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Trademark Issues In The Marijuana Industry

When reviewing and drafting trademark licensing agreements, I have been seeing quite a few problems. I find these issues most common in marijuana law. I understand why this is: the marijuana industry is growing at an incredible pace and lawyers and law firms are jumping in without the requisite level of experience. Much of the marijuana industry is not corporately backed and in order to expand and quickly, bootstrapping won’t work. Therefore, licensing the brand is the best option. In addition, licensing into Washington State under I-502 has its own set of challenges.

Today, we shall talk about naked licensing. Recently, I reviewed several licensing agreements for medical marijuana and I-502 producer/processors. In every one of these agreements, the opposing attorneys drafted the agreement as if it were any other intellectual property or licensing agreements. In other words, the agreements simply offered a license in exchange for a monetary payment. In trademark work, this greatly jeopardizes the very right in which one is seeking to protect. In a case in 2002 (Barcamerica International USA Trust v. Tyfield Importers Inc., 289 F.3d 589 (9th Cir. 2002)) the court invalidated a trademark because the licensing agreement had no quality controls in place and the license was in perpetuity. The court in Barcamerica court stated that a naked license is “inherently deceptive” and constitutes abandonment of any rights to the trademark by the licensor. This is further solidified by Freecyclesunnyvale v. The Freecycle Network, 626 E 3d 509 (9th Cir. 2010).

The bottom line is: when drafting a trademark licensing agreement, please avoid naked licensing by adding provisions for quality control of the final product. When drafting a licensing agreement regarding marijuana brands, look for a law firm that possesses substantial experience in both trademark law and marijuana law. To not do so results in the complete loss of one’s main competitive advantage – your brand.

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