5 Legal Techniques to Secure Cannabis Strain Intellectual Property
Cannabis is a multi-billion dollar industry in the United States, and the cannabis plant is characterized by some as its most valuable asset. Some strains of cannabis stand out as superior based on a number of factors including yield of seed, fiber and cannabinoid content. Various strains are adapted for particular regions and cultivation environments. Other strains possess unique characteristics including unique aromas, desirable growth characteristics and other attributes.
Exclusivity in the marketplace can reward a grower/entrepreneur. This article illustrates a number of possible ways to protect your strain in the marketplace. Protection can be afforded through the strategic use of Patents, Trademarks, Copyrights, Contracts and Plant Variety Protection Certificates.
No single form of intellectual protection is comprehensive. Each form has its advantages, limitations and associated costs. The best protection includes an array of strategically considered hurdles that limit a competitors use of the protected strain.
Different Strategies for Protecting a Cannabis Strain in the Marketplace
Utility patents are regularly issued for plants, extraction methods, formulation methods, nutraceutical compositions, growing techniques and hardware. There is no express prohibition that would limit patentability of a particular cannabis strain. Many cannabis-patents have been issued.issued.
For example, GW Pharma Limited, from the UK, has hundreds of published patent applications and many issued patents covering aspects of cannabis. One interesting example covers particular genotypes that result in the high production of cannabichromenic acid and its decarboxylated form. Utility patents can pose a hurdle to those that may wish to use a proprietary cannabis strain.
Plant patents covering asexually reproducible varieties (clones). Plant patents are relatively inexpensive compared to a utility patent for the genetics. A plant patent is essentially a design patent covering any novel and visually perceived attributes of the plant. Coverage is narrow. While plant patents are quite useful in covering clones, they do not cover sexual reproduction of the variety e.g. using a cannabis clone to create hybrid seeds for distribution.
Contracts restricting the use of seeds and clones may be achieved through a material use agreement, a trade secret agreement or a technology use agreement. A clone supply agreement should include terms that enable the strain owner to protect the strain. However, one should appreciate that contracts typically bind only the parties. If a third party appears with the strain, and it can’t be traced back to the contracting parties, the contract likely adds little protection. Smart contracting can be a valuable and inexpensive way of protecting your strain.
Trademarks : the strain name can be protected by State and Federal Trademark Law. Those holding or owning special strains of cannabis see value in the strain name. Customers recognize the name and it may be difficult for a third party to distribute the strain without using the name. Trademarks are a way of creating a hurdle for competitors.
There are challenges to Trademark Protection. The U.S. Patent and Trademark Office is notorious for rejecting trademarks for marijuana and related products. In order to obtain a federal trademark registration, actual use in interstate commerce is required. The Controlled Substances Act under federal law arguably makes the interstate distribution of marijuana illegal.
Solutions are available. Legal hemp products are distributed in interstate commerce. Marijuana could become legal under Federal Law in the future. Early trademark rights can be developed through use in conjunction with hemp products distributed via interstate commerce. These early trademark rights can encompass the later use in conjunction with other similar (legal) products, including Marijuana when it becomes legal.
Further, state law trademark registration is available for each individual state. Some find this cumbersome, but it is possible. Lastly, federal copyright law can protect a logo such as an image or fanciful font expressing the strain name. Protecting trademarks is another useful hurdle that can be erected to protect your strain.
Plant Variety Protection : The Plant Variety Protection Act (the “PVPA”) provides an option along with patent law as a way to protect and encourage the development of new seed varieties. PVPA creates a voluntary program to provide patent-like rights to developers, breeders, and owners of plant varieties. Similar to patent protection, the PVPA provides intellectual property protection to breeders of varieties of seed and tuber (potatoes) propagated plants that are new, distinct, uniform, and stable it allows for protections for a term of up to 20 years. It is important to note that PVPA does not limit the scope of patent law when looking to protect new seed variety. One can obtain both a plant patent and a PVPA certificate for the same strain.
PVPA provides similar protections as a patent provides. Unlike a plant patent, which does not cover seed propagation, the PVPA affords protection to those using seed to propagate the protected variety and hybrids thereof.
For example, it is unlawful to sell or grow a PVPA protected variety without the permission of the PVPA certificate holder; and the PVPA certificate holder can bring civil actions against persons violating/infringing on the holder’s rights. Damages may include attorney’s fees and up to triple the damages where willful infringement is found. In addition to patent like protection, the certificate holder may bring federal or state enforcement in some circumstances. Penalties for willful infringement under Federal law have been awarded in the six-figure range.
Under the PVPA infringing acts may include: using seed marketed as “unauthorized propagation prohibited” to produce seed of the variety to market for growing purposes: Selling, offering, delivering, consigning, exchanging or advertising for sale a protected variety; Dispensing the variety to another person without informing that person that the variety is protected; Importing the variety into the United States or exporting the variety from the United States; or Inducing a third party to commit any of the above acts.
Obtaining a PVPA certificate requires deposit of seed in an authorized repository. As of yet, there is no known court case where a PVPA certificate has been enforced against a marijuana cultivator. Like patents and other types of intellectual property protections, the PVPA is a useful tool in protecting plant species.
Establishing a variety of legal hurdles is essential to enjoy protection of cannabis strains in the marketplace.
