**Case Update**
Kiva Health Brands LLC vs. Kiva Brands Inc., et al
Marijuana Trademark Rights
Judge Charles R. Breyer sends a “not-so-sweet” Valentine’s Day decision to Kiva Brands Inc. (“Kiva Cannabis”), a leading maker of cannabis-infused chocolates and confections. In the long-awaited decision, Judge Breyer delivers a “death blow” to Kiva Cannabis’ prior common law trademark affirmative defense claim because its mark is used for federally illegal marijuana edibles.
The February 14, 2020, Order addresses the parties’ motions for summary judgment about Kiva Cannabis’ affirmative defenses. The Order addresses the defenses of (A) prior use, (B) laches, and (C) acquiescence, waiver, and estoppel.
- To read the background of this case, click here for blog post 1.
(A) Prior Use and Marijuana Trademark Rights
Kiva Cannabis argues that because it used the KIVA mark first, as between the parties, Kiva Health’s trademark infringement claims are barred in those markets where Kiva Cannabis used first and before Kiva Health filed its U.S. trademark applications for the KIVA mark.
However, Kiva Health seeks summary judgment on this defense by arguing Kiva Cannabis has no cognizable claim of prior common law use rights against Kiva Health and its federal trademark registration rights because Kiva Cannabis’ products are illegal under federal law. Judge Breyer agrees.
While Kiva Cannabis’ marijuana-infused edibles are legal under California law, “its illegality under federal law means that KBI [Kiva Cannabis] cannot have trademark priority” between the parties. The Court also correctly noted that priority of trademark rights between parties ordinarily comes with earlier use of a mark in commerce. The Court also correctly stated that the United States Patent and Trademark Office and Ninth Circuit have held that trademark “use in commerce” must be a lawful use.
Therefore, the Court held that Kiva Cannabis cannot be the senior user of the KIVA mark as between the parties because its use of its mark was not lawful use in commerce.
Accordingly, the Court GRANTED Kiva Health’s motion for summary judgment on Kiva Cannabis’ prior use defense.
(B) Laches (Unreasonable Delay)
Defendant, Kiva Cannabis, argues that Plaintiff Kiva Health’s delay in bringing its trademark infringement suit has caused harm to Kiva Cannabis. Accordingly, Kiva Cannabis argues that, among other things, the case should be dismissed.
The principle behind laches is that one who seeks the help of a court of equity must not “sleep on” it rights. To establish laches, a defendant must show an unreasonable delay by plaintiff in brining suit, and … prejudice to itself. Furthermore, to determine whether a party’s delay in bringing an action amounts to laches, the court must establish the length of the delay “measured from the time the plaintiff knew, or in the exercise of reasonable diligence, should have known about its potential cause of action.”
Kiva Health argues that it learned of Kiva Cannabis’ use of the KIVA mark at a food industry trade show in California around June 2015. However, Kiva Health did not take issue at that time because Kiva Cannabis’ use was limited to San Francisco, California, and its goods were marijuana-based. Nevertheless, Kiva Health claims that once it learned about actual consumer confusion between the brands starting in late 2016 or early 2017, and once the “severity of customers’ concerns increased,” Kiva Health took prompt action when it sent a cease and desist letter in May 2018 and later filed suit in September 2018.
Kiva Cannabis takes the position that it is doubtful that Kiva Health’s owners did not find at least Kiva Cannabis’ website by 2013. Kiva Cannabis further asserts that a reasonable jury could find that Kiva Health is not telling the truth and that its owners had actual knowledge of Kiva Cannabis’ use of the KIVA mark in 2013, if not before.
The Order states that the Court will follow “the weight of authority in the Circuit” and hold that trademark infringement claims carry a four-year statute of limitations. Furthermore, the Ninth Circuit does not stop the laches period until a law suit is initiated. The Court noted that if Kiva Health brought suit within the four-year statute of limitations, there is a strong presumption that laches would not apply.
Because there is a dispute of material fact as to when Kiva Health learned of Kiva Cannabis’ use of the KIVA mark, the Court denied summary judgment as to the laches defense.
(C) Acquiescence, Waiver, and Estoppel
Because the parties have not yet engaged in full discovery on these issues, the Court denied the motions for summary judgment.
Legal Ramifications
- GRANTED Motion for Summary Judgment on Prior Use Defense
Makers and sellers of cannabis products illegal under federal laws (which may arguably include CBD-infused edibles based on current FDA regulations) may:
1. not rely on earlier state common law trademark rights for challenging federal trademark registration rights, even if the registrant is the “junior” trademark user and sought federal trademark registration after a cannabis company’s trademark use;
2. be deemed the infringing party as against a third party federal trademark registrant, even if the cannabis company used the conflicting mark first; and
3. be compelled to cease all use of the subject mark and re-brand even if it establishes prior common law trademark rights nationally or within certain geographic regions.
We will continue to monitor this case and bring you updates as they occur.
To read more about marijuana trademark rights and securing trademark registration for cannabis marks, click here.
