Landmark Case in Colorado Raises Questions on Cannabis Patents

Is the marijuana industry on the verge of seeing more legal disputes surrounding patent infringement? One patent lawyer thinks it’s possible.

As the markets see the steady rise of the cannabis business, the possibility of an uptick in courtroom battles over patent use may be appearing soon enough.

In an interview with the Investing News Network (INN), Brian Shortell, a partner with law firm Ballard Spahr, said he is curious to see the development of legal disputes surrounding the enforcement of cannabis-related patents in state and federal courts given the status of the drug in the US.

Despite being legalized across several states for medical or even recreational uses, cannabis remains a scheduled drug at the US federal level. However, this past summer a Denver federal judge made history by allowing a cannabis patent lawsuit to move ahead into a jury trial.

According to a report from Marijuana Business Daily, the suit was filed by United Cannabis against Pure Hemp Collective — both Colorado-based firms — claiming infringement on a “cannabinoid-based medical product formula.”

Shortell told INN he expects to see disputes rise about the legality of enforcing patents for cannabis applications and cannabinoid-related technology.

“They are not finding them invalid based on the subject matter being marijuana,” Shortell said. Given the federal status of the drug, the expectation would have been for the suit to be dismissed.

In terms of the variance in patents related to the marijuana industry, the lawyer has predominantly seen patents connected to formulations, medical treatments and methods of processing.

“It’s basically patents related to taking the active ingredients and being able to use them in other products,” he explained.

Due to the many complications surrounding marijuana reform and policy, Shortell is curious about the impact of a potential winning patent lawsuit regarding cannabis, since the punishment for a court finding patent infringement is that lost profits are awarded.

“Will a court award money damages to a patent holder from the infringer for a substance for sale that is federally illegal?” he questioned.

While patents have different intentions and potential uses, Shortell reminded investors that a patent allows someone to go to court and stop someone from doing something.

“It’s called an exclusionary right or an exclusive right — we can exclude people from that activity or making that product … When one has a patent on a marijuana formulation they can go into court and stop people from making that marijuana formulation,” said Shortell. “The patent holder is doing nothing illegal by having the patent, the patent is to stop an infringer.”

Besides this case in Colorado, the lawyer has not seen any other notable patent-related cases with cannabis involved.

In a previous interview with INN, Dena Jalbert, founder and CEO of Align Business Advisory Services, said she expects to see an increase in the merger and acquisition deal-making space for cannabis based on intellectual property (IP).

“I think most of the deals that we’re going to see are going to be IP specific, because there’s only so much land,” Jalbert said.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.