Business
First Amendment May Help Cannabis Companies Beat Trademark Infringement Claims
The U.S. Constitution’s free speech protections, found in the First Amendment, may present a legal recourse for cannabis brands in trouble for using marks that are similar to famous trademarks.
To be clear, a free speech argument will not be of help to those who simply copy a famous trademark, making no effort to differentiate between their mark and the famous one.
In the case of trademarks that simply evoke famous ones, however, the First Amendment could help preclude infringement claims.
Famous trademarks are a not-uncommon source of inspiration for brand creators. At times, brands take that inspiration too far, effectively appropriating a famous trademark.
For example, candymaker Ferrara Candy Co. sued a company called Akimov LLC in the U.S. District Court for the Southern District of Florida in May, alleging that it was selling THC-containing products bearing some of Ferrara’s registered trademarks, including those for its Nerds and Trolli candies.
Assuming the allegations are true, Akimov was not using marks inspired by Ferrara’s, but rather using Ferrara trademarks without authorization.
The harm presented to Ferrara and the public by the presence in the market of Nerds and Trolli products not made by Ferrara should be self-evident. Consumers could be misled into buying Nerds and Trolli products of unclear provenance, possibly of lower quality than the genuine products made by Ferrara.
That is without even taking into account the risks posed by the alleged presence of cannabis in Akimov’s products. For Ferrara, its reputation could suffer in case of any problems with Akimov’s products, as the problems could be associated with Ferrara’s trademarks, even if they were not in fact produced by Ferrara.
Moreover, sales of unauthorized Nerds and Trolli products to misled consumers, who in fact wanted the genuine article, would represent a loss of revenue to Ferrara.
In other cases, the inspiration drawn from a famous trademark might be obvious, but the potential for harm minimal or inexistent. For instance, last year Wm. Wrigley Jr. Co. sued a company, Terphogz LLC, that sells Zkittlez products in the U.S. District Court for the Northern District of Illinois, alleging infringement of Wrigley’s Skittles trademarks.
It is hard to argue that the Zkittlez name is not a play on Skittles, but whether the use of Zkittlez trademarks infringes on Wrigley’s Skittles marks is another matter.
In fact, the U.S. Patent and Trademark Office allowed the registration of two marks incorporating the word “Zkittlez,” not finding a likelihood of confusion between these marks and the Skittles ones.
In cases where their mark is not identical to the famous trademark, brand creators can argue that there is no likelihood of confusion. At the same time, the Constitution and its free speech protections might constitute another arrow in the quiver of brands that seek inspiration from famous trademarks, and find themselves as defendants in a trademark action.
In relevant part, the First Amendment to the Constitution provides that “Congress shall make no law … abridging the freedom of speech.” There is tension between the First Amendment’s mandate against abridgments of freedom of speech, on the one hand, and federal trademark rights provided for under laws made by Congress, on the other.
In particular, the Lanham Act prohibits the registration of a trademark that so closely resembles a registered mark or a mark that was previously used by another “as to be likely, when used on or in connection with the goods of the application, to cause confusion, or to cause mistake, or to deceive.”
Strictly speaking, brand owners’ freedom of speech is limited by this prohibition, as it means they cannot use certain words, phrases and logos in connection with their products.
Recognizing this tension between trademark rights and freedom of speech, courts look to strike a balance. In Iancu v. Brunetti, the U.S. Supreme Court in 2019 held that a provision of the Lanham Act prohibiting the registration of immoral or scandalous trademarks infringed on the First Amendment.
Previously, in Matal v. Tam, the Supreme Court in 2017 reached a similar conclusion regarding a prohibition on disparaging trademarks.
By contrast, courts have generally considered that the curtailment of First Amendment protections is acceptable when denying protection to a trademark that is likely to be confused with one previously used in commerce.
In its 1987 San Francisco Arts & Athletics Inc. v. U.S. Olympic Committee decision, the Supreme Court recognized that the suppression of certain words in the interest of trademark protection can have the unfortunate effect of also suppressing the expression of ideas.
