The creative protection that failed
A trademark infringement defendant argued it couldn’t be sued in federal courtroom as a result of its hashish enterprise was engaged in criminality beneath federal legislation. This seemingly intelligent technique fell flat in Colorado federal courtroom, representing the most recent resolution in a rising pattern of federal judges retaining cannabis-related litigation regardless of the centuries-old precept that courts lack jurisdiction over civil disputes involving unlawful conduct.
The choice confirms that corporations acquiring federal trademark registrations in “cannabis-adjacent” businesses are doubtless to achieve defending these marks towards rivals working with out registrations—most actually because they’re immediately concerned in hashish commerce fairly than merely adjoining to it.
The illegality doctrine and hashish commerce
The illegality doctrine prohibits courts from offering a discussion board or granting cures to events who’re breaking the legislation. The earliest reported utility of the doctrine ex turpi causa is the 1725 case of Everett v. Williams, better known as The Highwayman’s Case, through which an English courtroom dismissed a dispute between two thieves over division of theft proceeds—after which turned each litigants over to the sheriff.
Within the hashish context, this doctrine has created important obstacles. Federal courts have traditionally dismissed cannabis-related industrial disputes, forcing litigants into state courtroom techniques. The problem is compounded by federal trademark coverage: the Patent and Trademark Workplace refuses trademark registrations for federally unlawful items and providers, successfully excluding hashish companies from federal trademark safety for merchandise with psychoactive quantities of THC.
Regardless of these obstacles, federal judges are more and more keen to retain cannabis-related circumstances, representing a practical recognition of the complicated authorized panorama the place state legalization conflicts with federal prohibition.
Case evaluation: BBK Tobacco & Meals v. J&C Corp.
In BBK Tobacco & Foods LLP v. J&C Corp., U.S. Dist. Ct. Colo. Case No. 24-cv-01466 (Aug. 26, 2025), the defendant operated a hashish enterprise utilizing the marks “Juicy” and “Uncooked” for THC-containing merchandise. The plaintiff held federal trademark registrations for an identical marks used on hemp rolling papers.
The defendant’s technique
The defendant’s argument was creative: since federal legislation prohibits trademark safety for unlawful enterprise actions, and because the plaintiff couldn’t get hold of registered trademark safety for THC-related items, any infringement declare should fail as a matter of legislation. The defendant basically argued that permitting the declare would improperly increase the plaintiff’s rights past what federal trademark legislation permits.
The courtroom’s response
The federal choose made fast work of this protection, specializing in conventional trademark infringement evaluation. First, the courtroom famous that a lot of defendant’s merchandise utilizing the contested marks weren’t federally prohibited: smoking paraphernalia stays authorized no matter supposed use.
Extra importantly, the courtroom utilized commonplace “probability of confusion” evaluation. The choose emphasised: “Each corporations right here promote and market merchandise on the smoking fringe between marijuana and tobacco and merchandise which may simply and doubtless do cross over and again.” This overlap creates substantial probability of client confusion, significantly as a result of shoppers wouldn’t train nice care when buying these merchandise.
Strategic implications
This resolution has important implications for companies within the hashish ecosystem. Corporations with federal trademark registrations for cannabis-adjacent merchandise—hemp items, smoking equipment, way of life manufacturers—now have stronger grounds to guard these marks towards direct hashish rivals.
The choice suggests federal courts will look past strict illegality and concentrate on conventional trademark rules when marks and markets overlap considerably. This gives priceless safety for companies which have invested in constructing federally protected manufacturers in markets adjoining to federally unlawful hashish, resembling hemp merchandise.
Wanting ahead
This resolution represents one other step within the evolving panorama of cannabis-related federal litigation. Though the BBK resolution is on the district courtroom degree, and doesn’t bind different federal courts, it displays a pattern the place judges will not be reflexively dismissing civil claims involving hashish—even the place the treatment sought by the plaintiff includes restoration of cash damages derived from federally unlawful conduct.
Federal judges have acknowledged in a lot of latest choices the sensible actuality that medicinal or recreational marijuana is now allowed under state law in 34 states, and that the federal authorities isn’t actively imposing the Managed Substances Act (“CSA”) referring to hashish. However the courts stay constrained by the CSA’s absolute prohibition on possession, manufacturing and distribution of high-THC hashish, and the Act’s declaration that there isn’t a property proper to cash given in “trade for a managed substance.” This has brought about federal chapter judges to deny many petitioners within the hashish trade safety beneath the Chapter Act. But when some side of a civil dispute includes federally authorized conduct, or insolvency contains not less than some funds or belongings which can be arguably untainted by violation of the CSA, the doorways to the federal courthouse usually tend to be unlocked in the present day than just some years in the past.
Timothy L. Alger is a litigator and of counsel at Harris Sliwoski LLP, and serves as an arbitrator and mediator by way of his ADR follow, Alger Resolutions. https://algeradr.com/
