Ak Futures LLC v. Boyd Street Distro, LLC ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
AK FUTURES LLC, No. 21-56133
Plaintiff-Appellee,
D.C. No.
v. 8:21-cv-01027-
JVS-ADS
BOYD STREET DISTRO, LLC, a
California limited liability company,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Central District of California
James V. Selna, District Judge, Presiding
Argued and Submitted March 18, 2022
Las Vegas, Nevada
Filed May 19, 2022
Before: Andrew J. Kleinfeld, D. Michael Fisher,* and
Mark J. Bennett, Circuit Judges.
Opinion by Judge Fisher
*
The Honorable D. Michael Fisher, United States Circuit Judge for
the U.S. Court of Appeals for the Third Circuit, sitting by designation.
2 AK FUTURES V. BOYD STREET DISTRO
SUMMARY **
Trademark Infringement / Preliminary Injunction
The panel affirmed the district court’s grant of a
preliminary injunction in favor of AK Futures LLC, a
manufacturer of e-cigarette and vaping products, in a
copyright and trademark infringement action in which AK
Futures alleges that Boyd Street Distro, LLC, has been
selling counterfeit versions of AK Futures’ “Cake”-branded
e-cigarette and vaping products containing delta-8
tetrahydrocannabinol (“delta-8 THC”).
The panel wrote that the district court’s order, which
limited the scope of copyright protection to AK Futures’ one
registered copyright and granted trademark protection to its
six unregistered marks, properly distinguished between
trademark and copyright protection.
Boyd Street did not contest the district court’s finding
that it was selling counterfeit versions of AK Futures’ Cake
products. Its chief argument was that AK Futures could not
own a valid trademark in connection with these products
because federal law forbids possession and sale of delta-8
THC. Granting the preliminary injunction, the district court
held that the 2018 Agricultural Improvement Act (the “Farm
Act”) legalized the company’s delta-8 THC products.
The panel held that the plain and unambiguous text of
the Farm Act compels the conclusion that AK Futures’ delta-
8 THC products are lawful. Observing that the relevant
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
AK FUTURES V. BOYD STREET DISTRO 3
portion of the Farm Act removes “hemp” from the definition
of marijuana in the Controlled Substances Act, the panel
concluded that on the available record, the delta-8 THC in
AK Futures’ e-cigarette liquid appears to fit comfortably
within the statutory definition of “hemp”—i.e., the liquid is
properly understood as a derivative, extract, or cannabinoid
originating from the cannabis plant and containing “not more
than 0.3 percent” delta-9 THC. The panel wrote that because
the Farm Act’s definition of hemp is not ambiguous, the
panel does not consider agency interpretation, and even if it
did, the Drug Enforcement Agency’s view of the Farm Act’s
plain text aligns with the panel’s own. The panel wrote that
any congressional intent that the Farm Act legalize only
industrial hemp, not a potentially psychoactive substance
like delta-8 THC, appears neither in hemp’s definition nor in
its exemption from the Controlled Substances Act. The
panel therefore concluded that AK Futures is likely to
succeed on the merits of its trademark claim.
The panel held that Boyd Street failed to overcome the
district court’s finding and presumption of irreparable harm
absent an injunction. The panel wrote that none of Boyd
Streets’ arguments why the injunction is not in the public
interest succeed in convincing it that the district court erred.
The panel remanded for further proceedings.
4 AK FUTURES V. BOYD STREET DISTRO
COUNSEL
Darrel C. Menthe (argued), Sage Law Partners PC, Culver
City, California, for Defendant-Appellant.
James R. Sigel (argued) and Joyce Liou, Morrison &
Foerster LLP, San Francisco, California; Benjamin J. Fox
and Ani Oganesian, Morrison & Foerster LLP, Los Angeles,
California; Thomas Frost, The Frost Firm, San Diego,
California; for Plaintiff-Appellee.
OPINION
D.M. FISHER, Circuit Judge:
AK Futures LLC, a manufacturer of popular e-cigarette
and vaping products, brought suit for trademark and
copyright infringement against Boyd Street Distro, LLC, a
downtown Los Angeles storefront and smoke products
wholesaler. According to AK Futures, Boyd Street has been
selling counterfeit versions of its “Cake”-branded e-cigarette
and vaping products containing delta-8
tetrahydrocannabinol (“delta-8 THC”), a chemical
compound derived from hemp. Boyd Street contends that
AK Futures does not have protectible trademarks for its
Cake products because delta-8 THC remains illegal under
federal law. Faced with AK Futures’ request for a
preliminary injunction, the District Court held that the 2018
Agriculture Improvement Act (the “Farm Act”) legalized the
company’s delta-8 THC products, and it granted injunctive
relief. Plain statutory text compels the conclusion that AK
Futures’ products are lawful, and we see no other reason to
deny a preliminary injunction. We affirm.
