Shortly before Christmas, the Northern District of Illinois weighed in on what should be a growing area for trademark disputes in 2024 and beyond: the “hypercompetitive” market for cannabis-infused beverages. As the prevalence of CBD and THC-infused beverages, cocktail mixers, and various food products grows, the competition for brand awareness and market space will naturally heat up, making trademark rights an important tool for any cannabis and CBD company entering the fray. 

The case, Reddi Beverage Company LLC., v. Floral Beverages, LLC, 1:23-CV-06147, 2023 WL 8827978 (N.D. Ill. Dec. 21, 2023), involves the rare instance of a company attempting to assert common law (i.e. unregistered) trademark rights. Plaintiff Reddi, which sells CBD-infused beverages under the FLORA trademark, alleged that defendant Floral Beverage, “a competitor in the hypercompetitive cannabinoid-infused beverages market, has been selling cannabinoid-infused beverages under an allegedly similar FLORAL trademark.” Notably, Reddi does not own a federal trademark registration for its FLORA mark. 

For several reasons, brand owners should always consider applying for trademark registration for their house marks and ancillary product names (a topic for a future post). However, a mark is protectable even if it is not registered. In general, a mark is protectable if it is: (1) registered with the USPTO, which provides prima facie evidence of validity, ownership, and exclusive right to use the registered mark; (2) registered in the Supplemental Register, which does not receive the presumption of validity associated with a registered mark because it is only “capable” of becoming a trademark; or (3) unregistered but nevertheless entitled to protection under Section 1125 of the Lanham Act. Therefore, a brand owner may bring a federal lawsuit under the Lanham Act for common law trademark infringement of an unregistered mark.

In this case, Reddi filed suit for common law trademark infringement of its FLORA mark (among other claims) and moved for a preliminary injunction. Reddi faced an uphill battle from the start. First, the court had to determine whether Reddi’s unregistered FLORA mark is entitled to trademark protection. When a mark is not federally registered a plaintiff may state a claim for trademark infringement and unfair competition by showing that the mark is protectable based on the degree of its distinctiveness. The level of trademark protection available generally corresponds to the distinctiveness of the mark. The spectrum for “distinctiveness” includes (1) generic, (2) descriptive, (3) suggestive, (4) arbitrary, and (5) fanciful, progressing from the least to most distinctive. 

Reddi’s claim did not fare well, primarily because FLORA is a very weak mark. Floral Beverage successfully argued that FLORA is merely “descriptive” and fails to invoke a secondary meaning in the relevant market. The court noted that the USPTO has “explicitly stated that the term ‘flora,’ ‘is not inherently distinctive,’ and is an unregistrable term that is ‘at best merely descriptive of an ingredient, quality, characteristic, function…’” The court then determined that the mark “FLORA” is not entitled to trademark protection because it is generic and because Reddi failed to meet its burden of establishing secondary meaning in its use of the mark. 

While the Court could have ended its analysis there, it proceeded with the usual likelihood of confusion analysis for assessing trademark infringement. In the Seventh Circuit, courts consider seven factors when assessing the likelihood of confusion between marks: (1) the similarity between the marks in appearance and suggestion, (2) the similarity of the products, (3) the area and manner of concurrent use of the products, (4) the degree of care likely to be exercised by consumers, (5) the strength of the plaintiff’s marks, (6) any evidence of actual confusion, and (7) the defendant’s intent to palm off its goods as those of the plaintiff’s. Other circuits invoke similar tests for likelihood of confusion when assessing trademark infringement claims. 

While the court determined that the products at issue are similar (CBD versus THC-infused beverages), the other key factors favored Floral Beverage: the marks were not similar as they appeared on the parties’ products, the FLORA mark was not strong, and there was not any significant actual confusion. Accordingly, the court denied Reddi’s motion for preliminary injunction. 

Companies involved in the manufacture of cannabis or hemp-based food and beverage products (including THC, Delta-8, and Delta-9 products) should strongly consider consulting trademark counsel to determine whether their company and product marks can obtain federal registration. See AK Futures LLC v. Boyd Street Distro, LLC, 35 F.4th 682, 695 (9th Cir. 2022) (Delta-8 THC products are lawful under the plain text of the Farm Act and may receive trademark protection).  

Chilivis Grubman advises companies on intellectual property rights, including trademark registration and litigation. We also advise cannabis businesses on all other legal compliance and state licensing issues.