Image credit: Alyson Martin

“Sort of a Land Grab”: Intellectual Property in the Cannabis Space

The landscape of cannabis patents and trademarks is shifting, and hemp legalization via the Farm Bill adds a new wrinkle.

Jun 25, 2019 6:55AM EDT Business

Julia Barajas @Julia_P_Barajas

LA native, graduated from Columbia Journalism School after working in education for several years. Her work has also appeared in La Opinión, the Columbia Journalism Review, and La Prensa Gráfica.

The 2018 Farm Bill, which legalized hemp in the US, has triggered an avalanche of applications for cannabis patents and trademarks.

Last Tuesday, Duane Morris, an international law firm headquartered in Philadelphia, hosted a webinar on intellectual property concerns as they relate to the cannabis industry. Early on, the presenters made two things clear: one, there is an unprecedented rush for cannabis patents, and two, how property rights in the industry will be divvied up remains up in the air. The lawyers presented a patent and trademark landscape that the industry needs to understand, but one in which the rules are very much in formation.

Christiane Campbell, a partner at Duane Morris specializing in intellectual property, opened the discussion with a focus on cannabis trademarks broadly, noting that “what we’re doing, frequently, with clients, on a daily basis, is working with them to protect what they can, where they can.” More specifically, clients in the cannabis industry are trying to get federal protection for their brands and ancillary business services in anticipation of “a change in federal law, the ability to nationally market, and the ability to nationally sell.”

Until recently, said Campbell, the trademark office would reject applications for trademarks that covered cannabis-related goods and services on the grounds that these items violated the Controlled Substances Act, the federal law under which cannabis is illegal. And so, in removing hemp—cannabis plants with less than .3% THC—from the Act, the 2018 Farm Bill supplied “some clarity for applicants that are filing trademark applications in the cannabis space,” as well as for examining attorneys by distinguishing “between what does violate CSA and what doesn’t and, therefore, what does violate the ‘lawful use’ rule and can’t be registered.” (The “lawful use” rule stipulates that applicants cannot be in violation of any federal law.)

But just because the Farm Bill removed the CSA hurdle for hemp, said Campbell, stakeholders in that industry are not necessarily home free. The Food and Drug Administration, for example, still has not clarified its stance on which hemp-derived products, namely those for human consumption, such as hemp-derived CBD beverages, will be allowed. (CBD, or cannabidiol, is a compound found in cannabis plants, including hemp, and has become wildly popular.)

Today, said Campell, there are more than 2,500 applications pending at the office level that cover cannabis, and more than 5,200 that include the word “hemp.”

To date, she added, “only a handful” of those thousands of trademark applications have been registered. This, in part, is because many of these applications were filed recently, following the passage of the 2018 Farm Bill. Applications that were filed earlier, she suspects, “are held up and being rejected by the office,” or getting “sent back and forth” between the trademark office and the applicant, who is pressed to “demonstrate that their mark is, indeed, intended for use in connection with lawful goods and services.”

Doing so, said Campbell, is not a clear-cut endeavor.

After the 2018 Farm Bill was enacted, the United States Patent and Trademark Office issued a new guide for the Examination of Marks for Cannabis and Cannabis-Related Goods Services. Among CBD, hemp, and cannabis, noted Campbell, “only hemp is identified in the office’s manual of acceptable identification of goods and services,” which indicates that hemp “can potentially be the basis for a lawfully registered trademark.”

Still, she explained, the playing field is not entirely level. Examining attorneys reviewing applications at the trademark office, Campbell said, “do have a manual of examining procedure, but their application of that manual and its guidelines is very much subjective, so you could get a very conservative examining attorney or a very liberal one, and that may dictate how your application gets treated before the office. It’s frustrating, but it’s true.” Cambell added that examining attorneys sometimes “play scientist.”

From there, the webinar discussion turned to patents, which differ from trademarks in two important ways: First, trademarks protect a symbol, name, word, logo, or design used to represent the manufacturer of goods. A patent, in contrast, gives property rights to inventors of a new product, preventing others from making an identical product.

Moreover, unlike the “lawful purpose” requirement for trademarks, there is no such requirement for patents.

In the United States, said Vincent Capuano, also a partner at Duane Morris specializing in Intellectual Property, “You can get a patent on a product that you can’t lawfully use, or a method that you can’t lawfully practice. You give patents for ideas.”

A patent, he added for clarification, “is not a license to do anything. Just because you have a patent on a method of treating a disease doesn’t mean you can go sell a drug for treating that disease if you don’t have FDA approval. But you can still get a patent on it, if you can fulfill all the requirements of getting a patent.”

What are those requirements? First, he said, the invention must not be a “product of nature,” in other words, you can’t patent the cannabis plant itself. It must also be new and “nonobvious,” and it must be described in enough detail so that, once the patent expires in twenty years, anyone can replicate it.

To date, people have won patents for a myriad of cannabis-related items, including a patent on treating horses for anxiety with CBD and another on a single-serve coffee pot with CBD. Some patents are particularly significant. GW Pharmaceuticals, for instance, has a patent on its FDA-approved product, Epidiolex, which is prescribed for severe forms of epilepsy. And though the FDA has not approved the treatment of autism with CBD, there’s already a patent on that.

There are even patents on items that could shape public safety, including one on a breath analyzer, “the kind of thing you would expect we would eventually see police officers have in the field, a method of detecting THC in exhaled breath.”

The proliferation of patents, said Gretchen Temeles, an associate at the firm, is understandable, as clients conceive of them as business tools with direct and indirect economic benefits. Patents, Temeles noted, put competitors on notice. They can also be licensed, bartered, or sold. Patents, she said, can also be deployed to “keep others out,” as holders can take legal action to prevent competitors from making or selling technology covered by the patent.

Capuano, perhaps, best illustrated the patent landscape in the cannabis industry when he characterized it as a “land grab.”

“It’s important for you to understand that your competitors have patents that you might be at risk of infringing,” he told the webinar participants, and “it’s important to understand whether your own people are innovating in a way that could mean that you should file a patent application.”