Image credit: Alyson Martin

“It Isn’t Illegal If It Doesn’t Exist yet”: Patent Laws Pose Challenges for the Cannabis Industry

“In 5 years, cannabis probably will be federally legal, so we really need to be in a place where we can get a headstart,” said Joe Segilia, General Counsel, Terra Tech Corp.

Jun 26, 2019 6:55AM EDT Business

Nikitha Sattiraju

Nikitha Sattiraju is a journalist. She previously reported on agriculture, sustainable development, and mental health in India.

Inconsistent federal and state cannabis laws are leading to confusion for lawyers and cannabis companies when it comes to patents and trademarks, a panel on cannabis intellectual property at the NYC Bar Association said on Tuesday.

“This is not a black and white issue,” said Ryan S. Osterweil, an attorney with Day Pitney LLP, a Connecticut based law firm. “We need to provide diligent, competent representation and we want to do that in the best way possible without violating the laws ourselves.”

The challenges begin with the fact that the US Patents & Trademarks Office only approves trademarks for products and services that are considered lawful but cannabis remains illegal at the federal level. However, there is no such restriction for patents. There are 332 patents that include the word cannabis, 309 for THC, and 181 for CBD, according to data compiled so far by James R. Major, an attorney with the New York based Norris McLaughlin, P.A, and one of the panelists. In fact, the United States government itself holds a patent for the use of non-psychoactive cannabinoids as antioxidants and in treating certain neurological diseases — a patent it has held since 2003.

A significant share of the CBD patents—26 percent—belong to GW Pharmaceuticals, Major said. Interestingly, none of the big players like Pfizer or Novartis seem to have filed for any patents yet, Major said.

When it comes to patent infringement cases, however, federal judges could refuse to hear cases involving cannabis patents while it is still illegal, said Michael Cottler, an attorney with Boston based Goodwin Procter LLP. “You’re asking the judge to enforce a patent that covers illegal activity,” Cottler said. While this didn’t happen with the United Cannabis Corp. vs. Pure Hemp Collective case, where the former accused the latter of violating the former’s patent on liquid cannabinoid formulations, there’s nothing stopping judges from refusing in the future, he added.

However, attorneys for cannabis companies need not fear prosecution, Cottler said. “There is little threat that federal prosecutors would come after lawyers and companies for doing something that’s legal under state laws,” he said, “I know [Jeff] Sessions had a few words about that, but he’s gone.”

There is also the issue of “prior art”—evidence that an innovation is already known or exists— that lawyers could rely on to file patent infringement claims, said Cottler. “How do you find what was known about something that was and still is illegal under federal law?” he asked.

Further, patenting THC, CBD, or their mixtures and varieties can pose a problem as they are naturally occurring substances, which cannot be patented under law. However, Pure Hemp Collective tried, and failed, to use this argument in its dispute with United Cannabis Corp.

One option to register trademarks for cannabis products and services is by using the “Intent to Use” clause, under which companies can file trademarks for something that isn’t sold yet, Doyle said. “It isn’t illegal if it doesn’t exist yet,” he said. The U.S. Patents & Trademarks Office gives a “notice of allowance” to companies once it approves their trademarks — a notice that gives them six months, which can be extended to three years, to use their trademark commercially.

“You might be able to have a placeholder, give yourself enough time until the Controlled Substances Act is changed, and all of a sudden what you want to do is lawful and you secure that registration,” Doyle said.

Filing for state trademarks can also be a temporary solution even if they offer limited protection, said Joe Segilia, general counsel of Terra Tech Corp, a medical cannabis company. State trademark registration only protects a company’s trademark in that particular state.

The panel noted that not enough has been done in the cannabis patenting space yet and, as a result, there are more questions than answers. But it will become a key issue going forward, they said.

“In 5 years, cannabis probably will be federally legal, so we really need to be in a place where we can get a headstart,” Segilia said.