At the same time, the court considered that this risk had to be weighed against the importance of protecting the value added to words through the efforts of parties who use these words as trademarks.
This calculus changes where artistic expression is implicated. In Rogers v. Grimaldi, the U.S. Court of Appeals for the Second Circuit in 1989 adopted a test under which, if free speech interests are implicated, a plaintiff claiming trademark infringement will only prevail under two circumstances. One is where the infringing trademark has “no artistic relevance” as used. The other is where the infringing trademark is explicitly misleading as to source or content.
It may seem like a stretch to view punny names like Zkittlez as artistic expressions. Yet in 2020, the U.S. Court of Appeals for the Ninth Circuit had no problem determining that a dog toy was an artistic expression in VIP Products LLC v. Jack Daniel’s Properties Inc. The “Bad Spaniels Silly Squeaker” toy resembled a bottle of Jack Daniel’s whiskey, and bears the phrase “the Old No. 2, on your Tennessee Carpet” instead of “Old No. 7 Brand Tennessee Sour Mash Whiskey,” as on actual bottles.
In its reasoning, the Ninth Circuit made clear that an expressive work need not be the sort of work to be exhibited in a gallery. Rather, the key is whether the use of the famous mark serves to express a point of view or communicate an idea. In the Ninth Circuit’s view, the use of elements associated with Jack Daniel’s brand image on a dog toy conveyed a humorous message entitled to free speech protections.
The Ninth Circuit’s reasoning above could be applied to some of the trademarks used by some cannabis brands that parody, or are inspired by, more famous trademarks. While not everyone will find trademarks such as Zkittlez to be amusing, it is reasonable to speculate that at least some people will be amused.
To be sure, not all cannabis trademarks being challenged by the owners of famous trademarks will cross the threshold of artistic expression, but arguably some do. This in turn means that, under the Rogers test, the use of these cannabis trademarks will only constitute infringement of more established brands under very limited circumstances.
Applying the Rogers test to the Zkittlez marks, its use has artistic relevance — there is no joke otherwise. Meanwhile, it is hard to argue that these explicitly mislead as to the source or content of the work.
The letter substitutions that differentiate the Zkittlez trademarks from the Skittles ones are significant. As such, they send an immediate signal to consumers, to the effect that these trademarks are not identifying the Skittles candies well known to the public. If anything, it can be argued that the Zkittlez trademarks seek to lead consumers away from confusion.
Contrast this to the facts in a lawsuit filed earlier this year in the U.S. District Court for the Southern District of New York by Hermes against Mason Rothschild, the creator of a nonfungible token collection named MetaBirkins.
Hermes has registered the BIRKIN trademark in connection with handbags. As Hermes alleges in the lawsuit, with many established brands entering the metaverse, consumers would expect that NFTs bearing famous trademarks would in fact be affiliated with the owners of said trademarks.
On the other hand, it would be far harder to make that argument if the chosen name for the collection was MetaVirkins, for example.
While decisions such as the one in Bad Spaniels provide legal inspiration for some cannabis brands in infringement hot water, it is critical to keep in mind that cannabis products are not chew toys. Courts might view free speech issues differently in cases where the allegedly infringed trademarks are used on products that are unlawful at the federal level, such as marijuana, as defined in the Controlled Substances Act, or CBD products whose introduction into interstate commerce violates the Federal Food, Drug and Cosmetic Act.
Owners of famous trademarks could argue that parodical or other similar marks should not enjoy trademark protection if they are used on unlawful products. The logical counterargument would be that the word, phrase or logo at hand is a First Amendment-protected expression first, and a trademark second.
For our purposes, however, it suffices to highlight this potential opening for a court looking for a legal distinction upon which to base a decision favorable to the famous trademark’s owner.
It is also worth noting that VIP Products applies only to the Ninth Circuit; other circuits may take different approaches.
Finally, it is worth stressing that the First Amendment will not come to the rescue of those cannabis brands that cannot register their trademarks at the USPTO because they are used in connection with products that are unlawful. For a brand facing a trademark infringement or dilution action, though, the Constitution might offer deliverance.
