Bad Faith Trademark Registration, Duplicate Trademark Filings and Non-Use Cancellations – Oh My!

Bad Faith Trademark Registration, Duplicate Trademark Filings and
Non-Use Cancellations – Oh My!

Bad faith trademark registration may occur when brand owners seek to “re-register” the same trademark for the same goods and services in the same country. A reason for seeking a duplicate trademark registration for the same mark and products in the same country is because an earlier registration may become vulnerable to cancellation for the non-use of the mark.

However, many, if not most, countries do not allow brand owners to “re-register” trademarks if they already own a registration for the identical mark and goods and services. That is so because most country laws give trademark owners three or five years from the date of registration to commercialize the mark and products before registration becomes vulnerable to cancellation for non-use.

Thus, “re-registering” the same mark and products for the purpose of gaining another three or five year “grace period” within which to commercialize the mark and products may be viewed as a “bad faith” attempt to circumvent country laws. For that reason, many countries do not allow a duplicate bad faith trademark registration.

Bad faith trademark registration
U.S. Patent and Trademark Office
Trademark Use ‘Grace Period’

Once trademarks register, most countries grant a three or five year grace period, starting from the registration date, within which to use registered marks before registrations become vulnerable to cancellation for non-use. Accordingly, the grace period provides brand owners with sufficient time to put their registered marks to use and ‘perfect’ their trademark rights and registrations.

However, once that grace period expires, third parties may seek cancellation of trademark registrations on the ground of non-use and, if successful, may secure their own trademark registrations for a same or similar mark and claim ownership. For that reason, it is common practice for brand owners to seek ‘re-registration’ of the same mark and goods/services to reset the non-use “vulnerability clock” or grace period.

Example

If a company secures a Russian trademark registration on January 1, 2020 for ‘Trademark X’ for nutritional supplements, the company automatically receives a three year grace period from that date to commercialize the registered mark for nutritional supplements in Russia.

However, failure to launch those goods in Russian under the registered mark during that three year period renders the trademark registration vulnerable to cancellation for non-use.  Accordingly, if that registration is cancelled, all trademark rights in Russian would be lost.

Specific Country Laws

Many countries do not allow a duplicate trademark registration strategy, including the United States, EU, Philippines and Russia.

United States Does Not Allow Duplication

U.S. trademark law does not permit trademark registration for the identical mark and identical goods/services. However, filing a new U.S. application for the identical mark with modified goods and/or services is permitted, even if the new application lists the same goods appearing in the earlier registration. For example, if the earlier registration lists products A, B and C, the new application for the same mark would be allowed for products A, B, C, and D.

Other Countries Allow Duplication

Conversely, certain countries permit duplicate trademark registrations, including Australia, China and India.  However, while some country trademark offices may issue duplicate trademark registrations, those registrations may still be vulnerable to third party challenges on the basis of bad faith registration, i.e., bad faith intent to circumvent country trademark use laws.

Recent EU Case on Duplicate Trademark Registration

A recent EU trademark decision made that point clear when the European Union Second Board of Appeals cancelled a trademark owner’s trademark registrations (or removed certain duplicative goods/services from later issued registrations) on the basis of bad faith registration. In that decision, the Board stated that trademark owners that seek to circumvent EU trademark use laws by fraudulently “re-registering” their marks to extend the five year non-use grace period do so in bad faith and such practice is an “abuse of law.”

Bad faith trademark registration
Plot a course for “smooth sailing”
Potential Scenarios

Brand owners may encounter numerous duplicate trademark (‘bad faith’) registration scenarios depending on country laws, including the following:

1. Country trademark laws that permit duplicate trademark registrations (identical mark and identical goods/services)

  • For those countries, fire away!

2. Country trademark offices that allow new registrations for the identical mark and same goods and services as long as new goods/services are also added to the application

  • For those counties, make the required modifications and fire away!

3. Countries that do not allow new registrations for the same mark and for the same goods/services listed in an earlier registration even if the new application lists new goods/services within the same class or adds a new class

  • For those counties, brand owners should modify the description of goods/services within a duplicate class in a manner that satisfies country trademark office guidelines and add the new goods/services and classes

4. Country trademark offices that issue duplicate trademark registrations but those registrations may still be vulnerable to challenge by third parties based on bad faith duplicate filing

  • For those counties, best practice may be to modify the goods and services in a manner that satisfies local laws
Madrid Protocol (a/k/a International) Trademark Filing Considerations

Once you introduce the Madrid Protocol into the mix, filing strategies may become even more complicated!

