Just under a decade ago, Washington became the first state to legalise recreational cannabis, bringing with it the potential to create a legitimate business focused on the buying, selling or distribution of the drug in the US.
However, it is still very much illegal at a federal level, taxes on cannabinoids are high and producers are constantly skirting legality in trying to build their own businesses.
IP has an increasingly important role to play in the legitimisation of the industry and the protection of its produce.
During a panel discussion The Current Cannabis IP Landscape on April 15, LSPN Connect invited legal professionals working in the cannabis market to talk about how IP protection can help cannabis entrepreneurs and what we can expect from the fast-growing market in the future.
“There is a real boom in patenting across all areas of cannabis,” said Dale Hunter, founder and CEO of Plant & Planet law firm. “In the US there are three ways to patent plant genetics: Firstly, through the US department of Agriculture (USDA) and the other two ways are with the US Patent and Trademark Office.
“There are two key patent types you can register. You can register for a plant patent but the drawback is that, like a copyright, if something is similar but not a direct copy, it isn't infringement. It is also quicker and less expensive than a utility patent.”
A utility patent offers more protection and has a further reach, covering clones, seeds, and extracts, added Hunter.
While patent protection is costly, trademarks are a cheaper alternative for companies looking to protect and focus on their brand.
“Trademarks can play a very important role in the initial launch of a product. Costs are lower and you can do more with that brand,” said John Mansfield, owner of Mansfield Law. “Trademarks are right now the best bang for buck you can get for protecting cannabis IP.”
Building a portfolio
One of the biggest challenges facing the cannabis market right now is the lack of prior art or case law to draw from when it comes to litigation or attracting investors with a robust IP portfolio.
Hunter said: “One thing investors look at is the validity of patents. In biotech and agritech, they would have millions of examples of prior art to draw from to compare to your patent, but with cannabis, prior papers on effects for example are effectively non-existent.
“There is no corresponding rich body of literature to claim if some patents are clear or not obvious. I think there will be a cloud over many cannabis patents to come. However the literature will grow in the future.”
Joe Wyse, partner at Bressler IP agreed, saying: “The more prior art the better, it makes the world of cannabis appear far more professional.”
“It is a good thing that more prior art is being proffered. It will greatly improve the quality and validity of the patents going forward.”
With the cannabis market still in its infancy, much is expected to change over the next few years as the business is further legitimised and more money comes into the cannabis market.
“Obviously the biggest watchstone in the US at the moment is federal legislation. If it triggers, it will change almost everything,” said Mansfield.
As the market grows, the standardisation of practices will follow suit. One recent development that could have a large impact on the way business is done in the cannabis market is the Nagoya Protocol on Access and Benefit-sharing—a regime that promises that value created is put back into regions that created that value.
The US has not joined the protocol but that should not stop businesses from adhering to it.
“It is good business to behave ethically,” added Wyse, “Whether the US joins or not it is just good business for small US cannabis companies to behave as if they were part of the protocol.”
Watch The Current Cannabis IP Landscape here.
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