After evading law enforcement for nearly 13 years, an accused linked to a large-scale pharmaceutical fraud case has been arrested by Delhi Police from Surat, Gujarat. The suspect is alleged to have orchestrated a series of financial scams involving fake identities, forged documents, and dishonoured cheques used to procure high-value pharmaceutical raw materials.
Authorities say the accused, identified as Himmat Singh Lodha, is believed to have defrauded multiple pharmaceutical companies in Delhi of goods worth approximately ₹98 lakh before disappearing and remaining underground for years.
Fake Business Deals and Dishonoured Cheques Used in Fraud
Investigators claim the accused posed as a legitimate pharmaceutical trader and placed bulk orders for expensive drug ingredients, offering post-dated cheques as payment security.
In one documented case from 2013, he allegedly obtained around 550 kilograms of Gliclazide, a diabetes-related pharmaceutical ingredient, valued at over ₹26 lakh. When suppliers attempted to encash the cheques, they were reportedly returned with the remark “account closed.”
Following the transaction, the accused allegedly vacated his office and rented residence and disappeared without settling payments. He was later declared a proclaimed offender in 2016 after repeatedly failing to appear before court proceedings. Authorities had also issued a reward for information leading to his arrest.
Multiple Identities and Repeated Fraud Pattern
Police investigations further link the accused to another cheating case dating back to 2012, where he allegedly used a fake identity, “Kailash Jain,” to obtain a large consignment of Ambroxol HCL, a pharmaceutical compound used in cough medications. The value of that consignment was estimated at around ₹72 lakh.
Officials believe the accused followed a consistent modus operandi—posing as a credible businessman, securing high-value goods on deferred payment terms, and then disappearing after delivery while shutting down business operations.
Investigators suspect that forged business records, fake company credentials, and fabricated financial histories were used to build trust with suppliers and gain access to expensive raw materials.
Multi-State Surveillance Leads to Arrest in Surat
A special Crime Branch team tracked the accused through coordinated surveillance efforts across multiple cities, including Mumbai, Ahmedabad, and Surat. After nearly a month of technical monitoring and intelligence gathering, officials located and arrested him from a residential area in Surat.
Authorities also revealed that the accused had been involved in property-related activities while staying under the radar to avoid detection.
Growing Threat of Corporate Identity Fraud
The case highlights a rising trend of organised financial fraud targeting industries that rely heavily on trust-based transactions and deferred payments. Experts note that criminals increasingly exploit gaps in corporate verification systems by using fake GST registrations, temporary offices, and forged documentation to appear legitimate.
Cybercrime and financial fraud specialists warn that such schemes are becoming more complex with the widespread availability of digital business tools, making it easier to create convincing but fraudulent corporate identities.
Experts Urge Stronger Due Diligence in High-Value Transactions
Experts, including former IPS officer and cybercrime specialist Prof. Triveni Singh, emphasize the need for stricter verification procedures in commercial dealings. He noted that relying solely on paperwork or digital business profiles can expose companies to significant financial risk.
Authorities and industry experts recommend physical verification of business operations, bank account validation, and detailed background checks before engaging in high-value or deferred-payment transactions—particularly in sectors like pharmaceuticals, where single consignments can involve transactions worth crores.
Business
EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices
A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.
Investigation Under Digital Markets Act Gains Momentum
The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.
Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.
Industry Groups Demand Swift Action
Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.
Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.
In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.
Google Denies Allegations
Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.
However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.
Potential Billion-Euro Penalties
If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.
Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.
Wider Implications for Big Tech
The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.
A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.
As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.
AI & Technology
Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations
Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).
The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.
Trial Push Despite Multi-Million Euro Settlement
The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.
Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.
A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.
Allegations of VAT Evasion Through Marketplace Sellers
At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.
Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.
Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.
Italian Government Named as Affected Party
In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.
Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.
Multiple Investigations Add to Pressure
The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.
Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.
In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.
Amazon Denies Allegations
Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.
Broader Impact on Europe’s Digital Economy
If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.
With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.
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