Fast Facts About Intellectual Property for Cannabis
Every business has IP rights that should be protected. Hoban Law Group has a highly experienced team of IP attorneys who are knowledgeable about the practice of IP law in the context of cannabis businesses. We pride ourselves in securing IP rights that are robust and expansive and can help you create a comprehensive, business-driven IP strategy that will protect all aspects of your valuable IP estate.
1. Intellectual Property is more than trademarks.
Intellectual Property Rights (“IP”) is a generic term that refers generally to rights in intangible property, as distinguished from real estate or personal property. IP encompasses trademarks, which protect branding; patents, which protect new, useful, and non-obvious technology; copyrights, which protect works of authorship fixed in a tangible medium of expression; and trade secrets, which protect proprietary information not known to the general public and that confers an economic advantage in the market by virtue of it being secret. Each of these types of rights performs a different function, and the wise cannabis entrepreneur uses them, alone and in combination, to maintain market exclusivity, build their brand, and, as a result, increase corporate valuation and, in some cases, create revenue.
2. Trademark rights protect branding.
Trademarks are words, designs, sounds, colors, or combinations thereof, that are used in combination with the sales of goods or services, as a means of identifying their source. These rights attach and accrue with use – they are automatic, vs. granted by a government entity. However, registering the marks provides additional benefits, including but not limited to, expanded geographic scope of protection, enhanced damage awards, and border interdiction.
Trademark rights protect the use of the same or confusingly similar marks on the same or similar goods. However, they do not prevent others from selling the same or similar goods under different marks.
3. Patent rights protect technology.
Patent rights protect technology, which is broadly defined as applications of scientific principles which solve technical problems. There are four types of patents: utility patents, design patents, plant patents, and plant variety protection certificates, each of which is designed to protect different types of subject matter.
The policy underlying patent rights is, to incentivize innovation in order to encourage inventors to share their knowledge with the general public in order to allow others to “stand on their shoulders” and push technology forward. Hence, patents give the owner an absolute monopoly for a limited period, in exchange for full disclosure of how to make and use the invention.
Patent rights only apply to certain types of subject matter. They do not protect creative works, branding, or technology which is not novel and/or non-obvious. Moreover, they are rights of limited duration. In some cases, such as where the invention isn’t non-obvious, or where the inventor wishes to protect their invention for an unlimited period, they are not the right choice.
Unlike trademark rights, patents are not automatic – they must be applied for. Patent applications undergo a process of examination; rights are granted in cases where the invention as it is claimed is found to be useful, novel, and non-obvious over the prior art (defined as anything known to the public prior to the date on which the first application was filed).
Patent rights are rights of exclusion – they give the patent owner the right to prevent others from making, using, or selling the claimed invention. However, they do not give the patent owner the absolute right to make, use or sell their own invention. The owner of a patent to a four-legged table will be subject to the rights of the holder of a patent to a three-legged table and will have to obtain permission or take a license in order to avoid liability for infringement.
Patent law is a highly complex area, and attorneys who practice in this area must take a separate bar exam as well as having a technical background in an area related to the technical area in which the invention falls.
4. Trade secrets can protect proprietary knowledge not known to the general public for a potentially unlimited period
In cases where technology is not patentable, or where an inventor wishes to protect their technology for an indefinite period, trade secret protection may be the best option.
Trade secrets are defined as proprietary information that confers an economic advantage by virtue of the information not being generally known.
Trade secrets are creatures of contract – they are protected by imposing a duty of confidentiality on anyone who is entrusted with the information, such as during negotiations; as a condition of employment; or in other circumstances where the information is being disclosed. As such,trade secrets are only enforceable as against persons who are signatories to the contract imposing the duty of confidentiality and their authorized agents.
Trade secrets are best employed where the information is not easily reverse-engineered; where it can be siloed so that no one person knows everything necessary to practice it, such as by limited disclosure and/or by geographic separation; and where the information is not easily accessible to the public, such as for manufacturing processes accessible only by limited numbers of employees.
However, where appropriate, trade secrets are very powerful and effective.
5. Copyrights protect original works of authorship fixed in a tangible medium of expression
Copyrights are used to protect creative works. Copyrights protect, not the underlying idea or information, but the manner in which they are expressed. Hence, “creativity” is used very broadly in this context – it can include things like phone books, maps, and data reports, which are comprised of factual information – in such cases, what is protected is the particular presentation.
Copyrights, like patents, are of limited duration, and like trademarks, are automatic. They come into existence automatically as of the moment of fixation, and they expire 70 years from the death of the author.
A special case of copyrights that often creates problems that can lead to litigation are “works for hire” – creative works that are commissioned and often executed according to the direction of the entity commissioning them. In such cases, provided certain criteria are met, ownership vests not in the author but in the commissioning party. Disputes around ownership of works for hire are best avoided by having the author sign a contract in which the relationship between the parties and the nature of the work is clearly defined as a work for hire to be created by the artist at the behest and direction of the commissioning party, and some valuable consideration – such as money – is given in exchange for the work.
The following table compares and contrasts IP rights, but is not exhaustive. Individual circumstances will vary.