July 10 2019
United Cannabis (UCANN) holds U.S. Patent No. 9,730,911 that covers a cannabinoid-based medical product formula invented by Tony Verzura and Earnie Blackmon. The patent issued August 15, 2017. UCANN filed suit against Pure Hemp in 2018 in Colorado federal court, alleging that a Pure Hemp product infringes certain claims of the ‘911 patent. This is not an extraction method patent: rather, this patent claims a specific formulation that may be produced by “any suitable extraction method.” A sampling of the claims reads:
- A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids is cannabidiol (CBD).
- A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids are THC [tetrahydrocannabinol] and CBD.
- A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids are CBD, cannabinol (CBN) and THC.
A full copy of the patent can be found here.
Pure Hemp responded with an early motion for summary judgment on the grounds that the asserted UCANN patent claims were invalid and unenforceable under 35 U.C.S. 101 because they are directed at unpatentable subject matter, i.e., naturally occurring cannabinoids. The District Court disagreed, holding that Pure Hemp “failed to establish beyond reasonable dispute that the claimed UCANN formulations are anything like a natural phenomenon.” I.e. UCANN’s patent claims survived. Pure Hemp’s early motion for partial summary judgment was denied, and UCANN’s patent case against Pure Hemp lives on.
So just how many cannabis related patents have been filed in the United States? Try more than 10,000 since 1978, with more than 6,000 filings since 2008. That is a lot of patent coverage.
The clear message for the cannabis markets is this – although cannabis may have been around for a long time, the commercial markets and the IP portfolios that are presently being built to erect barriers to competition in those markets have not. Those barriers are being erected as you read this article. And, as players in more traditional commercial markets can attest, patent litigation, even if successful, can be expensive enough to drain precious capital and sink or seriously delay product launch. In a young, competitive and rapidly growing market such as the current cannabis market this could be a fatal blow.
What to do? Anyone in the cannabis markets would be well advised to survey the field of issued patents and published patent applications to make sure that they understand whether the current or prospective business operations may infringe someone else’s IP. If there is existing IP that is problematic, it may not be the end of the world. Early discovery is the key to risk mitigation. At this early market stage it may be possible to negotiate licensing arrangements, change plans for producing products in order to avoid someone else’s patent claims, or erect defenses to patent enforcement that will allow the business to survive and grow. However, once the patent holders are experiencing significant revenue and have consolidated their market position, they may not be very willing to negotiate a reasonably priced license. As an added incentive to patent searching, business executives in the space should be aware that failing to understand the IP landscape before using investor’s money could give rise to investor claims. The best approach is to budget for patent searching and proactively engage competent patent counsel to uncover and disarm any patent issues before significant funds are committed, and before that cease and desist letter shows up in the mail.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.