Government
Cannabis Patent Q&A
On June 14, 2022, Harris Bricken attorneys Fred Rocafort, Jihee Ahn, Paul Coble, and Vincent Silwoski presented a webinar entitled Protecting, Monetizing and Enforcing Cannabis Intellectual Property. Attendees submitted many great questions before and during the webinar, but our IP attorneys were not able to answer all of them. In this post, we will answer the cannabis patent questions that were not addressed in the webinar.
What do you think about using the Plant Variety Protection Act to protect strains?
The Plant Variety Protection Act (PVPA) can provide protection for both asexually and sexually reproducing plants, like cannabis. The pseudo-patent protection available under the PVPA prohibits other from marketing, selling, delivering, exchanging, transferring, or multiplying a protected strain. However, current practical realities make PVPA protection unavailable for most cannabis patent strains. The PVPA includes a strict requirement that at least 3,000 seeds of the claimed plant species be deposited with the U.S. Department of Agriculture in Fort Collins, CO. The USDA will not accept any deposits for plants that are classified as controlled substances, including cannabis. In other words, for the time being, PVPA protection is unavailable for cannabis plants that do not qualify as hemp (less than 0.3% delta-9-THC). The DEA recently stated that cannabis seeds containing less than 0.3% d9-THC are not controlled substances regardless of the THC content of the mature plant, but it is not yet clear whether the DEA’s statement will affect the USDA’s prohibition.
How can I protect a recipe/formulation that is unique to the market? How do I present a Fast-Acting ingredient and protect the recipe? How do I sell license opportunities for my recipes?
New and useful compounds, as well as novel formulations of known compounds, can be protected with a utility cannabis patent. Licensing strategy is a complex issue that depends on the nature of the invention and inventor(s), but obtaining a patent almost always strengthens licensing leverage. Sometimes just having a patent application on file is enough to license rights to larger companies or patent monetization firms.
Is it possible to obtain a cannabis patent for a methodology that cures or eliminates a cannabis pathogen?
Absolutely, so long as it is new, useful, and has not been disclosed or used in public (some exceptions may apply). You will also need to be able to describe the methodology in sufficient detail such that a typical cannabis cultivator can achieve the desired outcome without undue experimentation.
Who owns patentable IP that is jointly developed by multiple parties?
Absent an enforceable agreement addressing IP ownership, patent rights in the US vest by default with the inventors. Any person who materially contributed to the claims of the patent must be listed as an inventor and the inventors each have an individual right to practice and license the patent. If the inventors work for different companies, ownership of the IP will be dictated by any agreements the inventors have with their employers.
I’d like to hear thoughts on enforcement of patents on cannabis paraphernalia, specifically electronic devices and whether there’s any reason to believe there are any more issues with those than with enforcement of patents on any other consumer good.
Patents on cannabis paraphernalia (namely vaporizers, water pipes, rolling papers, etc.) are a common subject for both utility and design patents. Electronic vaporizers and cartridges are one of the most common cannabis patents, with several new patents issuing each week. There is no reason to believe that such patents are any less enforceable than any other patent, but none have been tested in court.
Ramifications of Canopy vs GW Pharma?
For the uninitiated, Canopy Growth v. GW Pharmaceuticals et al., Case No. 6:20-cv-01180-ADA (W.D. Tex.), is one of the first cannabis patent infringement cases in the US and sets the stage for many more to come. In late 2019, Canopy Growth obtained a patent for subcritical CO2 extraction and promptly sued GW Pharma in Texas federal court. As part of every patent infringement lawsuit, the court is required to construe the claims of the patent and, where necessary, put the patent language into terms that can be applied to the allegedly infringing product or process. Canopy and GW agreed on the meaning of all claim terms, except for one. GW argued that the patent term “CO2 in liquefied form under subcritical pressure and temperature conditions” meant that both the temperature and pressure had to be below the critical point to infringe (i.e. only extraction conditions in the red portion below):
Canopy contended that liquified CO2 at either a lower pressure or a lower temperature than the critical point would constitute subcritical conditions (i.e. the red and blue portions). The court agreed with GW. Since GW’s processes are presumably solely within the blue range excluded by the court’s construction, Canopy consented to judgment of non-infringement and promptly appealed.
For now, there will be few direct ramifications from the case for most operators. Extractors that are operating processes with extraction conditions in the red range should consult a patent attorney to discuss their options. More broadly, however, it serves as an indicator that major cannabis patent suits are coming and highlights the importance of understanding cannabis science in cannabis patent analysis.
Source: https://harrisbricken.com/cannalawblog/cannabis-patent-qa/
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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