We are pleased to report that we have just returned from the annual “Cannabis Summit” in Denver, CO hosted by the National Cannabis Industry Association (“NCIA”) where we co-hosted an evening mixer with Culture Magazine and our friends at the Bremer, Whyte, Brown & O’Meara law firm. Once again, one of the most highly-discussed topics was one that we are most interested in and have spoken about before at other conferences such as the NORML Legal Committee meeting and this past February’s “IP For Adults Only” sponsored by the Intellectual Property Section of the State Bar of California: why trademarks, copyrights, trade secrets, and patents are playing an important role in the ever-growing expansion of the decriminalization of the possession and use of marijuana in the United States.
NCIA was founded about 5 years ago to provide a place for entrepreneurs and businesses to come together to try to normalize the billion-dollar industry that has grown up around the 23 states that have enacted laws to decriminalize the possession and sale of MJ for medical purposes and the four states that have decriminalized MJ for use by adults over the age of 21. This has created an environment where businesses – not just individual growers – are needed to grow, process, and distribute the marijuana that the public demands. Consequently, in order for those businesses to attract the capital they need to build and grow, they need to protect and capitalize on their intellectual property (“IP”) rights, namely, their trademarks, domain names, copyrights, trade secrets and patents.
Five years ago, when we first started to explore the transition of the marijuana business from an underground economy to a legitimately taxed and regulated industry, very few of the entrepreneurs and businesses in the industry were thinking much about their IP rights and opportunities. In the last five years, this has changed dramatically – to the point where we routinely receive several inquiries a week about how the artful use of IP can help these kinds of businesses. Smart investors want to know.
As a reference point, at my NORML Legal Committee presentation in December of last year we asked the lawyers in attendance how many of them had received questions about IP matters from their cannabis clients more than 5 years ago. Two of the attendees raised their hands. When we asked how many of them had received questions about IP in the prior year, about 15 hands went up. Based on our experience, we believe that is a fairly accurate barometer of how important these issues have become to cannabis businesses in the past five years.
As we will address in future blog entries, many of the IP rules and models that have long applied to every conceivable business – from electronics to automobile parts to clothing and restaurants – apply to the commercial marijuana industry. However, some do not. Because the growing, processing and sale of marijuana is still illegal under federal law, as well as many state and local laws – (despite recent polling that seems to indicate that 58% of the American public favors the end of the marijuana prohibition) – there are some unique challenges that arise when trying to develop and implement and IP protection program for a marijuana business. We provide strategies to deal with these challenges almost every day of every week.
Typically we start with an overview of the four basic “tools” of intellectual property law: trademarks, copyrights, patents and trade secrets. The purpose of this overview is to help our clients get familiar with some of the broad general concepts in IP law and to help them with issue-spotting.
To help facilitate this overview, we provide a handout that summarizes and compares the four basic IP tools over five different criteria on one piece of paper. (For a brief summary of the four basic tools, please see our 05/15/2015 blog entry below).
After the overview, we jump into the issues that are unique to the marijuana industry. In particular, we discuss how marijuana businesses face difficult and challenging hurdles when it comes to protecting their trademarks, trade secrets and patents. Some of these difficulties arise from a rigid interpretation of the Controlled Substances Act (“CSA”) by the U.S. Patent and Trademark Office. Others arise from state requirements that force marijuana businesses to disclose their methods of operation. There is also a great deal of fear and misunderstanding about what can and can’t be patented.
We will address some of these issues in upcoming blog entries. However, for right now we will close by making reference to one of the most interesting aspects of this entire inquiry – the fact that the United States government owns an issued patent for a process of using cannabinoids to treat certain ischemic diseases. See U.S. Patent No. 6630507. Reading the patent as written by the government and as issued by the Patent Office sounds as if it were a promotional advertisement for marijuana written by NORML and any number of proponents of decriminalized marijuana:
“Cannabinoids have been found to have antioxidant properties, unrelated to NMDA receptor antagonism. This new found property makes cannabinoids useful in the treatment and prophylaxis of wide variety of oxidation associated diseases, such as ischemic, age-related, inflammatory and autoimmune diseases. The cannabinoids are found to have particular application as neuroprotectants, for example in limiting neurological damage following ischemic insults, such as stroke and trauma, or in the treatment of neurodegenerative diseases, such as Alzheimer’s disease, Parkinson’s disease and HIV dementia.”
How the U.S. Government owns a patent like that while at the same time refusing to issue trademark registrations is one of the many incongruities that have arisen in this field that need to be worked out in the months and years to come.
CAVEAT: Despite the number of states that have legalized the use and sale of marijuana either for adults over the age of 21 or for medical purposes, the use and sale of marijuana is still illegal under federal law. This blog entry is not intended to encourage anyone to ignore the illegality of marijuana possession and sale under federal law and we encourage all readers to consult with an experienced attorney concerning compliance with all applicable local, state and federal laws concerning the use, possession and sale of marijuana.