Cannabis Trademark Infringement Series: Contributory Infringement

In the previous installment of the Cannabis Trademark Infringement Series, we discussed what it looks like when a large company comes after a cannabis manufacturer for trademark infringement. This week’s post has a slightly different flavor. In this piece, we explain how manufacturers taking part in alleged infringement aren’t the only ones in danger of a legal fight—resellers of those products are too.

The Hershey Company, one of the largest companies and the leading producer of chocolate in the United States, has a long history of protecting their trademark. In some instances, their infringement claims can seem unreasonable. In one battle, The Hershey Company, who owns Reese’s Peanut Butter Cups, claimed Reese’s Nursery and Landscaping infringed on their trademark. And the Hershey Company isn’t afraid of picking fights with cannabis companies either.

In 2014, The Hershey Company filed an infringement suit against Tincturebelle, a Colorado-based edibles maker. In this case, The Hershey Company seemed to have a compelling argument. Tincturebelle made cannabis-infused peanut butter cups called “Hashees” which had labelling very reminiscent of Reese’s Peanut Butter cups, down to the orange background and yellow script. Tincturebelle also made a product called “Ganja Joy”, a chocolate and coconut candy nearly identical to Almond Joys in ingredients and packaging. The Tincturebelle case ended in a settlement, with the company rebranding all of their products and destroying all of the infringing material.

But that isn’t the only cannabis trademark infringement case The Hershey Company has pursued. In fact, the more interesting ones do not involve the actual producers of allegedly infringing edibles, but their resellers.

In 2014, The Hershey Company filed suit against Conscious Care Cooperative (CCC), a Seattle-based dispensary for selling allegedly infringing products. The products in question, Reefers Peanut Butter Cups and Mr. Dankbar, were made by a totally different company and CCC was simply a reseller of these goods. But this fact made no difference to Hershey. CCC ended up settling this case and halted all sales of the allegedly infringing goods.

In the most recent cannabis trademark infringement case from The Hershey Company, they went after a well-known California dispensary called Harborside. Hershey claimed that Harborside, led by longtime cannabis activist Steve DeAngelo, was infringing on their trademarks by selling Jolly Meds, a hard candy similar to Hershey-owned Jolly Ranchers. But Hershey never once reached out to the manufacturers of the candy, only Harborside, one of their largest resellers.

Hershey wanted Harborside to stop selling the allegedly infringing product, pay $20,000 in liquidated damages, and sign a non-disclosure agreement. Unfortunately for Hershey, Harborside did not back down. Instead, the dispensary’s management and counsel worked with Jolly Meds and encouraged them to undergo a rebrand. Jolly Meds agreed, even though they had never been accused of infringement by Hershey, and changed their name to J:Meds. The Hershey Company dropped the case.

How can The Hershey Company and others come after resellers even though they do not actually manufacture the allegedly infringing product? It comes down to something called Contributory Infringement.

Contributory Infringement is defined by the Legal Information Institute as “a form of secondary liability for direct infringement of a patent, copyright, or trademark.” That legalese means  a person can be held liable for infringement without ever having engaged in infringing activities. While the threshold to prove contributory infringement in court is high, having to prove that the alleged contributory infringer knew they were violating a trademark, it can still be quite an expensive battle for both parties.

The best way to avoid costly legal fees is to, as a dispensary or reseller, avoid doing business with companies if there is any chance they are infringing on a trademark. If you find yourself in a contributory infringement case, set up a free consultation with attorneys who have dealt with this before. Contact Gleam Law today.