For example, if the existing global trademark registrations posing duplicate trademark registration barriers were filed via the Madrid Protocol and are based on a brand owner’s only existing home country trademark registration(s), the brand owner may not use those same home country filings for new Madrid Protocol filings for counties that do not permit duplicate registrations, duplicate classes and/or duplicate goods/services.

Strategy Considerations

When faced with the reality that certain country trademark registrations and trademark rights are or will be vulnerable to cancellation for non-use, it is prudent to audit those rights and decide which of those rights should be preserved, if possible. Furthermore, the audit should consider whether any of the subject registrations can be perfected by putting a registered mark to genuine use – for at least some of the listed goods/services – or whether new filings should be made.

Lastly, it is also prudent — obviously — to prepare a strategy that contemplates potential duplicate trademark registration barriers on a country-by-country basis, which should include the assistance of trusted foreign counsel.

See related posts here and here about global trademark registration filing strategies.

Conclusion

As brand owners seek to maintain valid and enforceable global trademark rights for, what may be, bona-fide future business opportunities, they must do so strategically. Furthermore, they must do so with the understanding that there are many intricacies of trademark law that must be navigated or they run the risk of losing trademark rights, wasting money and suffering from a severe case of heart burn.

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Kiva Trademark Dispute Exposes Marijuana Industry’s Federal Trademark Registration Dilemma

Kiva Trademark Dispute Exposes Marijuana Industry’s
Federal Trademark Registration Dilemma   
Kiva Health Brands LLC (Plaintiff) v. Kiva Brands Inc., et al. (Defendant) 
  • Exhibit A for the marijuana trademark registration dilemma

California federal judge rules that defendant marijuana edibles maker cannot challenge plaintiff’s federal trademark registration rights based on prior common law trademark rights “created” in California because marijuana is illegal under federal law.  This decision highlights the marijuana trademark registration dilemma facing marijuana brands.

Marijuana trademark registrationSignificant Decision

U.S. District Court Judge Charles R. Breyer, for the Northern District of California, dismissed two of Defendant Kiva Brands Inc.’s (“Kiva Cannabis”) counterclaims, specifically the second counterclaim, which argues that Plaintiff Kiva Health Brands LLC’s (“Kiva Health”) U.S. trademark registration(s) should be cancelled based upon Kiva Cannabis’ prior common law trademark rights and the third, which argues that Kiva Health infringed Kiva Cannabis’ prior common law trademark rights under the Lanham Act (or federal Trademark Act). Both counterclaims were dismissed because Kiva Cannabis uses its mark for marijuana products and cannabis-infused edibles, which are illegal under federal law, thus it cannot claim and establish legally recognized prior trademark rights as against Kiva Health. 

Judge Charles R. Breyer writes: 

“Although the parties have not identified, and the Court has not seen, any directly relevant authority about the interplay of state marijuana and federal trademark law, the Court is persuaded that the illegality of KBI’s [defendant’s] products under federal law renders KBI unable to challenge KHB’s [plaintiff’s] federal trademark.  Accordingly, as of this stage in the case, KHB [Plaintiff] has demonstrated ownership of the mark nationally, including in California.” 

In other words, although Kiva Cannabis may have used its mark KIVA before Kiva Health’s use of, and U.S. trademark registration for, its mark KIVA, Kiva Cannabis may not rely upon earlier common law (federally unregistered) trademark use because that use was unlawful use in commerce.  The Ninth Circuit has explained that “to hold otherwise would be to put the government in the ‘anomalous position’ of extending the benefits of trademark protection to a seller based upon actions the seller took in violation of that government’s own laws.”

The decision correctly states that trademark priority between conflicting marks ordinarily “comes with earlier use of a mark in commerce.”  However, it further states that such “[u]se in commerce must be lawful use” and only lawful use in commerce can give rise to trademark priority between conflicting marks. 

Legal Ramifications

This decision means that makers and sellers of marijuana and/or other cannabis products illegal under federal laws and regulations (which may possibly also include CBD infused edibles) may:

1.  not rely upon earlier common law, federally unregistered, trademark rights as grounds for challenging federal trademark registrations and federal trademark rights, even if the registrant used and/or filed a federal trademark application for the mark after the cannabis company’s trademark use;

2.  be deemed the infringer of third party federal trademark registration rights, even if the cannabis company used the conflicting mark first; and

3.  be required to re-brand even though it may have prior common law trademark rights nationally or within certain geographic markets and regions. 