AK FUTURES V. BOYD STREET DISTRO 5
I. Background
A. Factual History
AK Futures is a producer and distributor of e-cigarette
and vaping products, including electronic delivery systems
and cartridges containing e-cigarette liquid. This suit
involves the company’s Cake-branded delta-8 THC
products. Delta-8 THC is a chemical compound that occurs
naturally in the cannabis plant, Cannabis sativa L., which
can be grown into either hemp or marijuana (alternatively
spelled marihuana) depending on cultivation method. 5
Things to Know about Delta-8 Tetrahydrocannabinol –
Delta-8 THC, U.S. Food & Drug Admin. (Sept. 14, 2021).
According to the Food and Drug Administration, delta-8
THC has “psychoactive and intoxicating effects” similar to
delta-9 tetrahydrocannabinol (“delta-9 THC”), a different
chemical compound and the main psychoactive component
of marijuana. Id. The FDA notes that delta-8 THC “is not
found in significant amounts in the cannabis plant. As a
result, concentrated amounts of delta-8 THC are typically
manufactured from hemp-derived cannabidiol.” Id.
In 2018, Congress passed and the President signed the
Farm Act, Pub. L. No. 115-334, 132 Stat. 4490, which
legalized the possession and cultivation of hemp. See 21
U.S.C. §§ 802(16)(B), 812 sched. I(c)(17). Because hemp
and marijuana are different varieties of the same plant, the
Farm Act uses the concentration of delta-9 THC to set a
threshold distinguishing the two. As defined by the Act,
hemp includes “any part of” the plant Cannabis sativa L.
“and all derivatives, extracts, [and] cannabinoids . . . ,
whether growing or not,” with a delta-9 THC concentration
of no more than 0.3 percent on a dry weight basis. 7 U.S.C.
§ 1639o(1). The Act is silent with regard to delta-8 THC.
6 AK FUTURES V. BOYD STREET DISTRO
AK Futures manufactures flavored e-cigarette liquid
containing delta-8 THC, which it describes as “a hemp-
derived product with less than 0.3% of the psychoactive
delta-9-[THC] compound.” According to the company, its
products come with a QR code permitting verification of
“the percent of THC in the e-liquid (less than 0.3%).” The
company also states that it “regularly tests its products for
potency and regulatory compliance purposes, and screens for
heavy metals, pesticides, and other contaminates.” The
record reveals little else about the manufacturing process.
In October 2020, AK Futures devised the Cake brand—
a logo depicting a two-tier cake overlaid with a stylized letter
“C”—to market its delta-8 THC products. The company
registered this Cake logo with the U.S. Copyright Office. It
also has pending trademark applications for six marks, four
of which are various permutations of the word Cake and two
are versions of the logo. All trademark applications are for
use in connection with e-cigarette liquid, cartridges, and
delivery systems. The Cake name and logo appear on the
packaging of the devices. AK Futures avers that its Cake
products are extremely popular, having generated $60
million in revenue over a nine-month period.
AK Futures learned of counterfeit versions of its Cake e-
cigarette products being sold by Boyd Street, a smoke
products wholesaler and storefront in downtown Los
Angeles, over the summer of 2021. Boyd Street is not one of
AK Futures’ authorized retailers. Suspecting infringement,
AK Futures hired a private investigator to visit Boyd Street
and purchase the purported Cake products. AK Futures’
packaging manufacturer compared the Cake products
obtained from Boyd Street to the originals, and, despite a
strong resemblance between the two, it observed differences
in packaging materials, labeling, and color. It concluded the
AK FUTURES V. BOYD STREET DISTRO 7
Cake products sold by Boyd Street were inauthentic. As part
of this case, AK Futures has submitted images showing its
own Cake e-cigarette products and packaging next to
virtually identical counterfeits.
Boyd Street claims it had only two interactions with
Cake-branded products. The first involved an unidentified
“someone” approaching the store and selling Cake products
on consignment. Boyd Street does not have “checks or
receipts for these sales.” According to its CEO, the store
conducts most of its business in cash. The second entailed
Boyd Street making a purchase from a person who “told [the
CEO] they were an authorized distributor” of Cake products.
The CEO states that his usual method of verifying a seller’s
authenticity is to ask for an invoice. Boyd Street claims its
entire inventory of Cake products has been sold and that it
has “no plans” to sell Cake products in the future.
B. Procedural History
AK Futures brought suit in the U.S. District Court for the
Central District of California alleging copyright
infringement under 17 U.S.C. § 101 et seq., and federal
unfair competition and false designation under the Lanham
Act, 15 U.S.C. § 1125(a). It also brought two California law
claims that are irrelevant to this appeal. The company moved
for a preliminary injunction.
