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Delta-8 THC Trademarks Future Hazy After Ninth Circuit Ruling (1)

May 26, 2022, 4:49 PMUpdated: May 26, 2022, 5:53 PM

A recent Ninth Circuit decision affirming that delta-8 THC found in e-cigarettes and vape products is legal—and therefore eligible for trademark protection—could open a new frontier for cannabis sellers hoping to protect their brands, though any sea change in trademark application grants could remain a long way off.

The appeals court specifically upheld an earlier ruling that a Los Angeles smoke shop couldn’t dismiss a copyright and trademark lawsuit against it by arguing that the underlying products—“Cake” branded e-cigarettes and cartridges—were illegal.

The court cited the 2018 Farm Bill, which categorized as legal “hemp” any cannabis-derived products containing less than 0.3% delta-9 THC, the psychoactive compound in marijuana. This could provide support for trademark applicants seeking to protect their brands involving the synthetic delta-8 form of THC, but the US Patent and Trademark Office still must parse a labyrinth of conflicting guidance before approving any delta-8 marks.

“There’s no reason why people wouldn’t apply in that space for now,” said Lauriel Dalier, a former PTO trademark examiner who now works in Sterne Kessler Goldstein & Fox’s trademark and brand protection practice. “Whether or not the PTO will turn around and examine them differently is yet to be seen.”

Pending Applications

The ruling comes before the PTO has issued any final decisions on requests to trademark delta-8 brands, said Richard Swor, a litigation and intellectual property associate at Bradley Arant Boult Cummings LLP.

As of last year, Swor noted, about 40 trademark applications had been filed with the PTO that explicitly mention delta-8 products. A Bloomberg Law search found that number has risen to 57 in 2022. Although a handful of the applications have been abandoned or preliminarily rejected on the grounds that the underlying product is illegal, the vast majority are still pending.

The rejected trademark applicants still have a chance to respond to the PTO’s determination. The Ninth Circuit ruling, which found the farm bill’s definition of legal cannabis trumps the US Drug Enforcement Agency’s more stringent definition—which considers delta-8 illegal—could be another arrow in their quiver, Swor said.

If the PTO shifts from the DEA’s classification of delta-8 as an illegal substance based on its manufacturing method to the Ninth Circuit’s interpretation, “it will be a big shift” likely resulting in a flurry of trademark approvals, Swor said.

But don’t expect that shift to happen any time soon, IP attorneys warn.

“I actually think that the trademark office is going to be the last entity to kind of let their guard down or start approving these,” said William Stroever, co-chair of the Intellectual Property Department at Cole Schotz PC.

High Court Guidance

Stroever predicts that the office will more than likely hold off on making a determination regarding trademark approvals on delta-8 products until there is a clearer indication of approval from a federal agency or court.

“I think you can make a colorable argument that agencies are saying one thing, and this actually says a different thing, and there’s some need for clarity from the Supreme Court,” Stroever said.

Others say the Supreme Court is more likely to decline to take on the case, if appealed. “The interplay between the illegal federal and the legal state level just raises so many issues that I just don’t see them wanting to get into that if they don’t have to,” said John Ottaviani, senior counsel at Partridge Snow & Hahn LLP.

That might not leave anyone satisfied.

If the Supreme Court refuses to weigh in, “it’s just going to leave us in the same weird position we’ve been in,” said Rachael Dickson, an associate at Dykema Gossett PLLC who previously examined cannabis and hemp trademark applications at the PTO. Lacking federal registration, companies will be “forced to rely on common law trademark rights,” she said.

Agency Confusion

Although the PTO wouldn’t be precluded from granting delta-8 trademarks based on their legal status, it could still deny the individual applications on other grounds, including the US Food and Drug Administration’s lack of approval for any ingestible cannabis products.

Darrel Menthe of Sage Law Partners LLC, who represents Boyd Street Distro, the defendant in the Ninth Circuit case, said that this decision will open doors to reconsideration and regulation by the FDA.

“I think it’s the beginning of a lot of regulatory processes,” he said. “Up until this point, it’s not been clear whether any delta-8 products were lawful for sale under federal law, and many of us believed they were not.”

Even under a more permissive standard, applicants will still have to prove to the PTO that their products don’t contain more than the legal limit of THC. Although the initial applications needn’t mention delta-8, the PTO will dig in and make sure that vague descriptions for products like vape oil aren’t veering into illegal territory.

“If your goods don’t include legal hemp, not only could your application not register, but if it does register, it could get canceled,” Dalier said.

Should the PTO change its stance on delta-8 trademarks, IP attorneys expect the office will update its guidance with details on its approach to new applications and reexaminations.

For now, the decision hints at another layer of protection for delta-8 sellers, whose products already carry less legal risk to their users than products like marijuana cigarettes that are more clearly banned by federal law.

Faith Lopez, a Mobile, Alabama, resident who is planning her own delta-8 product line, filed a trademark application for her brand “MadWavie” the same week the Ninth Circuit released its decision. Lopez said she was unaware of the ruling but had been pursuing her business—which will offer delta-8 products like edibles and cooking oil—since last year.

Lopez said she felt compelled to launch “MadWavie” after witnessing years of violence in her hometown, and now she hopes to offer people an alternative to federally illegal marijuana.

“Delta-8 provides a safety net and closure, knowing that the product you’re using isn’t illegal,” she said. “It’s friendly for the community and neighborhood. It won’t bring negativity. I want people to feel safe.”

(Updates with additional reporting. An earlier version of this story corrected the spelling of Rachael Dickson's name.)

To contact the reporters on this story: Kelcee Griffis in Washington at kgriffis@bloombergindustry.com; Riddhi Setty in Washington at rsetty@bloombergindustry.com

To contact the editors responsible for this story: Tonia Moore at tmoore@bloombergindustry.com; Adam M. Taylor at ataylor@bloombergindustry.com