This decision is a wake up call for those arguing that common law and state trademark rights obviously and adequately protect marijuana brands and trademarks, including “well known” marijuana brands, locally and nationally.

  • To learn about U.S. trademark registration eligibility and strategies for cannabis trademarks, click here.
Summary Background of Case

Plaintiff, Kiva Health, a maker of natural foods and health supplements, sued defendant, Kiva Cannabis, a maker of cannabis-infused chocolates and other edibles, in September 2018 for trademark infringement and thereafter filed a motion for a preliminary injunction and a motion to dismiss two of Kiva Cannabis’ counterclaims.

Kiva Cannabis filed its answer and also filed counterclaims, including a declaratory judgment of non-infringement, a petition to cancel Kiva Health’s U.S. trademark registrations based upon Kiva Cannabis’ earlier common law trademark rights, and trademark infringement, and thereafter filed a cross motion for a preliminary injunction to enjoin Kiva Health from using the KIVA mark within California based upon Kiva Cannabis’ claimed earlier common law use rights. 

Recent December 6, 2019 Motions

1.  Kiva Health argues for and files motion in support of partial summary judgment against Kiva Cannabis’ prior common law use defense to trademark infringement and laches and other related equitable defenses.

2.  Kiva Cannabis argues for and files motion in support of summary judgment based on laches.

Kiva Health alleges, among other things, that:

1.  Kiva Cannabis’ use of the KIVA mark for marijuana infused edibles is causing consumer confusion as to the source of the parties’ respective goods, economic damage and injury to Kiva Health’s goodwill and consumers to erroneously believe that Kiva Health’s products are infused with marijuana. In its complaint, Kiva Health alleges that “consumers and prospective consumers have contacted Plaintiff expressing concern and frustration believing that Plaintiff’s food products and supplements, marketed as healthy and eco-friendly, contain cannabis or other regulated substances.” 

Marijuana trademark registration2.  Kiva Cannabis cannot demonstrate “first use” of its mark “in commerce” because its goods are illegal, thus Kiva Health is deemed the senior user of the KIVA mark as between the parties (even though it may have started using KIVA after Kiva Cannabis) and its federal trademark registration(s) for the mark KIVA grants it national trademark rights, including in California. It is, therefore, entitled to nationwide priority of trademark rights, including the entirety of California, for the KIVA trademark for food and related products based upon its U.S. trademark registration rights commencing on September 5, 2013, the date its first U.S. trademark application was filed. How to Register Cannabis Trademarks

3.  Because the entity Kiva Brands Inc. (Kiva Cannabis) came into existence in 2014, and because it cannot show a clear chain of title to the KIVA mark dating back to 2010 via alleged predecessor rights, any trademark rights were created in 2014, which post-dates Kiva Health’s U.S. trademark application filing priority date of September 5, 2013.

Kiva Cannabis asserts, among other things, that:

1.  It is one of the nation’s leading providers of cannabis-infused edible chocolates and confectionery products and that its KIVA brand has obtained national notoriety and received many national awards.

2.  It created common law trademark rights in California, in a state where its products are legal, for its KIVAmark for marijuana infused chocolates and confections in 2010, a date before Kiva Health created any trademark rights for its KIVA mark for foods and supplements. Accordingly, Kiva Health’s issued U.S. trademark registrations (issued as early as 2014) are vulnerable to cancellation based upon Kiva Cannabis’ earlier, a/k/a “senior,” use of the mark KIVA in California. 

3. Notwithstanding trademark priority between the parties, “a reasonably prudent consumer of the parties’ products is not likely to be confused as to whether KBI’s [defendant’s] products originate with KHB [plaintiff], or vice versa.” Confusion is unlikely as to the source of the parties’ respective goods because its [defendant’s] products are infused with cannabis, cannabis products sold in California must display a cannabis symbol on packaging, its [defendant’s] products are sold only in licensed dispensaries and Kiva Health’s products are sold in different channels of trade or outlets, such as on the Amazon.com website and other websites.

4.  The illegality of its products under federal law “would be relevant if Kiva Cannabis were seeking federal trademark registration of the mark KIVA for use on its products,” but is irrelevant to Kiva Cannabis’ having invoked its “common law rights under California law.” Kiva Cannabis contends that Kiva Health’s trademark does not trump the valid common law rights Kiva Cannabis acquired under state law before Kiva Health’s first use and issued federal trademark registrations.

