Analysis: Patents on pot? US lawsuit puts cannabis claims to the test

Axim Biotechnologies

29/11/2018 12:00

By Jan  Wolfe
    Nov 29 (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.
    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.
    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."

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Graphic: Highly patentable    https://tmsnrt.rs/2Ri9sON
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 (Reporting by Jan  Wolfe; Editing by Anthony Lin and Paul
Thomasch)
 ((Jan.Wolfe@thomsonreuters.com;))