Cannabis Trademarks in the Metaverse

Cannabis Practice Group – April Newsletter

 

Cannabis Trademarks in the Metaverse

By: Jay Kotzker

Unless you’ve been living under a rock, it is likely you have recently heard of the metaverse. Indeed, with Facebook’s rebranding to Meta, the public has been clued in as to what big technology companies think of this burgeoning landscape. So, what exactly is the metaverse? Why have high profile brands flocked to register trademarks for their digital wares? And what does this mean for the cannabis industry?

At its most basic level, a metaverse is a network of 3D virtual worlds focused on social connection. Indeed, 90% of the time someone could replace the word “metaverse” with “cyberspace” and it still have the same meaning. You see, “metaverse” doesn’t necessarily refer to a specific kind of technology but rather a new way to engage with existing technology and one another. It’s more of an immersive, 3-dimensional internet. Currently, it can be accessed through VR goggles or less immersive in games such as Fortnite accessed through smartphones, game consoles and computers. And recent developments indicate that whatever it is, it is going to change the way we work, learn, entertain ourselves, and engage with others. 

In fact, there are traditional architecture firms who are currently designing educational campuses in the metaverse where students will be able to log into the virtual world. Here, they will learn, explore museums, visit the ancient wonders of the world, and interact with one another. And, of course, those students will visit the gift shop when they finish exploring.  See, with the establishment of the metaverse a digital economy is naturally created, where users can buy, sell, create, and barter goods and services. With this, the time is right for companies to begin thinking about possibilities in this digital world as well as the potential branding and marketing opportunities, and risks, to come.

Big brands have quickly taken notice of this new landscape. In the last several months, famous brands such as Versace, Nike, Vineyard Vines, Walmart, and even Jimmy Dean, yes, the sausages, have all sought to protect their valuable trademark rights by filing federal trademark applications in connection with “digital goods.” So, what does this have to do with cannabis? Well, the metaverse just might be able to assist cannabis brands in developing and protecting nationwide trademark rights. If you consider the aforementioned brands’ filing of trademark applications for a host of digital goods such as shoes, bags, clothing, and breakfast meats in Class 9, which is typically associated with digital applications, it is impossible to miss the incredible opportunity cannabis brand owners have in this space. With cannabis brands struggling to obtain federal protection for trademarks used in connection with THC and some CBD goods and services, the metaverse could end up playing an important role in the expansion of nationwide trademark rights. 

Under the United States Patent and Trademark Office’s Rules of Practice, to obtain a federal trademark registration, which confers nationwide rights for the covered goods or services, an applicant must show lawful interstate commercial use of the trademark. Because the Controlled Substances Act makes it unlawful to grow, possess, dispense, and distribute marijuana, it is impossible for lawful commercial use to occur. As a result, cannabis brands have been forced to cobble together intellectual property protection through the use of state trademark registrations, common law rights, and federal trademark registrations for ancillary goods and services such as clothing items, stickers, lighters, ashtrays, and educational materials. However, the inability of cannabis companies to secure a federal trademark registration for their core, plant-touching goods, and services such as flower, concentrates, infused products and retail store services still causes problems, as there is nothing to prevent a new dispensary brand in New Jersey from capitalizing on the goodwill garnered by an established cannabis brand operating in Colorado. This is due to the fact that trademark law is jurisdictional, meaning, intellectual property rights are limited to the geographical area where the mark is in use. So, a cannabis dispensary chain in Colorado may not be able to prevent another dispensary brand in another state from using the same or confusingly similar mark on their dispensary. This will undoubtedly cause major issues when federal legalization, rescheduling or other actions take place at the federal level, which would then allow for lawful interstate commerce. As such, forward thinking cannabis brands would be keen to take advantage of the possible opportunity to expand their trademark rights. 

With the metaverse, like other internet-based applications, the jurisdictional boundaries disappear. So, unlike mom and pop, Dave’s Donuts, who’s selling in a limited, real-world geographical area, internet-based trademark uses reach a national audience.  With this in mind, the metaverse may provide an avenue for state-based cannabis brands to reach a nationwide audience. While this certainly does not mean that cannabis businesses can sell federally illegal goods and services and ship them across state lines, what it does possibly open up is the provision of digital cannabis products to a national audience.  And, since digital cannabis products are lacking the very thing that makes marijuana an illicit Schedule 1 substance, namely THC, it’s conceivable that a cannabis brand could obtain a federal trademark registration for digital cannabis products and digital retail store services featuring cannabis.  So, when a cannabis brand selling infused products in State A where adult medical use is permitted under state law, moves beyond a State A trademark to offer digital cannabis goods in the metaverse, the brand has effectively expanded its reach from State A to anyone in the United States despite the fact that the physical cannabis products are not available in every state. 

This type of proactive approach would most certainly bolster any cannabis brand’s IP portfolio and would protect the brand nationally in a way that has been nearly impossible to this point.  And, when federal actions take place allowing for lawful interstate commerce of cannabis, it would be difficult to see how a third-party cannabis brand could then obtain a federal trademark registration for a brick-and-mortar dispensary bearing the same or confusingly similar mark.

What, exactly, this would look like in actual practice is yet to be seen. But, can you imagine visiting a fully built-out, state of the art dispensary or cultivation facility in the metaverse, where cannabis companies can, in ultra-high definition video, allow a virtual customer to peruse their dispensary’s wares, view plants in various stages of growth and processing, and engage with virtual sales reps to ask questions about various cannabis products?  This type of customer engagement is sure to excite any cannabis brand and provide an added layer of protection and national recognition for the brand.

Jay Kotzker is a partner at Parlatore Law Group with over 15 years of legal experience. He focuses his practice on all areas of intellectual property and cannabis business law, including brand development and protection, and guiding clients through cannabis business licensing, compliance, and operational issues. Mr. Kotzker can be reached at jay.kotzker@parlatorelawgroup.com and (303)529-0112.

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Cannabis Practice Group – April Newsletter