Business

Veritas Trademark Suit Claims ‘Customer Confusion’

avatar Hilary Corrigan / Jul 14, 2020

Colorado company Veritas Fine Cannabis has sued hemp oil maker Veritas Farms Inc. in federal court over its name and the use of a “V” logo.

The plaintiff complains “a competitor’s bad faith use of nearly identical and confusingly similar trademarks, create[s] and cause[s] actual confusion in the marketplace.” (The disputed marks can be seen in the suit.)

The case highlights trademark issues in the cannabis sector. The federal government does not always recognize industry intellectual property because its products remain federally illegal. 

According to the suit, filed July 10 at U.S. District Court in Colorado, the defendant “intentionally selected the Stylized V Mark in order to create consumer confusion with Plaintiff’s V Design Mark, particularly based on its use in combination with VERITAS FARMS.” It says social media posts have mistakenly used a hashtag with the name Veritas Farms when referring to Veritas Fine Cannabis. 

The plaintiff argues it has used its trademark since September 2016—before Veritas Farms’ use of the name connected to similar products. Veritas Farms, which is also based in Colorado, could not be reached for comment.

The plaintiff said that although it has used its name and design since 2016, it only filed the relevant trademark applications with the U.S. Patent and Trademark Office (PTO) early this year. The company did so while investigating “the extent of confusion caused by Defendant and resulting damages to the Veritas Marks.” 

The plaintiff uses its “V” on various products, including the hats, shirts, lighters and ashtrays it sells. It also appears on the company’s web site. Last month, the plaintiff also filed a trademark application for the same mark connected to the hemp cigarettes and other hemp flower products it plans to start selling early next year.

“Plaintiff has invested significant monies in promoting, marketing and advertising its goods and services under its Veritas Marks,” the suit states. “Its extensive use of the Veritas Marks has created a strong, distinctive and identifiable brand that carries substantial goodwill in the marketplace.”

The suit alleges that the defendant uses a similar name and design on its cannabis products and services, including websites the defendant created in 2018.

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‘Causes confusion’

Defendant Veritas Farms has filed four trademark applications with the U.S. PTO. According to the suit, the office refused two of those because the related hemp extract supplement products are illegal under federal law. The other two involve raw unprocessed hemp and a stylized V design with the words Veritas Farms. The plaintiff opposes those trademark applications.

Veritas pointed to Veritas Farms’ February 2019 press release announcing its name change from SanSal Wellness Holdings Inc. along with a public offering. The suit alleges the defendant purposely selected the stylized V mark and the Veritas Farms name “in order to wrongfully trade on and benefit from the substantial goodwill” that Veritas has obtained from its name and design.

The suit calls for the defendant to stop using the marks and website domains. The suit calls the continued use “trademark infringement” and “willful, deliberate and in bad faith.”

“Defendants’ conduct is intended to divert, and likely will divert, potential customers away from Plaintiff,” the suit states. The suit seeks $300,000, plus damages from “wrongful profits” in amounts proven in trial. It also seeks an injunction against Veritas Farms from using the marks and domain names.

“People want to protect their brand”

Shabnam Malek, a partner at Oakland law firm Brand & Branch LLP, said she has seen an uptick in trademark lawsuits in the cannabis industry as the industry grows. (Malek is not involved in the Veritas case.)

“People want to protect their brand,” she said.

In other industries, a company can obtain a trademark for a name, for instance, and that name would show up in a database if another company tried to use it. Or a company could claim seniority. However, marijuana’s federal illegality means similar protections don’t necessarily apply to this industry. 

Malek noted that trademark law is about consumer protection. Consumers expect certain qualities or characteristics from certain brands, including cannabis. So tinkering with a company’s trademark can affect what consumers expect to get. She called the federal government’s lack of recognition of trademark rights in the cannabis industry “devastating” to the industry and its consumers.