Boyd Street initially failed to file a motion in opposition,
so the District Court entered a preliminary injunction
without hearing from the store. The Court enjoined Boyd
Street from selling goods bearing imitations of AK Futures’
two Cake logo trademarks or “any copy or colorable
imitation of” the company’s “CAKE trademarks.” In a
separate section of the order, it enjoined Boyd Street from
“reproducing, distributing . . . , or displaying” copies of the
8 AK FUTURES V. BOYD STREET DISTRO
copyrighted Cake design. After allowing Boyd Street leave
to file and considering both parties’ submissions, the District
Court issued an amended order and opinion keeping the
injunction in place.
Reciting the facts, the District Court’s opinion stated that
AK Futures had applied for trademark registration and “had
continuously used one or more of the aforementioned
[m]arks in commerce” since October 2020. Later, the Court
concluded that AK Futures owned a valid copyright because
the company “owns six [m]arks for its Cake product, all of
which are registered.” In its trademark discussion, the Court
determined that AK Futures, by showing a likelihood of
success on its copyright claim, had impliedly met the
standard for ownership of a valid trademark. It concluded
that AK Futures was likely to succeed in showing both
copyright and trademark infringement, noting that the Cake
products sold by Boyd Street were “almost identical” to the
originals. The Court ultimately agreed with AK Futures
that—on the available record—its products are lawful under
the Farm Act.
Boyd Street timely appealed.
II. Jurisdiction and Standard of Review
The District Court had jurisdiction under 15 U.S.C.
§ 1121 (federal trademark) and 28 U.S.C. §§ 1331, 1338(a)
(federal question and federal intellectual property). We have
jurisdiction under 28 U.S.C. § 1292(a)(1) (appeal from
injunction). We review the District Court’s decision to grant
a preliminary injunction for an abuse of discretion; we
review underlying legal conclusions de novo and factual
findings for clear error. Roman v. Wolf, 977 F.3d 935, 941
(9th Cir. 2020) (per curiam). A “district court abuses its
discretion if its conclusions are without support in inferences
AK FUTURES V. BOYD STREET DISTRO 9
that may be drawn from the facts in the record.” LA All. for
Hum. Rts. v. Cnty. of Los Angeles, 14 F.4th 947, 957 (9th
Cir. 2021) (quotation omitted).
III. Discussion
Appealing the preliminary injunction, Boyd Street does
not contest the District Court’s finding that it was selling
counterfeit versions of AK Futures’ Cake products. Instead,
its chief argument is that AK Futures could not own a valid
trademark in connection with these products because federal
law forbids the possession and sale of delta-8 THC. AK
Futures responds that the Farm Act legalized delta-8 THC
and, by extension, its products incorporating the compound.
We agree with AK Futures, and we hold the District Court
properly issued a preliminary injunction.
To obtain a preliminary injunction, a party must show:
(1) it will likely succeed on the merits, (2) it will likely suffer
irreparable harm in the absence of preliminary relief, (3) the
balance of the equities tips in its favor, and (4) the public
interest favors an injunction. Disney Enters., Inc. v.
VidAngel, Inc., 869 F.3d 848, 856 (9th Cir. 2017). In
addition to claiming delta-8 THC remains illegal, Boyd
Street attacks the District Court’s determinations on
irreparable harm and the public interest. It does not challenge
the finding that the equities favor AK Futures. We therefore
consider in turn each injunction element besides the equities,
after first clearing up some confusion about the differences
between copyright and trademark.
A. Copyright-Trademark Distinction
At the outset, Boyd Street concedes that AK Futures has
shown a likelihood of success on its copyright infringement
claim with regard to its one registered copyright. But Boyd
10 AK FUTURES V. BOYD STREET DISTRO
Street argues the District Court erroneously extended
copyright protection to AK Futures’ six unregistered
trademarks. Indeed, the District Court’s statement in its
copyright discussion that AK Futures “owns six [m]arks for
its Cake product, all of which are registered,” was incorrect.
AK Futures owns just one registered copyright, which
covers a single version of the Cake logo design. It has
applied for trademark registration for six marks, but these
applications remain pending.
Copyright and trademark registration are not
interchangeable. The two involve different government
offices. Compare 17 U.S.C. § 701(a) (U.S. Copyright
Office), with 15 U.S.C. § 1051(a)(1) (Patent and Trademark
Office). They grant different protections and rights.
Compare 17 U.S.C. § 106 (copyright), with 15 U.S.C.
§§ 1057(b), 1115 (trademark). And, most pertinently here,
registration is a vital “prerequisite” for a copyright
infringement action, Unicolors, Inc. v. H&M Hennes &
Mauritz, L. P., 142 S. Ct. 941, 944 (2022), but a party with
only unregistered marks may still bring a trademark
infringement action under 15 U.S.C. § 1125(a). Matal v.
