Clearing the Record (Maybe?) on Cannabis-Related Intellectual Property

Guest post by Justin McNaughton, senior counsel in Intellectual Property Group at Greenspoon Marder LLP

There is a lot of misinformation about intellectual property and Cannabis. Let’s see if we can clear some of it up. First of all, there are four types of intellectual property: patents, copyrights, trade secrets, and trademarks.

• Patent: A patent is a grant of a property right in a useful process, machine, article of manufacture, or composition of matter – granted by the government – to prevent others from making, using, or selling the invention claimed in the patent. The patent system is authorized by the U.S. Constitution. More information is at the U.S. Patent and Trademark Office’s Website. Any protection requires issuance of a patent.
• Copyright: A copyright is a grant of a property right in an original work of authorship that is fixed in a tangible medium of expression – granted by the government – to prevent others from copying the author’s work. The copyright system is authorized by the U.S. Constitution. More information is at the U.S. Copyright Office’s Website. Full protection requires registration.
• Trade Secrets: A trade secret is any information that has independent economic value because it is not known by other people and is kept secret using reasonable efforts by its owner. Trade secrets are established by state law and, although most states have adopted a Uniform Trade Secrets Act, there are variations between states. More information is at The Legal Information Institute’s Website. No registration required.
• Trademarks: A trademark/service mark is a word, name, symbol or device that is used to indicate the source of goods and services in the marketplace and to distinguish them from the goods and services provided by someone else. Trademarks are founded in consumer protection law, but they have also been protected by the Lanham Act. Congress has authority to protect trademarks because of its authority over U.S. Commerce granted by the Commerce Clause of the U.S. Constitution. Each state also has separate trademark statutes that coexist with the Lanham Act. More information is at the U.S. Patent and Trademark Office’s Website. No registration required, but full protection requires registration when available.

Upon reviewing, you will notice that only one of those intellectual property rights is founded on the commerce clause of the U.S. Constitution. This is important because, if you can remember that U.S. Federal Trademarks exist because of Congress’ ability to regulate interstate commerce, you will always remember which intellectual property right is unavailable for things that are illegal in interstate commerce – Only U.S. Trademark Registrations are unavailable for Cannabis, and only when the activity stated in the U.S. Trademark Registration is for an activity that is illegal in interstate commerce. State trademarks are permitted in any state that permits Cannabis-related trademarks, and U.S. Trademarks are permitted for any activity taken by a Cannabis-related company that is legal under U.S. law. To make a funny comparison, if a company that sold flower in Colorado also had a side business where it sold superhero comic books, it would be perfectly acceptable for the company to register a U.S. trademark application for comic books. Note that if the company happened to distribute Cannabis flower in sleeves inside the Cannabis comic books, they wouldn’t be able to register a U.S. trademark (and instead, would have lots of other problems).

Switching gears, there is no prohibition on patents for Cannabis-related inventions. Don’t let this confuse though, just because you can get a patent on something doesn’t mean that you can sell it. The easiest example of this is U.S. pharmaceutical products. Often new pharmaceuticals are granted patents by the U.S. patent office long before the FDA grants permission to the company to sell the pharmaceutical product, and sometimes the FDA never does. Whether or not you can sell something in the U.S. is a completely different question than whether or not you can obtain a patent on it.

So you go and get a U.S. patent and a State trademark for your fancy new method of using Vibranium (keeping with the comic book theme) to extract THC from Cannabis and then learn that a competitor (founded by a former employee) is using the same method and even calling it the same thing and using your logo! Here’s where it starts to get awkward. You have to go to a U.S. courthouse to sue someone for patent infringement and you can’t use federal trademark law to stop the competitor from using your name. Also, it could get weird if your Cannabis-company owns and asserts the patent because the fact that your own company also distributes Cannabis is likely to come up in federal court. This may be one reason to hold patents in a holding company rather than your operating company. On the other hand, it wouldn’t be awkward to bring a copyright claim for use of the logo, but one requirement for bringing a copyright claim is having a registered copyright. Also, remember that your competitor will feel all the same pressures and concerns about being dragged into federal court.

Summary:

• Should you try to protect intellectual property as a company that sells Cannabis? Absolutely.
• Should you temper your expectations as to what you’ll be able to do with the intellectual property? Yes.
• As a Cannabis company, will you be able to enforce your intellectual property? It really hasn’t been tested, but you should be able to do it if you have done your homework and have established multiple measures of intellectual property protection.

About the author:

Justin McNaughton is a senior counsel in Intellectual Property Group at Greenspoon Marder LLP in Nashville. He focuses his practice in the following areas: patent prosecution and protection, trademark, and copyright law; internet and website law; commercial contracts and technology licensing; biotechnology and life sciences; and entrepreneurs and startups. Justin has spoken at numerous events about the intersection of intellectual property and the cannabis industry.

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