Candymaker Wrigley and Terphogz, LLC have reached a settlement in a high-profile lawsuit over Terphogz’s use of the mark ZKITTLEZ on cannabis products and other merchandise such as clothing (WM. Wrigley Jr. Co. v. Terphogz, LLC, No. 21-CV-02357 (N.D. Ill. July 3, 2023)). Wrigley argued that Terphogz infringed on its SKITTLES trademarks, including its tagline TASTE THE RAINBOW and its S logo. As part of the settlement agreement, Terphogz has agreed to immediately cease all use of the ZKITTLEZ marks, including TAZTETEHZTRAINBRO, ZKITTLEZ HEMP, and ZKITTLEZ HEMP & Cloud Design.
Wrigley’s suit, filed in 2021, alleged trademark infringement, false designation of origin, unfair competition, trademark dilution under both federal and Illinois law, and violation of the Federal Anti-Cybersquatting Consumer Protection Act as well as the Illinois Uniform Deceptive Trade Practices Act. Also named in the lawsuit were five businesses allegedly reselling products bearing the ZKITTLEZ marks. Pursuant to the parties’ agreement, the court enjoined Terphogz from using the ZKITTLEZ marks.
This case is just one of many involving the use of famous candy or snack brands on cannabis products. The Federal Trade Commission (FTC) and the US Food and Drug Administration (FDA) recently issued joint cease-and-desist letters to six companies “marketing edible products containing Delta-8 tetrahydrocannabinol (THC) in packaging that is almost identical to many snacks and candy children eat, including Doritos tortilla chips, Cheetos cheese-flavored snacks, and Nerds Candy” (Press Release, FTC, FTC Sends Cease and Desist Letters with FDA to Companies Selling Edible Products Containing Delta-8 THC in Packaging Nearly Identical to Food Children Eat, July 5, 2023). In 2022, Nerds-maker Ferrara sued Akimov LLC over its use of the NERDS and TROLLI trademarks on cannabis-related goods (Ferrara Candy Co. v. Akimov LLC, No. 22-CV-80768-RAR (S.D. Fla. Oct. 27, 2022)). As in the Wrigley case, the court enjoined the defendant from using Ferrara’s trademarks.
Despite similar outcomes, there are significant differences between the Wrigley and Ferrara facts. In Ferrara, some of the defendant’s products featured marks identical to those registered by Ferrara. Akimov’s products included “THC-0 Apple Rings” that prominently displayed the TROLLI mark and a “Medicated Nerds Rope”. In contrast, Terphogz did not utilize any SKITTLES marks on their products. Furthermore, the infringing products in Ferrara were “THC-infused candy products”; Terphogz did not sell any cannabis-infused candy (or indeed any candy) bearing the ZKITTLEZ marks.
Akimov’s use of NERDS and TROLLI marks presents grave risks both to Ferrara and consumers. For Ferrara, sales of the infringing products could result in lost revenues and reputational issues. Meanwhile, there is a clear potential for confusion on the part of consumers, particularly considering the genuine Nerds and Trolli products’ appeal to children. As Ferrara noted in its complaint that its candy products are marketed “as a fun and enjoyable treat for children of all ages,” hence it “would never condone or authorize the use of the Ferrara Trademarks and Ferrara Trade Dress in connection with products that could be harmful to children.”
Wrigley on the other hand presents a more nuanced situation. While the allusion to the Skittles brand is clear, using a punny mark like ZKITTLEZ is not the same as using an identical mark without authorization. It can be reasonably argued that there is not likelihood of confusion between SKITTLES and ZKITTLEZ. In fact, the US Patent and Trademark Office (USPTO) allowed Terphogz’s application to register the mark ZKITTLEZ HEMP & Cloud Design (Application Serial No. 88703451) in connection to clothing, despite Wrigley’s previous registration of the SKITTLES mark for clothing (Wrigley has since filed an opposition to the registration of Terphogz’s mark with the Trademark Trial and Appeal Board (TTAB)).
Differences between the two cases aside, a clear message emerges for cannabis businesses considering the use of marks inspired by established brands: Do not! While this is sound advice for any business, the cannabis industry must expect heightened scrutiny of their activities. Brands might not mind names that riff on their marks if used on run-of-the-mill products – but they might object if cannabis is involved.
Written by Frederic Rocafort, Attorney, Harris Bricken.