Tam, 137 S. Ct. 1744, 1752 (2017). Thus, conflating AK
Futures’ registration of one valid copyright with its mere
application to register six trademarks would ordinarily be
error.
However, the District Court’s order entering the
injunction properly distinguished between trademark and
copyright protection. Contrary to Boyd Street’s claim that
the District Court granted copyright protection to AK
Futures’ unregistered marks, the order limited the scope of
copyright protection to the one registered copyright. The
order instead granted trademark protection to the
unregistered marks, which followed from the District
AK FUTURES V. BOYD STREET DISTRO 11
Court’s separate discussion of AK Futures’ likelihood of
success on its trademark claim. We therefore must evaluate
whether the District Court properly issued a preliminary
injunction protecting AK Futures’ trademarks.
B. Likelihood of Success on the Merits: Trademark
AK Futures is likely to succeed on its trademark claim
because its delta-8 THC products are not prohibited by
federal law, and they may therefore support a valid
trademark. AK Futures sought a preliminary injunction to
prevent the infringement of its six unregistered trademarks
under 15 U.S.C. § 1125(a). This provision forbids, “in
connection with any goods . . . or any container for goods,”
the “use[] in commerce [of] any word, term, name, symbol,
or device” that is likely to cause confusion as to the origin of
the relevant goods. 15 U.S.C. § 1125(a). An infringement
action for unregistered marks requires a plaintiff to show,
among other elements not contested on this appeal,
ownership of “a valid, protectable trademark.” Applied Info.
Scis. Corp. v. eBAY, Inc., 511 F.3d 966, 969 (9th Cir. 2007).
To own an unregistered mark, the plaintiff must be the first
to use the mark in commerce, and such use must be lawful.
S. Cal. Darts Ass’n v. Zaffina, 762 F.3d 921, 926, 930–32
(9th Cir. 2014).
Turning briefly to priority of use in commerce, nobody
disputes that AK Futures was the first to use the Cake brand.
Perplexingly, the District Court, in its discussion of this
element, repeated its mistake conflating AK Futures’
unregistered trademarks with its registered copyright. This
was error, but such error is immaterial to our decision on
appeal. AK Futures’ uncontradicted declaration shows it
developed and first used the Cake brand in commerce in
October 2020, a statement the District Court appears to have
credited in its recitation of the facts. Boyd Street has not
12 AK FUTURES V. BOYD STREET DISTRO
claimed to be the prior user of the Cake brand at any point in
this litigation, nor has it asserted that any third party owns
the mark. As a result, the record uniformly supports
affirmance despite the District Court’s error because there is
no dispute between the parties as to AK Futures’ prior use.
See Sony Comput. Ent., Inc. v. Connectix Corp., 203 F.3d
596, 608 (9th Cir. 2000) (permitting affirmance of
preliminary injunction on any ground supported by the
record, but declining to do so). Having addressed first use,
we arrive at the key disagreement: whether AK Futures’ use
was lawful.
“[O]nly lawful use in commerce can give rise to
trademark priority.” CreAgri, Inc. v. USANA Health Scis.,
Inc., 474 F.3d 626, 630 (9th Cir. 2007). This rule prevents
the absurd result of the government “extending the benefits
of trademark protection to a seller based upon actions the
seller took in violation of that government’s own laws.” Id.And it favors sellers who take the time to comply with
government regulation before bringing products to market.
Id. At the same time, we have explained that illegal activity
of insufficient gravity or connection to a mark’s use in
commerce might not defeat an otherwise valid trademark.
See S. Cal. Darts Ass’n, 762 F.3d at 931. The parties do not
advance arguments based on these exceptions, so we do not
consider them now.
Instead, the parties dispute whether the possession and
sale of delta-8 THC is permitted under federal law and,
consequently, whether a brand used in connection with
delta-8 THC products may receive trademark protection. AK
Futures argues that delta-8 THC falls under the definition of
hemp, which was legalized by the 2018 Farm Act. Boyd
Street argues a contrary interpretation of the Act based on
agency documents and congressional intent. To evaluate
AK FUTURES V. BOYD STREET DISTRO 13
these divergent claims, we look first to the text of the Farm
Act before assessing Boyd Street’s contentions.
1. The Farm Act: Plain Text
When engaging in statutory interpretation, “we start
where we always do: with the text.” Van Buren v. United
States, 141 S. Ct. 1648, 1654 (2021). As we explain further,
the plain and unambiguous text of the Farm Act compels the
conclusion that the delta-8 THC products before us are
lawful.
