The Western District of North Carolina’s CBD Industries, LLC v. Majik Medicine, LLC is yet another case revolving around the USPTO’s shaky guidance for cannabis products. Originally delegated to a magistrate judge who issued a Memorandum and Recommendation (M&R), the plaintiff’s motion to dismiss the defendant’s counterclaims and cancel the defendant’s trademark registration was denied in the M&R.
The case hinges on the famous 2018 Farm Bill — the one that ushered in the CBD era of American life by essentially legalizing hemp. Somehow, contrary to the Controlled Substances Act’s pre-2018 prohibition on registering cannabis products, defendant Majik managed to register with the USPTO the trademark for its CBD products before the passage of the Farm Bill.
It was the unusual timing of that registration which gained the attention of CBD Industries’ attorneys, and became the basis for its legal strategy. It argued that Majik never should have received a registration for its CBD products, because CBD itself was not yet legal at that time. (And, as we’ve written elsewhere, CBD is still unapproved by the FDA for ingestion, skin creams, or anything else — so the USPTO historically has denied registration of trademarks for CBD products.)
In its analysis, the court showed that the defendant, Majik, always has the option to amend its trademark registration date to a later date (in a “forward” direction). Majik could simply state that its registration was effective starting on the date when CBD was legalized.
The court’s job was made easier by several precedents which had established the concept of trademark infringement being “intensely factual” issues that almost always require a fact finder to adjudicate. Naturally, in this case, the presence of any issue of fact — like a contested trademark — precluded dismissal of the case against the allegedly confusing mark of the plaintiff (who had brought the case by declaratory judgment, seeking a declaration that its mark did not infringe defendant’s registered mark).
The court took some time to express annoyance over the plaintiff’s objection to the M&R, calling it a mere “repackaging” of the substance of the M&R that was “useless.” Rather, the plaintiff had merely repeated each statement in the M&R and said it was wrong. So, the plaintiff failed to challenge any of the facts or legal conclusions at issue. Accordingly, the District Court Judge adopted the M&R, and the motion to dismiss the counterclaims was denied.
From my point of view, it seems like the plaintiff was trying to cut this lawsuit off at the pass before addressing the merits of what appears to be trademark infringement. I found it curious that the judge would suggest altering the date of registration — apparently, a teachable moment. Of course, if you were the plaintiff seeking a rapid result, you’d prefer dismissal over this life lesson.
