Comparing trademark issues in very different industries: fashion, cannabis, high-tech

The fashion industry is highly competitive, fast-paced and seasonally driven. Unlike other market sectors, the fashion thrives on knockoffs. Fashion designs seen on the runway at New York Fashion Week are often copied and sold cheaply the following week. But rather than harm the high-end fashion designers’ brand and reputation, the fact that cheap knockoffs are sold actually gives more status to the “real thing,” which fashionistas will always covet, thus enhancing the brand’s value.

It also is common for fashion designers not only to draw inspiration from the world around them, but from their competitors. So, how do they get away with it? And, does such copying actually translate to increased revenues for the high-end brands? There is no doubt that an entire sub-industry exists in the fashion world consisting of knockoff purses, shoes and other fashion goods.

IP plays a significant role in the proliferation and profitability of the apparel industry, however, largely through trademark law, not copyright. It seems counterintuitive that fashion does not enjoy the same level of protection under U.S. copyright laws as other creative media such as art, literature and film because fashion designs also are creative and original. However, the problem is that to be protectable by copyright, items cannot be functional. Because of that, the basic design of a garment may be copied without legal consequence. A quote attributed to Coco Chanel sums up the point: “If you want to be original, be ready to be copied.”

This does not mean that the apparel industry is exempt from IP protection, however. Trademarks are widely used by fashion brands to protect themselves from knockoffs (counterfeit products) and other infringing products. For example, companies can use trademark law (in the form of trade dress) to protect visual characteristics of their products, such as color or patterns.

Burberry, for one, has a trademark for its well-known Burberry plaid and aggressively protects it from infringers. Christian Louboutin famously won his hard-fought battle to obtain trademark protection for his red-soled shoes. There is no doubt, when someone sees a pair of shoes with the iconic red soles, the source of those goods.

Additionally, brand names and logos (such as Hermès, Gucci and Louis Vuitton) signify a certain quality expected by consumers, along with the social status associated with such goods. As a result, there will always be consumers willing to shell out a small fortune to buy a Birkin bag. And, apparel companies can still protect their brand names, i.e., their trademarks, through traditional means: cease and desist letters, trademark infringement claims and border enforcement actions.

Cannabis industry

Like the apparel industry, IP issues in the cannabis industry are also tricky, but for very different reasons. As everyone knows, cannabis is illegal under federal law — at least for the time being. And, the laws under each state vary widely. So, what does this mean for cannabis companies that want to protect their brands?

For now, the biggest obstacle to protecting a cannabis brand name remains that cannabis is still listed as a Schedule I drug (the same category used for LSD and heroin) under the Controlled Substances Act. As a result, companies cannot obtain federal trademark registrations for cannabis products. This is because the Lanham Act only allows registration of goods that are lawfully “sold or transported in commerce.”

Although the 2018 Farm Bill has resulted in an exception for the registration of trademarks for “hemp” (i.e., cannabis plants and their derivatives containing no more than 0.3% THC on a dry-weight basis), all other cannabis products are ineligible for federal trademark registration. Also, that bill did not eliminate the Food and Drug Administration’s purview over products containing hemp, nor did it remove cannabis with over 0.3% THC from Schedule I.

In addition, companies can file for state trademark registrations in those states where cannabis products are legal; however, that does not grant broader, nationwide protection to companies seeking to enforce their marks in other states where there may be infringers.

One creative way that companies avoid these obstacles is to file federal trademark registrations for ancillary products, such as rolling paper, lighters, ash trays, T-shirts and the like. This concept is referred to as “trademark laundering,” when companies file trademarks for which the marks also happen to be the brand names for cannabis products (or strains of marijuana, which raises other issues not addressed in this article). By doing so, in combination with state registrations, cannabis companies can create a patchwork of protection. Although not ideal, these strategies allow companies to assert trademark protections against competitors and, hopefully, deter infringement.

High-tech

An elementary principle of trademark law is that generic terms are not protectable. This means that no company can obtain the exclusive right to use terms such as “computer” or “operating system.” The challenge for companies that sell high-tech devices to the general public, is that they may feel the need to use generic (or descriptive) terms so that consumers understand the nature of the products sold by the companies. In other words, the nature of the products may be so abstract or complex that laypeople need a “dumbed-down” brand name in order to understand what they are purchasing. Finding the perfect balance of a brand name that conveys the nature of the good, without clearly describing it, is challenging.

Under trademark law, that is what is called a “suggestive mark,” one that hints at the nature or an aspect of the good, which allows consumers to easily connect the product to the mark. One example of an obviously very successful suggestive mark in this industry is Microsoft, which suggests software for small computers.

Clearly, in an industry highly dependent on invention and innovation, patents are an important issue for high-tech companies. However, the ability to sell those products under a strong, protectable brand that consumers identify with innovation, quality and reliability may be equally important to these companies. In fact, as the world economy has become increasingly reliant on online platforms for marketing and sales, high-tech companies must distinguish themselves from their competitors (including those selling cheap knockoffs) with strong, distinctive branding.

Indeed, one challenge faced by these companies in the United States is to stop the importation of knockoffs from Asia, particularly China, where many counterfeit goods are manufactured. This requires the registration of trademarks with U.S. Customs and Border Protection (CBP), which has the authority to detain, seize, forfeit, and ultimately destroy merchandise seeking entry into the United States if it bears an infringing trademark that has been registered with the U.S. Patent and Trademark Office and subsequently recorded with CBP.

Therefore, it is crucial to high-tech companies to engage in a comprehensive branding strategy not only to develop and build a strong brand, but to employ proactive, strong measures to protect their IP interests.

Conclusion

Although companies in vastly different industries have diverse issues, concerns and challenges surrounding their IP interests, one commonality shared by all companies — whether they sell handbags, marijuana, or smartphones — is that they all need to engage in broad strategies to protect their brands — from design to garment, seed to sale, or concept to completion — in order to ensure they have strong, protectable trademarks.

In particular, regardless of industry, companies need to use brand names that are non-generic, non-descriptive trademarks easily recognizable by their consumers, for which they can claim exclusive use and prevent infringement. In addition, it is essential that all companies employ aggressive protective measures (such as cease and desist letters, coordination with CBP and, if necessary, litigation) to prevent infringement and counterfeit goods.