Litigation Expert Talks Toys 'R' Us, Cannabis TrademarksApril 17, 2023 – Media Mention
Priya Sopori, Cannabis Industry Group founder and co-chair, shared her insights with Benzinga regarding trademark dilution and infringement involving a cannabis retailer.
Sopori explained that infringement occurs when the unauthorized use of a valid brand causes confusion among consumers who might mistake the source or affiliation of the goods. In other words, a customer might believe they're buying reflective tape affiliated with the well-known brand “3M,” when actually they've purchased reflective tape from a completely different brand known as “3N.”
Brand dilution does not necessarily cause consumer confusion, said Sopori. "Brand dilution occurs when the use of a lesser-known mark diminishes the capacity or strength of an already famous mark (blurring) or taints an already well-known mark through an association with unsavory or inferior goods (tarnishment)," she explained.
"For example, if adult film producers were selling a series of DVDs under the name 'Hairy Potter' with titles including 'Sex Chamber of Secrets,' 'Ron Weeny’s Broomstick,' and 'Hormone-y & CrookedSkank,' we can imagine the flurry of cease and desist letters that would descend upon the adult film producers via owl post or human messenger."
"It’s probable that at least some legal aspects of the Toys “R” Us case will be determined in a settlement rather than in the courtroom. Given the popularity of Toys “R” Us, the court may determine as a matter of law that the logo is famous," Sopori said, adding that a federal court also seems more likely than a state court to determine that a toy company’s affiliation with cannabis "is unsavory for no reason other than that the sale of cannabis remains illegal under federal law. Litigation is more likely to settle out of court when significant risks are present."
Sopori noted that cannabis companies have been forced to toe the line between following state law and licensing regulations while avoiding interstate commerce and illegality under federal law. "Hopefully, important exceptions will be made on the federal level that allows cannabis companies to regularly utilize FDIC-insured banking institutions, as well as other protections and privileges available only under federal law."