Kiva Cannabis relies upon the trademark principle that a junior user’s federal trademark registration does not invalidate a senior user’s earlier common law trademark rights created in geographic regions where the senior user developed rights prior to the issuance of the junior user’s U.S. trademark registration.

Furthermore, when a junior trademark user secures a federal trademark registration for a mark that conflicts with a senior user’s established common law trademark rights, the junior user may not enter the senior user’s geographic territory with its registered mark if there is a likelihood of consumer confusion as to the source of the parties’ respective products or services. Moreover, the courts have held that a junior user’s federal trademark registration rights can “look like Swiss cheese” throughout the United States with “holes cut out” where other parties’ common law trademark rights existed prior to the issuance of a junior user’s trademark registration.

Timeline of Certain Events and Alleged Facts

2009: Kiva Health name and mark conceived by owners of company.

Early 2010: Kiva Health develops a KIVA logo and a berry powder product (however, KIVA mark apparently not used in connection with sales of foods until 2013).

December 2010: Kiva Cannabis claims first common law use of KIVA mark via a trademark licensee, for marijuana infused edibles in Northern California.

December 2010: Kiva Health incorporated in Nevada.

2011: Kiva Cannabis expands brand and sales into Central and Southern California.

February 13, 2013: Kiva Health starts selling KIVA branded foods at swap meet in Hawaii.

June 2013: Kiva Health starts selling KIVA branded food products online.

2013: Kiva Health alleges continuous sales of KIVA branded food products in California, nationally and internationally.

September 5, 2013: Kiva Health files a U.S. trademark application for the KIVA mark for food products, claiming a date of first use of the mark for foods as February 15, 2013 (Recent motions filed by Kiva Health lists the date of first use of mark as June 10, 2013, however).

April 15, 2014: Kiva Health’s first KIVA trademark registration issues for food products.

September 5, 2014: Kiva Brands Inc. (Kiva Cannabis) Delaware corporation created and does business under Kiva Confections (Kiva Health argues that Kiva Cannabis’ trademark rights in the KIVA mark was created in 2014, only when Kiva Brands Inc. was created and alternatively that Kiva Cannabis cannot establish a valid chain of title back to the alleged 2010 date of first use via former trademark licensee(s)).

Early 2015: Kiva Cannabis expands its brand and sales into Arizona, Nevada, Illinois, Hawaii and Michigan.

June 2015: Kiva Health learns of Kiva Cannabis and its use of KIVA name for marijuana-infused chocolates/edibles.

September 2015/December 2016: Kiva Health secures two additional U.S. trademark registrations for the KIVA mark for additional foods, including candies, and cosmetic and personal care products.

Early 2017: Kiva Health begins receiving queries from customers who were confusing Kiva Health’s KIVA brand with products produced by Kiva Cannabis.

May 2018: Those queries increase and Kiva Health sends cease and desist letter to Kiva Cannabis. (Kiva Cannabis is arguing that Kiva Health’s nearly three year delay is unreasonable and amounts to laches and, combined with other facts and defenses, including that cannabis goods are highly regulated products, including packaging regulations, the parties’ respective goods travel in different channels of trade (i.e., licensed marijuana dispensaries vs. non-dispensary channels, and Kiva Cannabis, having relied on Kiva Health’s inaction, has become one of the leading cannabis companies in the U.S. and would suffer substantial harm, the case should be dismissed.)

September 2018: Kiva Health files this lawsuit against Kiva Cannabis.

December 2018: Kiva Cannabis secures a California trademark registration for its KIVA mark, claiming a date of first use as December 1, 2010.

May 2019: Kiva Cannabis secures U.S. trademark registration for KIVA mark for providing information services that includes information in the fields of medical marijuana and medical benefits of cannabis (Kiva Health argues that Kiva Cannabis makes false statements to the U.S. Patent and Trademark Office about its illegal activities, thus its registration is vulnerable to challenge).

2019: Interestingly, Kiva Cannabis expands KIVA branded marijuana-infused products to include Thanksgiving turkey gravy.

Marijuana trademark registration

Plot a course for “smooth sailing”

Conclusion  – Marijuana Trademark Registration Dilemma 

This decision highlights the need for cannabis companies to strategically protect and seek federal trademark registration protection, when possible, for trademarks for legal products and services in an effort to “preserve” future federal trademark registration protection and rights for “related” products and services that currently violate federal laws and regulations but may become legal in the future. 

Read “Update 1” regarding Kiva case here.

To learn about how to register cannabis trademarks and U.S. trademark registration eligibility and strategies click here.

Key: marijuana trademark registration Key: marijuana trademark registration