The relevant portion of the Farm Act removes “hemp”
from the definition of marijuana in the Controlled
Substances Act, Pub. L. No. 91-513, 84 Stat. 1242 (1970).
Specifically, “the term ‘marihuana’ means all parts of the
plant Cannabis sativa L. . . . [, but] does not include . . .
hemp.” 21 U.S.C. § 802(16). So, though marijuana remains
a schedule-I controlled substance, see § 812 sched.
I(c)(10), hemp has now been removed from schedule I.
Likewise, although schedule I continues to list
“tetrahydrocannabinols,” it now exempts
“tetrahydrocannabinols in hemp.” § 812 sched. I(c)(17).
Both of these sections reference the same statutory definition
of hemp. See §§ 802(16)(B)(i), 812 sched. I(c)(17). We
therefore turn to this definition.
The Farm’s Act definition of hemp represents the crux
of the parties’ disagreement, and we quote it in full.
The term “hemp” means the plant Cannabis
sativa L. and any part of that plant, including
the seeds thereof and all derivatives, extracts,
cannabinoids, isomers, acids, salts, and salts
of isomers, whether growing or not, with a
14 AK FUTURES V. BOYD STREET DISTRO
delta-9 [THC] concentration of not more than
0.3 percent on a dry weight basis.
7 U.S.C. § 1639o(1). Before interpreting this statutory
language, we observe that the Drug Enforcement
Administration has incorporated this definition into its
regulations. The entry for tetrahydrocannabinols on the
DEA’s regulatory schedule I exempts “any material,
compound, mixture, or preparation that falls within the
definition of hemp set forth in 7 U.S.C. [§] 1639o.” 21
C.F.R. § 1308.11(d)(31)(ii). And the DEA’s entry for
“Marihuana Extract” mirrors the terms of the Farm Act’s
definition. See § 1308.11(d)(58) (defining “Marihuana
Extract” to include only cannabinoid extracts with greater
than 0.3 percent delta-9 THC).
AK Futures argues the Farm Act’s definition of hemp
encompasses its delta-8 THC products so long as they
contain no more than 0.3 percent delta-9 THC. Plain
meaning supports this interpretation. A straightforward
reading of § 1639o yields a definition of hemp applicable to
all products that are sourced from the cannabis plant, contain
no more than 0.3 percent delta-9 THC, and can be called a
derivative, extract, cannabinoid, or one of the other
enumerated terms.
Importantly, the only statutory metric for distinguishing
controlled marijuana from legal hemp is the delta-9 THC
concentration level. In addition, the definition extends
beyond just the plant to “all derivatives, extracts, [and]
cannabinoids.” 7 U.S.C. § 1639o(1). The use of “all”
indicates a sweeping statutory reach. See Lambright v. Ryan,
698 F.3d 808, 817 (9th Cir. 2012) (“The common meaning
of the word ‘all’ is ‘the whole amount, quantity, or extent of;
as much as possible’ . . . .” (quoting All, Merriam-Webster
AK FUTURES V. BOYD STREET DISTRO 15
(online ed., visited Oct. 4, 2012))). This seemingly extends
to downstream products and substances, so long as their
delta-9 THC concentration does not exceed the statutory
threshold.
Certainly, a substance must be a derivative, extract,
cannabinoid, or one of the other enumerated terms to fall
within the Farm Act’s statutory definition. However, these
terms do not impose meaningful constraints. We may
consider whether a term carries a technical meaning in a
particular context. For instance, in Van Buren, a case
concerning the Computer Fraud and Abuse Act, the Supreme
Court considered the technical meaning of the term “access”
in the “computing context.” 141 S. Ct. at 1657. Here, the
various terms of § 1639o all have technical meanings in the
chemistry context, but these meanings are themselves broad.
See, e.g., Derivative, Merriam-Webster (online ed., last
visited Feb. 15, 2022) (“[A] chemical substance related
structurally to another substance and theoretically derivable
from it[.]”); Extract, Oxford English Dictionary (online ed.,
March 2022) (“The substance extracted[.]”); Cannabinoid,
Oxford English Dictionary (online ed., Dec. 2021) (“Any of
a group of substances including cannabinol, cannabidiol, and
other structurally related compounds of natural and synthetic
origin.”). Thus, even in the chemistry context, the terms in
the Farm Act’s definition of hemp capture a wide variety of
potential substances and products.
