If you’ve ever caught an episode of ABC’s “Shark Tank,” you’ve no doubt heard billionaire Mark Cuban and his cohorts ask entrepreneurs: “do you have a patent or other intellectual property protecting it?” This is because a company’s value increases substantially when its ideas, methods, or technology are properly protected under the law.
Cannabis industry companies, whether they be involved in the hemp, marijuana, or cannabinoid supply chains, require a wide array of Intellectual Property (IP) rights to protect their innovations. These include trademarks, patents, copyrights, trade secrets, and the like. Presently, patents and trademarks constitute the most substantial source of IP protection for most cannabis companies.
IP is a commonly utilized label referring broadly to rights in several forms of intangible property. IP generally includes patents (which protect novel technology); trademarks (which protect branding; copyrights (which protect written works of authorship); and, trade secrets (which protect a company’s proprietary information). 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 increase business valuation. As the cannabis industry is global in scope, these sorts of protections require a glimpse of international IP protection as well.
Patent rights protect technology, which is broadly defined as the application of scientific principles intended to solve technical problems. There are four types of patents: utility patents, design patents, plant patents, and plant variety protection certificates.
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, but registering a trademark ensures a broader, and standardized, level of protection. Trademark protection is impacted by the legality (or illegality) at the federal level of the subsector of the cannabis economy, as described above.
Copyrights protect the original works of an author. Copyrights are used to protect creative works. Copyrights protect, not the underlying idea or information, but the manner in which they are expressed. This includes things like books, reports, and certain compilations of factual information.
Trade secrets are generally a construct of contracts. These are defined as proprietary information that confers an economic advantage by virtue of the information not being generally known. Trade secrets can protect proprietary knowledge not known to the general public. 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.
International IP is similar, but perhaps a bit more specific, as it may relate to the cannabis industry. The World Trade Organization has affected the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. The TRIPS agreement provides benchmark standards for many types of IP. Similar to the US, TRIPS IP protection covers patents, trade secrets, copyrights, and trademarks. Yet, the most common types of TRIPS IP are utility patents, Plant Breeders’ Rights (PBR), which are intended to protect the commercialization of new varieties of cannabis plants developed by traditional breeding, and plant patents.
No matter where you are located, and no matter which facet of the cannabis industry you inhabit, there are certain IP protections available to you. IP law is a highly specialized practice, and IP protection can make or break a company and its valuation of M&A prospects. Thus, it’s imperative to tread carefully, consult learned IP professionals with cannabis experience (like the attorneys that comprise Clark Hill’s IP practice), and ensure that all protectable aspects of your enterprise are protected accordingly.