Canadian cannabis company Higharchy and manufacturer ReRoot must stop selling two cannabis-laced candies that look and are branded like Nerds, a popular pebble-like candy produced by Ferrero Group subsidiary Ferrera Candy Co. Ferrero U.S.A. is based in Parsippany.
“You take as many steps as you can to police the industry to make sure those brands aren’t popping up, and if they are, taking swift action to try to stop them.”
– Danielle DeFilippis, Norris McLaughlin PA
District Judge Thomas Durkin in the Northern District of Illinois ordered the companies to come clean about how much money they’d made from their Medicated Bud Bites and Medicated Bud Clusters candy, and to then shell the cash out to Ferrera on grounds of trademark infringement. Ferrara’s lawsuit against Higharchy, filed in October, claimed that Higharchy had not only infringed on its copyright for Nerds but has also knowingly made a cannabis product that would deceive children, which is against Illinois law.
The ruling is similar to one a federal judge in California issued in May, which ordered California-based Tops Cannabis to stop selling its Medicated Nerds Rope and give all profits over to Ferrera.
“We welcome this court’s judgement. As with previous judgements, it rewards our efforts to stop the unauthorized sale of THC-infused product under our famous NERDS trademark. Such infringement of our trusted brand makes it difficult for consumers, including parents, to distinguish between illegitimate, THC-infused product and legitimate candy,” a Ferrera spokesperson said in an emailed statement on Feb. 8.
“Ferrara, the maker of NERDS products, is in no way associated with these deceptive products and takes this very seriously. We continue to combat this industry-wide issue and pursue various means to limit – and eliminate – these products, including cooperating with law enforcement agencies, investigating dispensaries and other retail outlets selling these infringing products, and pursuing legal action, where and when necessary, to protect consumers,” the spokesperson said. “Consumers should be assured that NERDS products found at major retailers are safe to consume.”
CSG Law Intellectual Property Law Group Chair Peter Nussbaum noted that while a sophisticated cannabis consumer wouldn’t be confused by the labelling, there are different types of confusion that amount of trademark infringement.
“There’s initial confusion at the point of sale but also post-sale confusion, and especially in an area as hazardous as candy products that could wind up in the hands of a 5, 6, 7 years old who love to eat Nerds. It’s a real big problem [if] kids see a package of the Nerds-inspired edibles on their father’s night table or in a cabinet and starts popping them,” Nussbaum said. “I think the Ferreras of the world and the Wrigleys of the world have an interest in protecting consumers and not having their brand associated in any way with products that could be harmful to children.”
Ferrera is far from the first to bring these issues to court. Candymakers Mondelez International and Hershey Co. have gone after cannabis companies in recent years for making copycat products including THC-laced Reese’s peanut butter cups and Stoney Patch Kids and each of the suits settled with the cannabis companies putting an end to the production and sale of copycat treats.
For every lawsuit filed, Nussbaum said he’d “guess there are hundreds of demand letters going out from the candy companies and manufacturers of different types of food products” to cannabis product manufacturers on matters that never reach litigation.
Nussbaum believes that although it violates trademark laws, there’s a natural marketing pull toward parodying or creating products inspired by household treats.
“When the cannabis space started, it was much more the Wild West than it is today. I think there’s still an interest on the part of the creators of these products to be clever and cute and gimmicky, and I think that they view products of this nature as appealing to their consumer base who might see humor and fun in purchasing a product that is the THC-infused version of candy products,” he said.
Last May, Hackettstown-based Mars Wrigley filed suits in federal courts in Illinois and California and in Canada to stop cannabis companies from using its brand names and marketing in infused edibles. Several companies make a THC-infused Starburst knockoff and others sell a cannabis strain and related products under the name Zkittlez.
“As a brand owner what can you do? You’re diligent in moving swiftly to enforce,” said Danielle DeFilippis, co-chair of the intellectual property practice group at Norris McLaughlin PA in Bridgewater in May. “You take as many steps as you can to police the industry to make sure those brands aren’t popping up, and if they are, taking swift action to try to stop them,” she said.
While Zkittlez, which is not candy but cannabis flower, would not be mistaken for the sweet Skittles treat, DeFilippis said that famous marks may be protected even when the products aren’t similar. It doesn’t matter that what’s in the package isn’t candy: any use of a similar name could “dilute the brand itself,” she said.
Additionally, more and more food and beverage companies are exploring the use of CBD, a non-psychoactive compound found in cannabis, in their products.
“Right now, it’s still not legal on a federal scale, but I think you’re starting to see brands preparing for that … so it could be that there’s not so far of a stretch here to deem that these brands may one day be related,” DeFilippis said. “In light of the collaboration you’re starting to see, it’s a risk in letting any product out with a mark that’s confusingly similar.”