By: Nicole A. Syzdek, Associate, Brand & Branch LLP
On October 20, 2016, RX Green Solutions, LLC (“RX”)—a manufacturer and distributor of natural-based products used for the cultivation of plants—filed suit in the U.S. District Court for the District of Colorado seeking a declaratory judgment against The Green Solution, LLC, a company operating a chain of Denver-based cannabis dispensaries.
This is one of only a handful of federal trademark lawsuits we've seen between cannabis businesses. Assuming the case does not settle too quickly, its outcome will be instructive for cannabis companies seeking to enforce their trademark rights. It may also serve as a good reminder to think carefully about potential risks before firing off a round of cease and desist letters.
Since 2011, RX has provided products for growing plants such as nurtients, fertalizers, and pH adjusters under the trademark RX GREEN SOLUTIONS. In 2014, RX launched a line of nutrient products specifically designed for cannabis cultivation, and also opened a cannabis-focused testing facility in Denver, Colorado.
The Green Solution entered the Denver cannabis scene in 2010, and currently operates at least 10 cannabis dispensaries in the Denver area under THE GREEN SOLUTION brand. The Green Solution also owns two federal trademark registrations for the mark in connection with clothing, and multiple Colorado state trademark registrations covering a variety of cannabis-related goods and services.
The Cease and Desist Letter
On June 10, 2015, The Green Solution sent a cease and desist letter to RX claiming that RX’s use of the mark RX GREEN SOLUTIONS is likely to cause confusion with THE GREEN SOLUTION mark, and further alleging that this use of the mark constitutes unfair competition in violation of the Lanham Act and other federal and state laws.
The Complaint for Declaratory Judgment
Upon receiving the cease and desist letter, RX filed an action in federal court seeking a declaratory judgment that its use of RX GREEN SOLUTIONS is not likely to cause confusion with THE GREEN SOLUTION and does not constitute unfair competition under federal or state law.
RX claims that there is no likelihood of confusion between the two marks because The Green Solution has never sold plant nutrients or fertilizers and RX has never sold cannabis products. RX thus maintains that the two marks are used in connection with entirely different products. Additionally, RX states that its use of its mark predates The Green Solution’s use in “forty-nine of the fifty states in the United States,” with Colorado being the only exception.
Federal or State Law?
RX is seeking a declaration from a federal court in Colorado that RX's use of RX GREEN SOLUTIONS does not violate federal or state law. The former may be an easier case for RX to make. As long as cannabis remains on Schedule I of the Controlled Substances Act, cannabis businesses are unable to secure federal trademark protection for goods or services that “touch the plant.” But many of these same businesses have secured federal trademark registrations for their ancillary, non-plant-touching services like business and agricultural consulting or online information services. And, like THE GREEN SOLUTION, many cannabis businesses have federal trademark registrations covering non-cannabis goods like apparel, tote bags, and jars. Uncertainty exists as to how federal courts will treat companies engaging in federally unlawful practices that bring claims relying on a combination of state and federal law.
The federal courts have already seen a few cannabis-related trademark cases, most filed by the owner of HIGH TIMES magazine against cannabis businesses using the mark HIGH TIMES (see, e.g., Trans-High Corp. v. Reimers). But in those cases, the party asserting its trademark rights did not offer any goods or services in violation of the Controlled Substances Act, and its federal claims were based on trademark rights in connection with federally lawful goods and services.
The current case differs because The Green Solution, the party that initially asserted its trademark rights in the demand letter to RX, is a cannabis dispensary, with federal trademark registrations only covering clothing. In its complaint, RX asks the court to declare that The Green Solution cannot use federal law to sue the company because the use of THE GREEN SOLUTION mark in connection with cannabis products is not valid use to establish federal trademark rights under the Lanham Act. Essentially, RX is saying that the only federal trademark rights The Green Solution has are for clothing—which is entirely unrelated to plant cultivation nutrients.
That may be so, but some states (including Colorado) will grant cannabis businesses state trademark registrations for goods and services that touch the plant—and The Green Solution has 6 of them. RX may therefore face rougher waters under Colorado state law.
We'll keep you posted as this case progresses!