Almost 40 years ago – in the Grade B horror spoof “Attack of the Killer Tomatoes” – vicious giant man-eating tomatoes of unknown origin were seen spreading mayhem and trying to take over the U.S. This was right around the time the term GMO was first working its way into our vocabulary. Flash forward to now, and recently we have heard quite a few concerns and fears about whether companies like Monsanto, GW Pharma and Biotech Institute LLC are trying to take over the cannabis industry by obtaining patents and using them to squash the small cultivator, manufacturer, dispensary or retailer.
Thus we recently read with great interest an article in GQ magazine entitled “The Great Pot Monopoly Mystery” which has caused a bit of a flurry in the cannabis industry due to the suggestion that one company is trying to corner the market on legal cannabis. Unfortunately, the GQ article was long on drama and manufactured mystery but short on facts and a close examination of the patents in question.
While trying to predict the future in the cannabis industry is extremely difficult since change seems to occur at an accelerated pace and there are more unknowns than knowns, our instincts tell us that the future of cannabis is more likely to follow the patterns in the craft beer industry this last decade. There, for the most part, small craft brewers have been able to stay true to themselves and their loyal customers and not be taken over by the beer giants – apparently by a force of will by the brewers and the demands of their customers. We understand, of course, that there will be differing opinions and vigorous debate about this in terms of cannabis. But what we do know is that cannabis entrepreneurs both small and large have already started to file for and obtain patents for a variety of inventions.
Like the Paul Simon song “One Man’s Ceiling is Another Man’s Floor”, one’s view of whether this is “good” or “bad” largely depends on whether you believe inventors need to protect their large investment in their cannabis enterprise by obtaining some form of intellectual property (“IP”) protection. While it is not possible within the limits of this note to provide a list of every pending patent application and issued patent, this will provide a representative sample of some of the cannabis-related patents that have already been filed for or obtained and will address one or two of the patents obtained by Biotech Institute LLC – the company mentioned in the GQ article.
SOME TYPICAL CANNABIS-RELATED PATENTS:
Background: a patent is a government grant of the exclusive right to sell, produce, market, or use an invention for a set period of time. Patents are granted by the U.S. Patent & Trademark Office (“USPTO”) to applicants who comply with a strict set of requirements. And despite a blanket ban on granting marijuana-related trademark registrations, the USPTO doesn’t seem to follow the same ban when it comes to granting marijuana-related patents. Having said that, being granted a patent doesn’t mean that you are entitled to sell the invention; depending on the invention, that is likely to still be illegal under federal and some state laws. So why are people applying for an obtaining patents? They’re getting ready for the future.
Also, a fundamental rule regarding patents in the U.S. is the so-called “on-sale bar”: written into the law at 35 USC Section 102, it provides that the invention cannot be patented if it has been for sale for over one year prior to the patent filing. So can someone get a patent on good old-fashioned Maui Wowie, Blue Dream, or Bubba Kush? No. But the answer becomes “maybe” if someone creates a new strain that meets the new, novel and non-obvious test.
There are basically three types of patents.
Utility Patents: These patents cover inventions and devices that are functional, novel, and non-obvious to someone skilled in the art of the invention. The “ novel and non-obvious” standard is somewhat loose and therefore the subject of countless articles and lawsuits over its application. But examples of patents in the cannabis space include devices for smoking marijuana, processes for extracting and purifying marijuana and its key ingredients, medical uses for marijuana, and other technologies related to the use of marijuana, whether medicinal or otherwise.
The general rule is that the term of protection for a utility patent is twenty (20) years from the date of filing of the application. What’s covered by the patent must be explained in detail in the “claims” set forth in the patent. The claims are like the metes-and-bounds that define a piece of real property. Just like you can’t say “I own a piece of real property on Main St. in St. Louis, MO and no one else can own any real estate on Main St.”, it is not possible to say “I own all cannabis strains and no one else can grow or sell one”. In other words, the specific of what is covered – (and by inference what ISN’T covered) – by the patent must be laid out in the claims.
Examples include U.S. Patent No. 8,906,429, which covers medical cannabis lozenges and compositions thereof.
This patent is just one example of many that have been granted by the USPTO, even where the invention mentions marijuana outright. It’s particularly interesting because it covers a method of optimizing the therapeutic effects of CBD and balancing them with the psychoactive effects of THC through the use of a sublingual medicament (essentially a lozenge). The patent specifically mentions CBDOOS and GOOD-EZ as pre-existing products that accomplish a similar goal. Another example is U.S. Patent No. 8,337,908, which covers a particular method of extraction of THC from cannabis.
