In September 2020, Edible Arrangements—the company best known for its fruit-bouquet gift baskets—sued one of the nation’s largest cannabis operators, Green Thumb Industries, for trademark infringement. The suit claims that Green Thumb’s “incredibles” line of infused products infringes a series of EDIBLE-based trademark rights.

Whether intentional or not, EA’s claims have far reaching implications for the entire cannabis industry, beyond Green Thumb’s branding. If EA is successful, the industry may find itself waking up in a world where cannabis-infused products are no longer sold under the “edible” moniker.

What’s baked into the suit

EA sued Green Thumb in the Northern District of Illinois (Chicago) on September 30, 2020. The case is currently pending before Judge Sarah Ellis. (Side note: I’ve argued trademark cases before Judge Ellis, to varying degrees of success. In all instances, I found Judge Ellis to be fair, reasonable, and engaged.)

The lawsuit includes 5 counts for violation of federal and Illinois state laws. Each count, however, lives and dies with the essential elements of trademark infringement. Ultimately, the question in this case is whether Green Thumb’s marketing causes a “likelihood of confusion” that Green Thumb’s products are produced by or otherwise affiliated with Edible Arrangements. Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 959 (7th Cir. 1992).

In other words, to prevail in this case, EA must show that a consumer purchasing Green Thumb’s products is likely to be confused into believing that the product is affiliated with Edible Arrangements. To accomplish this feat, EA is combining a group of seven*trademark registrations that feature the word “edible,” five EDIBLE-formative marks (like EDIBLE GOURMET and EDIBLE TREATS), and a registration for INCREDIBLE EDIBLE. (*The complaint identifies 8 registrations, but the definition of “Edible Marks” and summary table seem to omit EA’s original EDIBLE ARRANGEMENTS registration.)

It is a tried and true strategy to use trademark families to build IP beyond the sum of the individual parts. McDonald’s family of “Mc-” trademarks (McNuggets, McGriddles, McMuffin, etc.), for example, is strong enough to reach well beyond the fast food that McDonald’s actually sells. McDonald’s Corp v. McBagels, Inc., 649 F. Supp. 1268, 1 U.S.P.Q.2d 1761 (S.D.N.Y. 1986).

While trademark families have the potential to create broad trademark rights, they ultimately remain subject to the limitations of individual trademarks. In this case, as discussed further down, EA will face daunting challenges proving infringement. But before it passes that gauntlet, EA has a though hill to climb just to prove that its 20+ years using the EDIBLE trademarks should count for anything at all in the cannabis space.

Getting into the zone of expansion

Under federal law, trademark rights are not recognized for brands of goods that are illegal under federal law. So cannabis companies cannot register a mark or enforce federal trademark rights for brands used only on federally illegal cannabis products. That does not mean, however, that trademark law ceases to exist in the cannabis industry. Far from it.

Savvy cannabis brands have a host of options to protect their trademarks on both a state and federal level. [Standard Disclaimer: trademark rights are highly factual and you should consult with your attorney to fully understand your options.] Many states that have medical or adult-use cannabis programs also recognize trademark rights for state-legal cannabis brands.

Federal trademark law also protects goods and services within the natural “zone of expansion” of the original registration. The zone of expansion doctrine can, for example, allow a toothbrush brand rights that cover a later expansion into toothpaste. Smart cannabis companies can use the zone of expansion to register their marks for federally legal goods and services that can naturally expand into cannabis products. This allows companies to secure (and enforce) federal trademark rights now that will cover products when they become federally legal later.

But the zone of expansion works both ways. EA’s lawsuit positions all cannabis-infused food products within the zone of expansion of the EA’s EDIBLE family of trademarks:

[C]annabis-related products are within the zone of Edible’s natural expansion, as evidenced by Edible’s expansion in-fact to sell Cannabidiol (“CBD”) products in EDIBLE retail locations.

Complaint ¶ 68

EA believes that its trademark rights extend to all cannabis-related products that use “edible” as part of the brand name. Most edible brands, admittedly, do not use “edible” as part of their name. On the other hand, most cannabis companies do use the word to describe the cannabis-infused products that are, well, edible.

And therein lies the problem. Cannabis companies all over use the word “edible” to describe their cannabis-infused food products to consumers. That fact makes this lawsuit a threat to the cannabis industry. But it also make the cannabis industry a threat to EA’s trademark claims.

