In 2021, candymaker Wrigley sued Mendocino-based cannabis brand Terphogz, LLC alleging that Terphogz infringed on various Wrigley trademarks for the Skittles candy line in its “Zkittles” cannabis product line. The lawsuit alleged trademark infringement, false designation of origin, trademark dilution, and a number of other trademark claims under the federal Lanham Act and Illinois state law.
In its lawsuit, Wrigley claimed that Zkittlez copied their famous “taste the rainbow” slogan with confusingly similar slogans like “taste the strain bro”. Wrigley also accused Zkittlez of selling merchandise that infringed on Skittle’s product trademarks, such as multi-colored packaging and branded merchandise. In early July 2023, the two companies settled the lawsuit where Terphogz LLC agreed to stop using the Zkittlez name or similar-terms for cannabis-related products, among other requirements.
You may be asking yourself what a trademark is and how it impacts your business, and how using trademarks may expose you to litigation.
First, what is a trademark? A trademark is a type of intellectual property used to show the public that a product or service comes from a specific source. Trademarks take many forms. Some famous examples are the “Apple” logo to identify the range of electronic products made by Apple, Inc., the “Tiffany blue” color is used to identify jewelry created by Tiffany & Co., or the “I’m lovin’ it” slogan used to identify McDonald’s fast food products. Companies put a significant amount of resources to protect their trademarks because it is how they differentiate their products from their competitors. Owning very recognizable trademarks can also build brand value and reputation.
Because trademarks can provide a lot of value and name recognition, companies go to lengths to make sure their trademarks are protected. One way to protect trademarks is to pursue legal action against companies who may be infringing on one’s trademarks.
Trademark infringement refers to the act of taking another company’s trademark and using it without permission to sell a product that does not come from the trademark holder. If you tried to sell electronic devices with an Apple logo, you would be infringing on Apple’s trademark rights.
False designation of origin is a type of trademark infringement that accuses someone of using another trademark to make it appear like a certain company or brand is the source of the product. If you tried to put the Apple logo on a pair of socks, people would think that it came from Apple, Inc., and you could be liable in a lawsuit brought by Apple for false designation of origin.
Trademark dilution is a type of trademark infringement that accuses someone of using a similar trademark or trade name that “dilutes” public perception of a famous mark. If you tried to sell fake diamonds in a Tiffany blue box, people would think Tiffany & Co. was selling fake diamonds, and it would hurt their brand.
In all of these situations, there is a high chance that a company would bring a lawsuit – and likely win – against the infringing party for trademark dilution.
Trademark laws exist at two levels – the state level and the federal level. Because cannabis is still federally illegal, cannabis companies cannot register trademarks with the United States Patent and Trademark Office (“USPTO”). However, cannabis companies can still hold trademarks and register them with the state that they sell products in. California allows cannabis companies to register their trademarks with the California Secretary of State. Trademarks at the state level are subject to states’ versions of the federal Lanham Act – meaning that states have their own type of Lanham Act that protects trademarks within that state.
The cannabis industry is no exception to the idea that brand names carry values. Think about brands like Cookies, Wyld, or Stiizy. These companies are in nearly every legal market and people recognize their names all over the world. These companies have used trademarks, such as their names or unique packaging, to build a reputation in the cannabis industry. You can build brand recognition and value in your company by creating and protecting trademarks that distinguish your company from the competition. Our attorneys are here to help you identify what trademarks your company may have and the best way to protect those trademarks. Contact us today if you want to learn more about protecting your brand and building value in branding.