Why patent lawyers are watching this Colorado cannabis case

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Colorado-based Pure Hemp Collective promotes its Vina Bell line of tinctures, salves, topicals and bath soaks as plant-based, inspired-by-grandma’s-garden remedies to “heal what ails ‘ya.”

Notwithstanding all the folksy charm surrounding its marketing, the cannabis extract-containing products—specifically a 5,000-milligram tincture—are at the heart of a modern-day, potentially big-dollar patent fight that has the marijuana IP bar watching.

United Cannabis Corp., a biotechnology company in Golden, Colorado, also known as UCANN, has sued Pure Hemp Collective for patent infringement in the U.S. District Court for the District of Colorado. The complaint, filed in late July, alleged Pure Hemp infringed a patent claim protecting “liquid cannabinoid formulation, wherein at least 95 percent of the total cannabinoids is cannabidiol (CBD).”

Represented by Cooley partner Orion Armon, United Cannabis is seeking triple damages for Pure Hemp’s “willful” decision to continue selling the patented formulations despite being sent a warning letter in May. United Cannabis’s suit said the company ran lab tests on a purchased bottle of Vina Bell tincture and discovered the infringing contents.

“UCANN is proud of the CBD-based therapeutics it has developed,” Jesús Vázquez, general counsel to United Cannabis, said in an email. “Our company places a high priority on research and development and when it becomes necessary, we will protect our IP rights.”

Pure Hemp Collective has not filed its answer. Matthew Meidinger, Pure Hemp’s director of sales, referred questions to attorney Donnie Emmi of Hunsaker Emmi in Golden. Emmi did not return a message.

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The United Cannabis lawsuit appears to be a first-of-its-kind case involving a patent for a cannabis-based extract, according to patent lawyers who spoke with The Recorder. The suit—if it proceeds—has the potential to set precedent for how federal courts handle marijuana-related parents. And if validated by a court, the claims could have a wide-reaching effect on the booming $1 billion cannabidiol industry.

If Pure Hemp Collective can’t knock down those claims, “I think this company will go around to everyone with their hat in their hand, saying ‘Pay us,’” said Brett Schuman, a Goodwin Procter partner in San Francisco specializing in IP litigation.

Although the federal government classifies marijuana as an illegal Schedule 1 drug under the Controlled Substances Act, the U.S. Patent and Trademark Office will grant cannabis-related patents if the subject matter meets all the legal criteria, including not having been in the public domain previously. But there’s no case law or other guidance for federal courts on handling such patent disputes.

“It’s not clear what a federal court is going to do with this,” said Gretchen Temeles, an associate in the Philadelphia office of Duane Morris. “Nobody knows what a court is going to do, no one wants to be that test case. The risk is quite high. You could get to court and the court could say, ‘This is Schedule 1, I’m going to dismiss this case.’”

United Cannabis was issued patent number 9,730,911, or ’911, in August 2017 for “cannabis extracts and methods of preparing and using same.” The patent asserts claims for 36 liquid cannabinoid formulations. United Cannabis has developed its own “cannabis-centric” Prana Bio Nutrient Medicinals line and has licensed its sale in the United States and Australia, according to the company’s website.

In its patent complaint, United Cannabis cited the U.S. Food and Drug Administration’s recent approval of a cannabis-based pharmaceutical, Epidiolex, and the U.S. Drug Enforcement Administration’s possible reclassification of CBD to a less-restrictive Schedule II or Schedule III drug.

“UCANN views its IP on CBD-based therapeutics in the same category as other patents covering Schedule III, IV, or even Schedule V compounds that offer proven medical benefits and low or no potential for abuse or dependence,” Vázquez told The Recorder. “For those reasons and others we believe our patent can be enforced in federal district court.”

United Cannabis’s patent claims have been criticized as overly broad. Neil Juneja of Gleam Law in Seattle told IPWatchdog that many cannabis products on the market contain a THC concentration of 95 percent, a formulation United Cannabis asserts as its own in the ’911 patent.

“All it takes is pouring some alcohol over cannabis to get a THC concentration in excess of 95 percent,” Juneja said. “You can do it at home if you buy some Everclear. I don’t understand how that could be considered patentable.”

There’s a potential wrinkle for proving prior, prepatent use of such formulations, however. The marijuana industry was largely clandestine and government-wary until recent years. While the U.S. patent office has accepted marijuana patent applications for decades, there’s no “deep reservoir of prior art,” as Schuman puts it, for patent challengers to use.

Schuman and others warn of the potential for an upcoming patent war in the cannabis space as more entrepreneurs seek U.S. patent protection, relying on broad claims that can’t easily be invalidated.

“I worry that in the next couple of years, we’re going to have all of these patents coming out of the woodwork and companies will go out of business,” said Kevin Wimberly, an associate with Beusse Wolter Sanks & Maire in Orlando, Florida. “It definitely harshes the mellow of the industry.”

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