On the available record, the delta-8 THC in AK Futures’
e-cigarette liquid appears to fit comfortably within the
statutory definition of “hemp.” According to the company’s
uncontradicted declaration, its delta-8 THC products are
“hemp-derived” and contain “less than 0.3” percent delta-9
THC. The FDA materials cited by Boyd Street also refer to
delta-8 THC as “one of over 100 cannabinoids produced
16 AK FUTURES V. BOYD STREET DISTRO
naturally by the cannabis plant.” 5 Things to Know about
Delta-8, supra (emphasis added). This indicates that the
delta-8 THC in the e-cigarette liquid is properly understood
as a derivative, extract, or cannabinoid originating from the
cannabis plant and containing “not more than 0.3 percent”
delta-9 THC. See 7 U.S.C. § 1639o(1). AK Futures is thus
likely to succeed in showing its products are not illegal under
federal law and are eligible for trademark protection.
The conclusion that AK Futures’ delta-8 THC products
are lawful necessarily depends on the veracity of the
company’s claim that these products contain no more than
0.3 percent delta-9 THC. A showing that AK Futures’
products contain more than the permitted threshold level of
delta-9 THC would defeat AK Futures’ entitlement to
trademark protection. According to the DEA and FDA,
“many cannabis-derived products do not contain the levels
of cannabinoids that they claim to contain on their labels.”
Implementation of the Agriculture Improvement Act of 2018,
85 Fed. Reg. 51,639, 51,641 (Aug. 21, 2020). So it is entirely
possible that AK Futures may ultimately fail to show that its
products stay within acceptable delta-9 THC limitations.
But at the preliminary injunction stage we must assess
likely success, and the only probative record evidence is AK
Futures’ statement that its products contain less than 0.3
percent delta-9 THC. Further evidentiary support is not
required at this stage. See K-2 Ski Co. v. Head Ski Co., 467
F.2d 1087, 1088–89 (9th Cir. 1972) (“A verified complaint
or supporting affidavits may afford the basis for a
preliminary injunction, [unless they] consist largely of
general assertions which are substantially controverted by
counter-affidavits . . . .”). Along with its complaint and
motion for an injunction, AK Futures has provided a sworn
declaration that remains uncontradicted regarding the factual
AK FUTURES V. BOYD STREET DISTRO 17
particulars of its delta-8 THC products. This is sufficient to
obtain an injunction.
2. Boyd Street’s Counterarguments
Boyd Street advances two principal arguments that the
legalization of hemp in the Farm Act does not extend to
delta-8 THC, neither of which overcomes the clear statutory
text. First, Boyd Street argues the DEA has interpreted the
Act not to apply to delta-8 THC because of the compound’s
method of manufacture or concoction. Second, it argues that
Congress never intended for the Act to legalize any
psychoactive substances, such as delta-8 THC. Both
arguments fail.
a. Agency Interpretation
Boyd Street argues that, according to the DEA, delta-8
THC remains a schedule I substance because of its method
of manufacture. Boyd Street relies on the DEA’s explanation
of its implementing regulations. It points to the phrase, “[a]ll
synthetically derived tetrahydrocannabinols remain
schedule I controlled substances.” 85 Fed. Reg. at 51,641.
According to Boyd Street, delta-8 THC is “synthetically
derived” because it must be extracted from the cannabis
plant and refined through a manufacturing process. In Boyd
Street’s view, “[d]elta-8 [THC] is considered a synthetic
cannabinoid by the DEA because, among other things, it is
concentrated and flavored.”
Although we disagree with Boyd Street on the DEA’s
stance, we need not consider the agency’s interpretation
because § 1639o is unambiguous and precludes a distinction
based on manufacturing method. Clear statutory text
overrides a contrary agency interpretation. See Chevron,
U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837,
18 AK FUTURES V. BOYD STREET DISTRO
842–43 (1984). The Farm Act’s definition of hemp does not
limit its application according to the manner by which
“derivatives, extracts, [and] cannabinoids” are produced.
Rather, it expressly applies to “all” such downstream
products so long as they do not cross the 0.3 percent delta-9
THC threshold. 7 U.S.C. § 1639o(1). While this statutory
definition is broad, its breadth does not make it ambiguous.
See Arizona v. Tohono O’odham Nation, 818 F.3d 549, 557
(9th Cir. 2016) (“[A] word or phrase is not ambiguous just
because it has a broad general meaning . . . .”).
Consequently, determining the scope of the Farm Act’s
legalization of hemp is not a situation where agency
deference is appropriate.
Even if the relevant portions of the Farm Act were
ambiguous, the DEA does not appear to agree with Boyd
Street as to what makes a cannabis product synthetic and
thus unlawful. In the same passage quoted by Boyd Street,
the DEA explains the Farm Act does not affect “the control
status of synthetically derived tetrahydrocannabinols”
because hemp, as defined by the statute, “is limited to
materials that are derived from the plant Cannabis sativa L.”
85 Fed. Reg. at 51,641. This language suggests the source of
the product—not the method of manufacture—is the
dispositive factor for ascertaining whether a product is
synthetic. A recent agency letter bolsters this understanding.