An incontestable mark enters a generic minefield

EA has a long—and generally successful—history of enforcing its EDIBLE trademarks. The traditional factors of trademark strength indicate that EA’s rights are fairly strong in the EDIBLE mark. EA began using the EDIBLE ARRANGEMENTS mark in 1998, and its first registration became incontestable in 2005. EA first began using EDIBLE as a standalone mark in 1999, and that registration became incontestable in 2018.

A trademark registration becomes incontestable when the registration has been active for 5 years and the trademark owner files the appropriate oaths. Incontestable registrations are not subject to some of the defenses in a trademark infringement suit. Defendants cannot contest, for example, the registrant’s ownership of the mark or their right to use the mark on the goods or services identified in the registration. 15 U.S.C. §§ 1065, 1115(b).

Incontestable, however, does not mean invincible. Incontestable trademarks are still subject to a number of defenses and challenges. Most importantly here, incontestable marks that become generic are invalid:

[N]o incontestable right shall be acquired in a mark which is the generic name for the goods or services or a portion thereof, for which it is registered.

15 U.S.C. § 1065(4)

Trademarks are graded in terms of relative strength based on how effective the mark is at distinguishing the goods of one company from the goods of another. The more distinctive the mark, the stronger it is.

On one end of the spectrum are fanciful marks, words that are made up and have no meaning outside of the brand. Think Xerox. Fanciful marks are the strongest because consumers associate them with nothing but a single company.

On the other end of the trademark-strength spectrum are generic marks. Generic marks are words that consumers associate with an entire class of goods, not a particular company. They receive absolutely no trademark protection because they do not help consumers identify the source of a product. A can that is labeled only “beer” gives no clue about which brewery produced it. It does not serve consumer interests to give trademark rights over generic terms, so no company has the right to tell any other company to stop using a generic mark.

A trademark (or any part of a trademark) becomes generic when it is incapable of distinguishing one producer’s goods from another’s. Patent and Trademark Office v. Booking.com, Case No. 19-46, Slip. Op. at *4 (Ginsburg, J.) (June 30, 2020). The name of the class of goods (e.g., “wine) is a classic example of a generic term. Otokoyama Co. v. Wine of Japan Import, Inc., 175 F. 3d 266, 270 (Cal. App. 2d 1999).

Some brands have successfully pulled themselves back from the brink of genericide. Kleenex and Rollerblade, for example, were able to convince consumers that there were other brands of facial tissues and in-line skates. Other brands, like Dumpster and Escalator, were not as successful.

Where will you be when the edible hits?

In the cannabis and hemp industries, “edible” is a broad term for any cannabis-infused food product. An “edible” category can be found on virtually all dispensary menus and no one sees a meme about edibles kicking in and thinks it’s talking about a flavor burst from a strawberry rose.

I’ve written before about the dire need for published standards on nomenclature in the cannabis industry. This is yet another instance where codifying what most of the industry already understands to be true will benefit operators and consumers.

While the cannabis industry is only starting to codify terminology standards, there is already piles of evidence that “edible” is used generically in cannabis. For fun, I put a clock on myself and tried to see how much evidence of generic “edible” use I could find in 30 minutes (what qualifies as “fun” is a bit different in Covid times). Here’s what I came up with:

Each of these examples, and many others I left out, uses “edible” to refer to a broad class of cannabis-infused products. Green Thumb’s lawyers will not limit themselves to 30 minutes, however, and I’d expect their mountain of evidence to be downright Himalayan.

What’s the likelihood anyone is confused?

While EA may be walking through a generic minefield, it is not certain doom. EA’s allegations are not limited to the word “edible.” It also contends that Green Thumb’s “incredibles” brand infringes EA’s rights to the INCREDIBLE EDIBLE trademark.

Trademark infringement is a highly factual analysis consisting of a multi-factor test. The exact factors vary slightly from circuit to circuit, but they all generally weigh the same considerations. In the 7th Circuit, where this case is pending, courts use a 5-factor test:

1. Similarity between the marks in appearance and suggestion
2. Similarity of the products
3. How and where the products are sold
4. The degree of care exercised by the consumers
5. Strength of the plaintiff’s mark
6. Any actual confusion

Sands, Taylor & Wood, 978 F.2d at 959

“Even those who’ve consumed a generous serving of our delicious Incredibles Mile High Mint bar wouldn’t confuse a pre-cut fruit bouquet delivery business with an edibles cannabis brand.”

