The cannabis market continues to grow worldwide with medical marijuana currently legal in 35 countries and over 30 US states and counting. Uruguay was the first country to legalize cannabis for recreational use and Canada will become the second on October 17, 2018. There are currently 9 US states that allow cannabis for recreational use.
The value of the cannabis market has been estimated to reach anywhere from $50 to $150 billion dollars worldwide over the next several years. Due to the large market value, it is increasingly important that companies producing cannabis, cannabis products, machines and devices seek to protect their Intellectual Property (IP) in important markets.
Obtaining patent protection is often the strongest protection available for cannabis products and processes as well as related machines and devices. A patent provides a monopoly to the owner to exclude others from making, using or selling the invention during the term of the patent, which is 20 years from the filing date. A patent is awarded to inventions that are new, useful and inventive. To obtain a patent, a patent application must be prepared that fully describes the invention. The application ends with the claims, which define the monopoly that the applicant is seeking to obtain. Patents are country-specific and therefore the application must be filed in each country where protection is desired. The application is examined rigorously examined in each country, which often results in the narrowing of the scope of the claims. Once the patent grants in a country it can then be enforced against any infringers.
There are many patentable products and processes that can arise from the cannabis industry. For example, patents can be obtained for novel or modified active ingredients extracted from the cannabis plant or chemically synthesized. This would include the isolation of novel cannabinoids as well as specific combinations of cannabinoids and/or terpenes, which is an active area of research. Patents can also be obtained for novel formulations comprising cannabis active agents or new combinations of active agents. Such formulations include topical creams, beverages and edible products. The discovery of new uses of cannabis or cannabis actives such as new indications that were not previously treated with cannabis products may also be patented. Cannabis has been around over 6,000 years and is known to treat a wide range of conditions including anxiety, insomnia, epilepsy, autism, post-traumatic stress disorder, autoimmune diseases, glaucoma and cancer. Any new indications would need to be consider non-obvious over the known indications to obtain a patent. Genetically modified cannabis plants may also be protected in certain countries. While Canada does not allow patents to plants per se they will allow claims to the modified plant cells. New methods or machines for growing cannabis or extracting cannabis active ingredients from the plants are also patentable. In addition to protecting cannabis products, patents are also available for ancillary products such as new devices for delivery of the cannabis products like vaporisers and patches.
As noted above, the claims of the patent define the monopoly awarded to the patent holder. A notable patent under litigation in the US is US patent no 9,730,911 owned by United Cannabis Corporation in Denver.
This patent has several claims that cover liquid cannabinoid formulations that have a content of cannabidiol (CBD), tetrahydrocannabinol (THC), or tetrahydrocannabinolic acid (THCa) of at least 95% of the total cannabinoids. On July 30, 2018, United Cannabis sued Pure Hemp Collective for infringement of the patent alleging the Pure Hemp’s products contain the claimed amounts of cannabinoids. This is just one of many infringement actions that is expected in the cannabis space.
Novel cannabis varieties may be protected in certain countries under various regimes. In Europe, plant varieties can be protected by Community Plant Variety Rights (CPVR) or through national protection systems. In the US, Plant Variety protection can be obtained for seed propagated varieties and plant patents can be obtained for asexually produced varieties. In Canada, one can obtain Plant Breeders' Rights (PBRs) for new varieties. In all three jurisdictions, the variety must be new, distinct, uniform and stable. Comparative tests and trials are required to determine if the candidate variety is distinct, uniform and stable. In terms of being distinct, a variety must be measurably different from all varieties cultivated or exploited for commercial purposes, or described in a publication, at the time the application was filed. A variety must also be uniform in its relevant characteristics, and any variation should be predictable and commercially acceptable. Further, a variety must be stable by remaining true to its description over successive generations. Once granted, the cannabis breeder gets exclusive rights to the propagating material of their variety for a period of 20 years. These exclusive rights include the right to sell, produce and reproduce, import and export propagating material of the variety as well as the right to authorize others to do the same.
Companies that manufacture ancillary products for the cannabis industry should consider obtaining design patents in the US, industrial designs in Canada or Community Design Rights (CDR) in Europe. Designs protect novel and non-functional, esthetic aspects of products. They basically protect the look of the object rather than the function. Designs can protect vape pens, pipes and bongs that are used for smoking cannabis. Designs can protect the shaping of products, such as a novel shape of foods or other edible products or novel packaging.
Cannabis companies should conduct clearance searches and file for trademark protection to protect their brand, which is a an important asset. Generally, trademarks can be obtained for words, slogans and designs that function to distinguish a company’s goods and services from others. Trademarks can be obtained for the company’s corporate identity and logo as well as the names of it products. Currently in the US, trademark registration for cannabis products is not permitted as cannabis is not legal at the federal level. The US Trademark Office is however allowing cannabis related trademarks for lawful products such as clothing. It is also difficult to obtain trademarks in the European Community, as a whole, for cannabis products due to their prohibition against registering trademarks for products that they consider immoral. However, it may be possible to obtain trademark protection directly in certain European countries. In Canada, trademark registration for cannabis products is permitted with several restrictions in respect to use, such as trademarks that consist of a person, character or animal, whether fictional or real, and marks that appeal to minors are prohibited. Care should be taken to select and file trademarks that may be lawfully used, since the government has clearly signaled that it intends to control all aspects of promotion and sale of legalized cannabis products. Trademarks can last forever provided the renewal fees are paid (and if the marks remain in use for the goods and services covered in the registration).
A trade secret is useful for information that a company prefers to keep confidential rather than disclosing it. Trade secrets generally apply to methods or formulas that can not be easily reversed engineered by competitors. In order to maintain information as a trade secret, companies must have strict confidentiality guidelines in place for any employees who need to access the information. In the cannabis industry, companies may want to keep their method for producing cannabis or their formulations as trade secrets if it provides more economic value than disclosing the information in a patent. As noted above, patents have a 20 year term while a trade secret can be infinite.
Cannabis companies should consider an IP strategy that incorporates all of the above rights. Protection should be sought in all countries with an important cannabis market including those markets that are still developing. While the US has not legalized marijuana at the federal level, it is important for companies to register IP rights there to be ready for when the market opens nationwide. Canada is also an important market with legalization just around the corner and it is home to many cannabis companies. With the market set to explode worldwide, please ensure your IP rights are protected in this lucrative market.
This article was first published in Euromoney's Life Sciences Expert Guide 2018.