About the authors:
Kevin H. Fortin is Counsel to Hoban & Feola. He is a Patent Attorney licensed to practice before the U.S. Patent and Trademark Office. His practice is limited exclusive to patent matters before the USPTO. He has a B.S. degree in Mechanical Engineering from Clarkson University and a JD from the University of San Diego School of Law. He is a member of the California State Bar. He has been involved in the Colorado Cannabis industry since 2008 after spending 13 years practicing law in Silicon Valley.
Grace Neibaron is Counsel to Hoban & Feola. Her practice focuses on patent and trademark law. Grace currently represents wine companies, cannabis companies, food and beverage companies, start-up technology companies, and industrial manufacturing companies. Grace represents clients managing their trademark portfolios including preparing trademark opinion letters, preparing cease and desist letters, filing and prosecuting trademark applications and litigating trademark disputes in Federal Court and before the United State Patent and Trademark Office. Grace represents clients in patent law preparing and prosecuting patent applications, preparing patentability opinions, and preparing infringement opinion letters.
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Intellectual property protection for cannabis
On June 19, 2018 , Canada became the second country to legalize nationwide purchase and use of recreational cannabis by virtue of the Cannabis Act, which came into force on October 17, 2018 . The recreational cannabis market in Canada is estimated to be worth as much as $6.2 billion a year which is roughly comparable to the $7 billion Canadian wine market. This emerging market is poised for entrepreneurial activity and businesses should ensure that their investments in this field are adequately protected through intellectual property (IP) rights. As such, businesses that are looking to delve into developing cannabis products/services should consider acquiring plant breeder rights, trademark, patent or trade secret protection.
Plant Breeder Rights
Plant breeders’ rights (PBR) are a form of IP protection that allows businesses to protect new plant varieties, including new varieties of cannabis, somewhat similar to the way an invention can be protected with a patent. When a PBR certificate is granted for a new cannabis variety, the holder has the right to seek compensation if the protected variety is used without authorization. The holder also has exclusive rights over the sale, production, reproduction, import, export, stocking, and conditioning of the propagating material (e.g. seeds or cuttings) of their variety. Protection for a species of a cannabis plant, such as cannabis sativa, is typically 20 years.
Goods and services related to recreational cannabis use, such as “cannabis”, “dried cannabis”, “live cannabis plants” or “medicinal marijuana for the relief of nerve pain” can be registered as trademarks. Such registrations would entitle the owner to the exclusive use of the mark in connection with the registered category of goods or services and the owner can enforce their rights to prevent competitors from using a confusingly similar mark.
Non-traditional marks, such as holograms, scents, tastes and textures, will be allowed to be registered in association with cannabis goods and services in late 2019. This presents a timely opportunity for those involved in the cannabis industry, since scent and taste are often the primary distinguishing features of cannabis products. Businesses entering the cannabis industry may want to position their products in the marketplace to seize this opportunity to establish a unique brand.
When considering a logo or a brand name for your cannabis product, one may wish to review the Health Canada regulations related to advertisement of cannabis related products. For example, the regulations will limit the frequency of the mark on the packaging, the size of the logo text, the colour scheme of the brand, and the potential influence of the mark to minors.
Since “higher life forms” are unpatentable in Canada, patent protection cannot be obtained for cannabis plants per se. However, other aspects of a cannabis plant, such as genetically modified plant cells and cell lines, isolated and genetically modified genes involved in the production of cannabis active agents, and extracts obtained from cannabis plant tissue, are eligible for patent protection. Pharmaceutical compositions comprising novel combinations of cannabis active agents (ie. cannabinoids) and the therapeutic/medicinal use of cannabis and cannabis-derived components are also considered patentable subject matter.
Additionally, new products and machines related to cannabis, such as vaporisers, arm patches, and controlled dose dispensers, as well as processes and methods related to the production of genetically modified cannabis plants, cannabinoid extraction, and the production of cannabis edibles and dry-leaf concentrates, could be patent protected.
Trade secrets can be described as any valuable business information that derives its value from being kept secret. In Canada, there is no formal process for protecting a trade secret, but rather a business must take all possible measures to ensure that the business information remains a secret. Recipes for making cannabis edibles and commercially desirable methods of creating cannabis edibles and cultivating new cannabis strains, are well positioned to be protected as trade secrets. For example, if valuable information related to the process of cultivating a new cannabis strain is kept confidential, it may be protectable as a trade secret.
Additionally, important business information, such as client lists, supplier contacts, and cutting-edge market research, are also protectable as a trade secret. This valuable information can be licensed for use to other businesses. However, one should take caution to protect the transaction thorough confidentiality agreements to maintain the privacy of the information.
Industrial designs protect the esthetically pleasing, visual aspects of products, such as their packaging. Industrial designs can protect the packaging of dry or edible cannabis products, and accessories designed to be used with cannabis, such as smoking pipes.
However, as mentioned earlier, the packaging of cannabis products is regulated by Health Canada and as such, businesses should familiarize themselves with those regulations prior to investing in any packaging designs. More information about the packaging requirements can be found.
Canada is the first G7 country to legalize recreational use of marijuana and businesses should be aware that other countries may not allow the same IP protections for the cannabis industry.