Linda Marsicano, GTI SPOKESWOMAN, emailed statement to MJBiz Daily

The complaint is silent on actual confusion, so it’s reasonable to infer that EA currently has no evidence of people calling to order a delivery of cannabis products. Evidence that people have actually been confused in a trademark sense is very powerful, and it may develop during a case. At this point, there is no reason to believe this factor weighs for or against infringement.

As you may have gleaned from above, the EDIBLE mark’s strength in the cannabis industry is far from certain, regardless of the registrations’ incontestable status. But where EA may really struggle is with the similarity of the products, channels of distribution, and care of the customers.

The very nature of cannabis products, and the gauntlet of regulations one must pass to purchase cannabis products, is a high barrier to confusion

EA’s trademark registrations are all limited to the types of goods that have been delivered to doorsteps and offices for decades. The goods identified in the EDIBLE and INCREDIBLE EDIBLE registrations include a variety of “fruit cut into shapes and arranged in containers as floral designs,” chocolate coated fruit and nuts, balloons, smoothies, decorative centerpieces, and “on-line and retail store services in the field of fresh fruit products.” These products, as EA’s registrations suggest, are all sold through EA’s website and Edible Arrangement stores.

Green Thumb’s products, on the other hand, all appear to be high-THC (i.e., >0.3%) cannabis products. It is not a particularly controversial position that high-THC food products are very different products from non-THC food products. Dispensary consumers understand that the chocolate is not the primary value of the cannabis edible. Consumers pay 10x the price and eat 1/10th as much. They do so only because the chocolate (or cookie, gummy, mint, etc.) is just a vehicle for the primary value driver: cannabis.

The parties’ products are also sold—by function of law—through very different channels. For better or worse, the process of buying THC-infused products is exceedingly different from ordering a fruit basket. Every single jurisdiction that permits THC-infused food products has strict requirements about how, where, and to whom businesses can sell those products. It’s hard to believe that anyone could approach a licensed dispensary without understanding the unique characteristics of the products inside.

While it is impossible to predict what evidence will emerge or how a judge or jury will view the facts, the merits of this case do not appear overly strong for Edible Arrangements.

What does it all mean for the cannabis industry?

There is often a lot of confusion around trademarks and copyrights. For starters, people often confuse trademark rights with a company “owning” a word. No one can own all uses of a word. Copyright can protect particular language very broadly, but copyright is not available for individual words or short phrases. EA does not have—and will never be able to obtain—copyright protection for the word “edible.”

Trademark law, on the other hand, can protect individual words (even common words), pictures, colors, and other source-indicators. But trademark rights are limited to the types of goods or services that the trademark owner actually sells (and, of course, those within the natural zone of expansion). Trademarks must be useful for consumers to know which company produced a particular product.

Apple Computers is a good example to illustrate the point. Steve Jobs did not invent the word “apple,” and he wasn’t even the first person name a company “Apple.” As powerful as Apple’s brand has become in tech, it is powerless to control how fruit purveyors use the word to describe their products.

So even if EA is successful in this case, EA would not own the word “edible.” Cannabis companies would still be able to use “edible” to describe their products, they just wouldn’t be able to use the word as part of their branding.

But there is a big practical difference between being “legally correct” and being immune from legal threat. EA has aggressively policed its trademarks in the past, so there is no reason to believe that this is an isolated instance. More likely, it is a shot across the industry’s bow.

By its own words, EA’s entry into the CBD-infused products space puts EA directly adjacent the high-THC cannabis space. Complaint ¶ 68. Whether or not EA eventually enters the high-THC cannabis market, it seems likely that a favorable outcome in this case will embolden EA to more actively police its EDIBLE and INCREDIBLE EDIBLE trademarks in all cannabis and hemp industries. Until the generic boundaries of EA’s trademark rights are solidified, this case may have a chilling effect on the industry.

Case Details

Edible IP, LLC and Edible Arrangements, LLC v. MC Brands, LLC and Green Thumb Industries, Inc., (Case No. 20-cv-05840)

Court: Northern District of Illinois

Judge: Hon. Sarah J. Ellis

Filing Date: September 30, 2020

Counsel for Plaintiff(s): Robert E. Browne, Jr., John M. Bowler, Lindsay M. Henner, TROUTMAN PEPPER HAMILTON SANDERS LLP

Counsel for Defendant(s): Unknown