A large British pharmaceutical company- GW Pharma – owns approximately 35 cannabis-related patents. These inventions range from using cannabinoid plant extracts to act as neuroprotective agents to pharmaceutical formulas containing cannabis to electronic delivery devices and containers.
Now, when it comes to Biotech Institute LLC, we assume that the GQ article – even though curiously it didn’t identify the patent(s) in question – was referring to at least one patent that was granted by the USPTO two years ago in August 2015: Patent No. 9,095,554 entitled “Breeding, Production and Use of Specialty Cannabis”. It appears to be broader than just a single strain of marijuana; but it does not appear to be broad enough to cover every strain of marijuana or even most strains. In very general terms – (the devil is in the details) – this patent claims strains with a CBD content greater than 3% plus a terpene profile where myrcene is not the dominant terpene.
Thus, this combination of features may make this patent somewhat limited in its scope of protection. The owner of the ‘554 patent also applied for two subsequent patents, at least one of which has been granted: Patent No. 9,370,164 with the same title – “Breeding, Production and Use of Specialty Cannabis.” The ‘164 patent grants similar but not identical claims to the ‘554 patent noted above.
Design Patents: A design patent protects the ornamental and aesthetic portion of an invention – NOT the functional features. Example: the shape of the green Perrier bottle. A design patent can include the unique visual and aesthetic portions of a pipe, bong, or other useful item. There is some overlap between design patent and trade dress rights – but that is the topic for another article.
Plant Patents: Plant patents protect new and distinct varieties of plants that are invented or discovered and asexually produced. It’s interesting to note that a utility patent can cover sexually produced plants and plants that are sexually produced may be protected under the Plant Variety Protection Act of 1970 (“PVPA”). The PVPA is similar to but not the same as a plant patent granted by the USPTO. However, the requirements differ greatly, as do the limits of protection; and we have recently seen correspondence from the Plant Variety Protection Office stating that it will NOT grant protection under the PVPA for cannabis strains
Important note!: Not all patents are created equal. Just like a Kia Rio and a Bentley are both automobiles – they are not the same. In other words, some patents are stronger, deeper and more enforceable than others. Just because a patent gets issued, that does not mean it is automatically self-enforcing. The USPTO doesn’t enforce patents; so if a patent owner believes its patent has been infringed, it has to file a lawsuit in federal court to press its claim. The alleged infringer then has the right to defend the lawsuit and show that the patent is overbroad or otherwise shouldn’t have been granted and therefore shouldn’t be enforced against the alleged infringer.
The alleged infringer thus has the right to try to invalidate the patent. Thus a lawsuit is a risk for both sides – and not inexpensive to pursue. It is not uncommon for it to cost over $1 million in legal fees and other costs per side to take a patent infringement lawsuit all the way to a trial. Thus the patent holder needs to be sure that there is a high likelihood – (no pun intended) – it is going to win when it files this kind of lawsuit. Having said that, some patent holders use the mere threat of a lawsuit to extract quick settlements in the $1,000 – $25,000 or more zone by sending “cease & desist” demand letters to alleged infringers. In fact, this is the entire business model for some patent holders – also known as “patent trolls”.
We believe that as the legal cannabis system grows and expands, one way that legitimate cultivators, manufacturers, retailers, etc. will be able to protect themselves is by making sure they have adequate insurance coverage to cover a patent infringement threat. Just like cultivators, manufacturers, retailers, etc. need insurance to protect themselves if someone comes to their place of business and falls and injures themselves – or if there is a flood, fire or theft – patent infringement insurance needs to become a cost of doing business.
THE ELEPHANT IN THE ROOM:
In one of the most striking ironies yet in the world of cannabusiness intellectual property, the U.S. government actually owns a patent for the use of cannabinoids for treating a wide variety of ischemic diseases. Patent No. 6,630,507 (issued in 2003) is entitled “Cannabinoids as antioxidants and neuroprotectants” and was assigned to The United States of America as represented by the Dept. of Health and Human Services. The summary abstract for the patent reads like a commercial for NORML in its touting of the medical benefits of cannabinoids. This is, of course, somewhere between ironic and sheer hypocrisy since the U.S. government continues to treat cannabis as a Schedule 1 drug under the CSA that has no medical benefit whatsoever.
While there is a great deal of concern and fear within the cannabis community whether patents will be used by businesses to squash small entrepreneurs and diminish the supply of medicine to the patients who need it most, we believe that the best way to address these concerns is through careful assessment of the facts of a given situation, the law applicable to those facts, and a vigorous debate about what should and shouldn’t be done with patent rights. Only time will tell for sure. But efforts to obtain patent rights are already here and they need to be addressed carefully and logically – not just ignored or feared.