Ak Futures LLC v. Boyd Street Distro, LLC
35 F.4th 682
9th Cir.
2022

Background

  • AK Futures manufactures "Cake"‑branded e‑cigarette liquid and cartridges containing hemp‑derived delta‑8 THC and asserts rigorous testing and <0.3% delta‑9 THC levels.
  • The 2018 Farm Act removed "hemp" (and "tetrahydrocannabinols in hemp") from schedule I and defined hemp to include "all derivatives, extracts, cannabinoids..." with ≤0.3% delta‑9 THC.
  • AK Futures registered one Cake logo copyright and has pending trademark applications for six Cake marks; it claims widespread sales and brand recognition.
  • Boyd Street sold virtually identical counterfeit Cake products in its Los Angeles store; AK Futures sued for copyright and trademark infringement and moved for a preliminary injunction.
  • The district court granted a preliminary injunction, concluding on the record that AK Futures’ delta‑8 products are lawful under the Farm Act and that AK Futures likely would succeed on its infringement claims.
  • On appeal Boyd Street conceded counterfeiting but argued AK Futures’ marks are not protectable because federal law still prohibits delta‑8 THC; the Ninth Circuit affirmed the injunction.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether AK Futures’ delta‑8 THC products are lawful under the Farm Act Farm Act’s definition of hemp covers hemp‑derived cannabinoids (including delta‑8) so long as delta‑9 ≤ 0.3% Delta‑8 remains controlled: DEA/agency materials and alleged manufacturing methods place delta‑8 outside Farm Act protection Held: Plain text of §1639o covers hemp‑derived delta‑8 with ≤0.3% delta‑9; products likely lawful
Whether AK Futures can own and enforce unregistered trademarks for Cake products Trademark protectable because AK Futures first used the marks in lawful commerce (product lawful under Farm Act) If delta‑8 is illegal, use isn’t lawful so no trademark protection Held: Because products likely lawful, AK Futures likely owns protectable marks and is likely to succeed on trademark claim
Whether DEA/agency interpretation controls (manufacturing/synthetic distinction) Statutory text is unambiguous; agency interpretation cannot override clear statute DEA statements classify some delta‑8 as synthetic and still controlled Held: Text is unambiguous; agency views that conflict with statute are unpersuasive; DEA’s own regulatory language supports court’s reading
Preliminary injunction factors: irreparable harm & public interest Injunction necessary: presumption of irreparable harm under §1116(a); protects consumers from counterfeit, potentially unsafe products Boyd Street says it stopped selling Cake products and questions public health benefit because AK Futures’ products are unregulated Held: Rebuttable presumption not overcome; public interest and health weigh in favor of injunction; injunction affirmed

Key Cases Cited

  • Roman v. Wolf, 977 F.3d 935 (9th Cir. 2020) (standard of review for preliminary injunction)
  • LA All. for Hum. Rts. v. Cnty. of Los Angeles, 14 F.4th 947 (9th Cir. 2021) (abuse of discretion review explained)
  • Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., 142 S. Ct. 941 (2022) (copyright registration prerequisite)
  • Matal v. Tam, 137 S. Ct. 1744 (2017) (ability to bring trademark claims for unregistered marks)
  • Applied Info. Scis. Corp. v. eBAY, Inc., 511 F.3d 966 (9th Cir. 2007) (requirement of a valid, protectable trademark for §1125(a) claims)
  • CreAgri, Inc. v. USANA Health Scis., Inc., 474 F.3d 626 (9th Cir. 2007) (only lawful use in commerce confers priority)
  • S. Cal. Darts Ass’n v. Zaffina, 762 F.3d 921 (9th Cir. 2014) (lawfulness of use in commerce and exceptions)
  • Van Buren v. United States, 141 S. Ct. 1648 (2021) (start statutory interpretation with text)
  • Kisor v. Wilkie, 139 S. Ct. 2400 (2019) (limits on deference to agency interpretations)
  • Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012) (agency interpretations unpersuasive when inconsistent with statute)
  • Sony Comput. Ent., Inc. v. Connectix Corp., 203 F.3d 596 (9th Cir. 2000) (affirmance may rest on any ground supported by record)
  • Lemmon v. Snap, Inc., 995 F.3d 1085 (9th Cir. 2021) (appellate courts avoid raising new arguments not considered below)
  • K-2 Ski Co. v. Head Ski Co., 467 F.2d 1087 (9th Cir. 1972) (verified affidavits may suffice at preliminary injunction stage)
  • Azar v. Allina Health Servs., 139 S. Ct. 1804 (2019) (legislative history cannot contradict clear statutory text)
  • Wis. Cent. Ltd. v. United States, 138 S. Ct. 2067 (2018) (clear statutory language controls over intent)
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