TTAB: Hemp Oil Extracts Marketed as Dietary Supplements Are Ineligible for Trademark Registration

See In re Stanley Brothers Social Enterprises, LLC, 2020 U.S.P.Q.2d 10658 (T.T.A.B., June 16, 2020) (available here).

The applicant, Stanley Brothers Social Enterprises, LLC, a Colorado cannabis company, developed a high-cannabidiol (CBD), low-tetrahydrocannabinol (THC) strain of cannabis that it named “Charlotte’s Web,” based on the novel of the same name as well as the name of a young girl suffering from a severe form of childhood epilepsy, who had reportedly achieved a significant reduction in seizures by using oil derived from the applicant’s high-CBD cannabis. After it was featured in a Sanjay Gupta documentary on CNN entitled “Weed” in 2013, the applicant’s cannabis strain enjoyed a great deal of publicity, which ultimately led the applicant to launch a CW-branded “hemp extract” intended for the general “health and wellness” market and seek federal registration for its CW mark in 2015.

In examining the trademark application CW for “hemp oil extracts sold as an integral component of dietary and nutritional supplements,” the examining attorney refused registration under Sections 1 and 45 of the Trademark Act, on the grounds that the applicant’s use of its mark in commerce in connection with the designated goods is per se unlawful because such goods are illegal under both the federal FDCA and the federal Controlled Substances Act (CSA). After several rounds of arguments, the applicant appealed the examining attorney’s refusal to the TTAB in 2017.

In considering the unlawful use refusal, the TTAB declined to reach a decision on the applicant’s alleged violation of the CSA, despite otherwise engaging in a lengthy discussion of the CSA, its general prohibition against marijuana, and the effects of the 2014 and 2018 Farm Bills on the definition of marijuana under the CSA — namely, the express removal of “hemp,” which is now defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol (THC) concentration of not more than 0.3 percent on a dry weight basis.”

Instead, the TTAB focused on the purported violation of the FDCA, which prohibits “[t]he introduction or delivery for introduction into interstate commerce of any food to which has been added … a drug or biological product for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public … .” FDCA Section 301(ll) (often referred to as the “Drug Exclusion Rule”). After engaging in a detailed analysis, the TTAB concluded that the examining attorney had established a per se violation of the FDCA because (a) the applicant’s goods constitute food to which a drug (i.e., CBD — the active ingredient in Epidiolex®, a drug approved by US Food and Drug Administration (FDA)) has been added, (b) substantial clinical investigations of CBD had been instituted and made public, and (c) there was no evidence on record that CBD had been marketed in food before the institution of the substantial clinical investigations of CBD.

In reaching these conclusions, the TTAB rejected the applicant’s various counterarguments. First, the TTAB disagreed that the 2014 Farm Bill’s Industrial Hemp Provision exempts the applicant from this portion of the FDCA. It reasoned that although the Industrial Hemp Provision permits authorized entities to “grow or cultivate industrial hemp” and does serve as a limitation on the CSA under certain circumstances, “it does not permit the distribution or sale of CBD in food when CBD is the subject of clinical investigation, even if the CBD is derived from industrial hemp which falls outside the CSA.” The TTAB also noted that the same logic would hold for the 2018 Farm Bill, which became law while the appeal was pending and after it had been fully briefed.

Second, the TTAB found the applicant’s argument that “its goods do not fall within the cited prohibition because they are ‘dietary supplements’ rather than food” to be unpersuasive. It cited the FDCA’s definition of food (i.e., “[t]he term ‘food’ means (1) articles used for food or drink for man or other animals … and (3) articles used for components of any such article”) and concluded that the applicant’s goods satisfy this definition because its marketing materials clearly recommend use of the hemp oil extract in beverage recipes and promote the product as a dietary supplement, the product itself comes in multiple flavors (including mint chocolate), and the application otherwise expressly identifies these goods as “an integral component of dietary and nutritional supplements.”

Finally, the applicant relied exclusively on a press release from a trade group in the hemp industry to argue that its hemp oil extract falls within an exception to the Drug Exclusion Rule for drugs or biological products that had been marketed in food before any substantial clinical investigations were instituted. The TTAB found this simple “self-styled ‘position’” statement to be unpersuasive, noting that the record contained no evidence supporting the trade group’s position, which was disputed by the FDA, and concluding that this was simply “an insufficient basis upon which to make a finding of fact,” especially “where the ingredient in question, CBD, is primarily derived from cannabis, which was illegal under federal law in all or almost all forms for decades prior to 2014, and remains illegal under federal law in many if not all forms today.”

Perhaps just as interesting is an argument that the applicant apparently did not make (or at least that the TTAB did not address in its opinion)—namely, that the applicant’s goods should not be considered a per se violation of the FDCA because they are distinguishable from the ingredient in the FDA-approved drug. The TTAB’s opinion does not address the specific chemical composition of the applicant’s goods, simply describing them as “hemp oil extracts” or “hemp extracts” that contain CBD. The terms “hemp oil extract” and “hemp extract” are not currently defined under federal law, so unsurprisingly, they are not always consistently used in the marketplace. With that being said, the term “hemp extract” is generally used to describe a substance that has been extracted from the flowers, leaves, and/or stems of the hemp plant and contains a wide array of naturally occurring compounds, including flavonoids, terpenes, and other cannabinoids in addition to CBD (these preparations are frequently described as “full spectrum” or “broad spectrum” hemp extracts depending on their THC content). The chemical composition of the active ingredient in the FDA-approved drug Epidiolex®, however, is almost 100% “pure” CBD. As we have reported previously, the FDA — the agency responsible for implementing and enforcing the FDCA — has consistently and repeatedly articulated the agency’s position that the Drug Exclusion Rule makes it illegal under the FDCA to add CBD to foods sold in interstate commerce. But many in the industry have argued that “full-spectrum” and “broad-spectrum” hemp extracts, which contain an array of phytonutrients and cannabinoids, are sufficiently different from the FDA-approved drug ingredient that they fall outside the scope of the Drug Exclusion Rule. The FDA has not yet articulated a formal position on this specific issue. But, at least for the time being, the TTAB appears to have taken the position that if goods are marketed as conventional foods or dietary supplements and contain any amount of CBD, the goods are per se illegal under the FDCA and therefore ineligible for federal trademark registration.

The TTAB’s ruling further echoes the guidance expressed in the US Patent and Trademark Office’s Examination Guide for trademarks covering cannabis and cannabis-related goods and services that “when applications recite services involving cannabis-related activities, they will be examined for compliance with the CSA and the 2018 Farm Bill,” and that “even if the identified goods are legal under the CSA, not all goods for CBD or hemp-derived products are lawful following the 2018 Farm Bill [, since they] may also raise lawful-use issues under the FDCA.”

This case serves as an important reminder that despite the decriminalization of cannabis in many states and the rapid growth of the cannabis and CBD industries, the Patent and Trademark Office will refuse to register a mark if the underlying goods and/or services violate federal law.