There, the DEA clarifies that “synthetic” delta-8 THC is
produced “from non-cannabis materials” and thus remains
banned. Letter from Terrence L. Boos, Drug & Chem.
Evaluation Section Chief, Drug Enf’t Admin., U.S. Dep’t of
Justice, to Donna C. Yeatman, Exec. Sec’y, Ala. Bd. of
Pharmacy (Sept. 15, 2021). In short, the DEA appears to
understand the Farm Act’s definition of hemp in the same
manner as this Court.
AK FUTURES V. BOYD STREET DISTRO 19
Boyd Street further points to a copy of the controlled
substances schedule from the DEA’s website that lists delta-
8 THC among tetrahydrocannabinols controlled under
schedule I. To the extent that this copy of the schedule
suggests that hemp-derived delta-8 THC remains controlled
regardless of its delta-9 THC concentration level, this is
inconsistent with both statutory text and the DEA’s own duly
enacted regulations. See 7 U.S.C. § 1639o(1); 21 C.F.R.
§ 1308.11(d)(31)(ii), (d)(58). As a result, we would afford
no deference to such an interpretation. See Kisor v. Wilkie,
139 S. Ct. 2400, 2415 (2019) (observing that no deference is
afforded where an agency’s interpretation is inconsistent
with its own regulation); Christopher v. SmithKline
Beecham Corp., 567 U.S. 142, 159–60 (2012) (finding
agency interpretation unpersuasive where inconsistent with
statute). This copy of the schedule does not help Boyd Street.
In sum, the Farm Act’s definition of hemp is not
ambiguous, so we do not consider agency interpretation.
Even if we did, the DEA’s view of the Farm Act’s plain text
aligns with our own and does not support Boyd Street’s
proposed distinction based on manufacturing method.
b. Congressional Intent
Boyd Street next argues Congress intended the Farm Act
to legalize only industrial hemp, not a potentially
psychoactive substance like delta-8 THC. As evidence, it
quotes from statements in the legislative history referring to
industrial hemp. See, e.g., 164 Cong. Rec. H10,145 (daily
ed. Dec. 12, 2018) (statement of Rep. Comer) (“I am
particularly glad to see industrial hemp de-scheduled from
the controlled substances list . . . .”). Boyd Street is
effectively asking us to recognize the following limitation:
that substances legalized by the Farm Act must be somehow
suited for an industrial purpose, not for human consumption.
20 AK FUTURES V. BOYD STREET DISTRO
Unfortunately for Boyd Street, this limitation appears
neither in hemp’s definition, nor in its exemption from the
Controlled Substances Act. See Farm Act, §§ 10113–14,
12619, 132 Stat. at 4908–14, 5018. The term “industrial
hemp” does appear in a separate section modifying
previously enacted authorization for research into the plant.
§ 7605, 132 Stat. at 4828–29. But the relevant U.S. Code
provision contains its own definition of “industrial hemp”
that is even broader than the one we have considered so far.
See 7 U.S.C. § 5940(a)(2). To give effect to Boyd Street’s
understanding of congressional purpose, we would need to
read its proposed limitation into the statute. But courts will
allow neither ambiguous legislative history, nor speculation
about congressional intent to “muddy” clear statutory
language. See Azar v. Allina Health Servs., 139 S. Ct. 1804,
1814 (2019); Wis. Cent. Ltd. v. United States, 138 S. Ct.
2067, 2073 (2018).
Regardless of the wisdom of legalizing delta-8 THC
products, this Court will not substitute its own policy
judgment for that of Congress. If Boyd Street is correct, and
Congress inadvertently created a loophole legalizing vaping
products containing delta-8 THC, then it is for Congress to
fix its mistake. Boyd Street’s intent-based argument is thus
unsuccessful. With that, neither of Boyd Street’s
counterarguments dissuade us from the conclusion that AK
Futures is likely to succeed on the merits of its trademark
claim. We are left with Boyd Street’s remaining challenges
to the injunction’s other elements.
c. Irreparable Harm
The District Court correctly found that AK Futures is
likely to suffer irreparable harm absent an injunction. By
statute, AK Futures is entitled to a rebuttable presumption of
irreparable harm on its trademark claim because the
AK FUTURES V. BOYD STREET DISTRO 21
company has shown it will likely succeed on the merits. See
15 U.S.C. § 1116(a). AK Futures has also argued that its
declarations show it will suffer damage to its reputation and
a loss of consumer goodwill from the sale of counterfeit
Cake products.
