Patents on pot? U.S. lawsuit puts
cannabis claims to the test
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[November 29, 2018]
By Jan Wolfe
(Reuters) - In October, the U.S. government
issued Axim Biotechnologies Inc <AXIM.PK> a patent for a cannabis-based
suppository to treat irritable bowel syndrome.
Britain's GW Pharmaceuticals Plc <GWPRF.PK>, which recently brought to
market a drug derived from marijuana for epilepsy, is now seeking patent
protection for another one to treat eczema.
With marijuana now fully legal in Canada and at least partially
legalized in the majority of U.S. states, companies are rushing to
patent new formulations of the age-old botanical. This year, the U.S.
Patent and Trademark Office has issued 39 patents containing the words
cannabis or marijuana in their summaries, up from 29 in 2017 and 14 in
2016.
(Graphic: https://tmsnrt.rs/2Ri9sON)
How well the patents hold up in court remains to be seen. If they do, a
handful of companies could be in position to demand licensing fees from
the rest of the industry.
The first U.S. case is now winding its way through the courts. In a July
lawsuit, Colorado-based United Cannabis Corp <CNAB.PK>, accused Pure
Hemp Collective Inc of infringing its patent covering a liquid
formulation with a high concentration of CBD, a non-psychoactive
cannabis ingredient touted for its health benefits.
One of the key issues in this case and others, experts say, is whether
the patent is overly broad or obvious in light of "prior art,” the
existing level of science or technology against which an invention's
novelty can be judged.
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Given the long history of experimentation with marijuana, patents
claiming new formulations or methods of using the drug could have
trouble withstanding legal challenges, said John Stewart, a board member
at Canadian cannabis company Emblem Corp.
Still, one factor that could help patent holders defend their products
is the lack of documented previous research. Because marijuana has been
illegal, many of its uses have not been written about in the sort of
scientific articles typically presented as prior art in patent cases.
"Because of 80 years of prohibition, there is a massive lack of prior
art documentation for cannabis," said Beth Schechter, executive director
of the Open Cannabis Project, a nonprofit that opposes cannabis patents.
"Folk knowledge and information that is clear to the industry might not
be seen or considered by the patent office."
OBVIOUS OR INVENTIVE?
Marijuana-based patents could never really be put to the test as long as
cannabis was broadly illegal. Even if companies had potential grounds to
challenge a rival's product for patent infringement, they were often
reluctant to call attention to potentially criminal activities.
But in a climate of increasing tolerance the number of marijuana
formulas and extracts being brought to market has exploded, opening the
door to challenges from patent-holders. The worldwide cannabis industry
is expected to reach $75 billion by 2030, according to Cowen & Co,
making it one of the world's fastest growing industries.
At the center of the United Cannabis case is the patent covering its
formulation of CBD, which has become trendy as a health supplement and
is widely available in U.S. cafes and wellness shops.
While the U.S. Drug Enforcement Agency considers CBD products to be
illegal, federal prosecutors are not bringing criminal cases against
sellers.
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![](../images/112918pics/news_m25.jpg)
Droplets of oil form on the surface of a marijuana plant at Tweed
Marijuana Inc in Smith's Falls, Ontario March 19, 2014.
REUTERS/Blair Gable
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United Cannabis' patent covering a highly-concentrated CBD
formulation could potentially apply to most of the CBD products now
on the market, said Neil Juneja, a patent lawyer in Seattle.
United Cannabis general counsel Jesus Vazquez declined a request for
an interview but referred to a blog post from August in which he
defended the company's patented technology as "novel and inventive."
Others say similar formulations have been used for decades.
"There are plenty of people who know the facts about cannabis
extracts and biochemistry who are just up in arms over this patent,"
said Dale Hunt, a patent lawyer in California.
Donnie Emmi, a lawyer for Pure Hemp, said he believed the company
had a good chance of invalidating United Cannabis' patent. In a
court filing, Pure Hemp said highly concentrated liquid CBD
formulations are "ubiquitous" and "were not invented in this
millennium."
INDUSTRY NEEDS TO ‘WAKE UP’
Still in its infancy, experts say the marijuana industry is largely
ill-prepared for patent litigation and battles over licensing fees
that may lie ahead.
"The cannabis industry needs to wake up to this business reality,"
said Reggie Gaudino, a vice president at cannabis research firm
Steep Hill Inc.
Part of the reason companies have been slow to recognize the threat,
analysts and investors say, is that patents are foreign to the
open-source, laissez-faire culture that has historically surrounded
marijuana.
"This industry has traditionally been made up of people who really
believed in this cause, this plant, and the health benefits," said
Kris Krane, a cannabis industry consultant.
"Most of the new players getting involved now are getting into it
from a business perspective and they will look at patents as more of
a business consideration."
(Reporting by Jan Wolfe; Editing by Anthony Lin and Paul Thomasch)
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