Boyd Street’s arguments fail to rebut the presumption in
AK Futures’ favor or to show the injunction should not have
issued on the copyright claim. Boyd Street relies on its
CEO’s declaration, which states the store has stopped selling
Cake-branded products and has no plans to do so in the
future. Following Boyd Street’s logic, AK Futures cannot
suffer harm if the sale of counterfeit Cake products has
ceased. Alas for Boyd Street, it waived this argument. Before
the District Court, it argued the lack of intent to make future
sales as an aspect of success on the merits, not irreparable
harm. Consequently, the District Court never had an
opportunity to consider whether the intent to stop selling
Cake products could defeat a presumption and showing of
irreparable harm. We will not do so for the first time on
appeal. See Lemmon v. Snap, Inc., 995 F.3d 1085, 1095 (9th
Cir. 2021) (“[W]e refrain from deciding an issue that the
district court has not had the opportunity to evaluate.”
(quotation omitted)).
Even if the argument were not waived, we strongly doubt
Boyd Street’s stated intent to stop selling Cake products
would defeat AK Futures’ presumption and showing of
irreparable harm. Boyd Street’s declaration contains a
number of admissions that call into question its ability to
adequately control the flow of products through its store.
Most of its business is in cash, it does not keep
documentation associated with at least some portion of its
sales, and its CEO relies on the mere fact that a seller issues
an invoice to assess authenticity. This all suggests a business
22 AK FUTURES V. BOYD STREET DISTRO
structure without safeguards against selling counterfeit
products. Thus, in pointing to its CEO’s declaration to no
longer sell Cake products, Boyd Street fails to overcome the
District Court’s finding and presumption of irreparable harm
in AK Futures’ favor.
d. Public Interest
Boyd Street presents several arguments why the
injunction is not in the public interest, but none succeed in
convincing us the District Court committed error. Boyd
Street begins with a challenge to the trademark claim. It
argues that various public interests typically present in
trademark cases—for instance, protecting consumers from
the confusion caused by counterfeit goods—do not apply
where the underlying product is unlawful. This argument
necessarily rises or falls with our view of the lawfulness of
delta-8 THC. Because we have determined AK Futures will
likely succeed in showing its delta-8 THC products are
lawful, this first argument gets Boyd Street nowhere.
Next, Boyd Street attacks the District Court’s reasoning
that an injunction will serve the public heath by allowing
consumers to avoid potentially unsafe counterfeit products.
According to Boyd Street, there is no evidence that the
original products are safe because they are not tested or
otherwise regulated by the FDA. However, Boyd Street fails
to grapple with the quality-control measures that AK Futures
reportedly imposes on its own. AK Futures’ undisputed
declaration reveals that it “screens for heavy metals,
pesticides, and other contaminates” in its products, though it
cannot test counterfeits. Keeping heavy metals and
pesticides out of consumer smoking products
unquestionably serves the public health.
AK FUTURES V. BOYD STREET DISTRO 23
More broadly, Boyd Street suggests that delta-8 THC is
potentially unsafe for consumers, so an injunction protecting
marks used in connection with these products may never be
in the public interest. But Boyd Street misunderstands the
nature of trademark law. Agreeing with Boyd Street at this
stage would not keep delta-8 THC products off of the
market, rather it would let a store continue to sell counterfeit
versions of unknown origin.
AK Futures has staked its name and reputation on the
safety and quality of its Cake-branded products. See
Manhattan Med. Co. v. Wood, 108 U.S. 218, 222 (1883)
(“[A] trade-mark is . . . a sign of the quality of the article
. . . .”); FTC v. Procter & Gamble Co., 386 U.S. 568, 603
(1967) (Harlan, J., concurring) (“[A] brand name may also
be an assurance of quality. . . .”). The protections of
trademark law mean that AK Futures does not need to do the
same for the untested products of other companies. See 1 J.
Thomas McCarthy on Trademarks and Unfair Competition
§ 3:11 (5th ed. 2017) (“When there is trademark
infringement, the reputation for quality enjoyed by the senior
user is now in the hands of a stranger: the infringer.”). And
these protections allow consumers to distinguish between
brands that take consumer health seriously—as AK Futures
declares it does—and those that do not. See 1 McCarthy,
supra, § 2:24; 4 id. § 25:10. The public health interest favors
an injunction.
Finally, Boyd Street alludes to an argument that an
injunction will not help trace the origins of the counterfeit
Cake products. But as already explained, the public interest
benefits from curtailing the sale of counterfeit products,
which this injunction does.
24 AK FUTURES V. BOYD STREET DISTRO
IV. Conclusion
The record on appeal convinces us that AK Futures’
delta-8 THC products are lawful under the plain text of the
Farm Act and may receive trademark protection. As we have
noted, this conclusion is necessarily tentative given the
nature of preliminary relief. Yet Boyd Street fails to
persuade us the District Court should not have issued an
injunction. Therefore, we AFFIRM the grant of a
preliminary injunction in AK Futures’ favor, and we remand
for further proceedings.