Intellectual property and Cannabis - where do we stand?

The state of intellectual property is in flux within the cannabis industry. On the eve of MJBizCon, below is a brief inventory of where the law stands on cannabis-related issues for branding and technology.

Branding

Federal trademark registrations remain unavailable to conventional cannabis companies, but there are several work arounds and caveats.

Work Arounds:

The general rule is that "unlawful" activities are not eligible for trademark protection. So it is still not possible to obtain a trademark registration for conventional THC-based cannabis products due to cannabis being a Schedule 1 substance under the Controlled Substances Act. But dispensaries also sell lighters, vape pens, rolling papers, and other goods that are not necessarily directed to illegal cannabis. Vape pens and rolling papers could be used for legal products such as tobacco.

The manufacturers of these legal goods can therefore obtain federal registrations for their branding (company name and logo, product name and logo, etc.). The dispensaries or retail outfits can also obtain federal trademark protection for the sale of these legal products, which provides some protection for cannabis itself as a related good once it is no longer a scheduled narcotic. Of course, state trademark registration is also available for any cannabis within the states that have legalized, but with fewer advantages than federal registration.

These work arounds are important to provide immediate protection for companies in the cannabis industry, but also to prepare for federal legalization whenever that occurs. Companies will no doubt flood the patent and trademark office with trademark filings the moment cannabis is no longer a Schedule 1 narcotic. Planting a flag in a "cannabis-adjacent" area will be critical to maintain brand positioning during this momentous growth period.

Caveats:

Recent developments in the law have defined the consumable products eligible for trademark protection.

• PROTECTIBLE: Delta-8 THC products with a Delta-9 THC content of 0.3% or less. Earlier this year, the Ninth Circuit Court of Appeals held that Delta-8 THC products are considered "hemp" under the 2018 Farm Act, paving the way for companies to obtain federal trademark registrations in this area. 
• NOT PROTECTIBLE: CBD Consumables. CBD concentrates and gummies cannot be protected by federal trademark registrations because the FDA continues to investigate the safety and efficacy of CBD as a supplement.
• PROTECTIBLE: CBD Topicals (lotions, soaps, etc.). These products are not considered supplements that are under review by the FDA and are therefore eligible for federal trademark protection.

Technology

The legality of a product is irrelevant under patent law. The restrictions applicable to trademark law do not apply to patent law and the U.S. Patent and Trademark Office will grant patent protection for a product or process even if it is directed to illegal goods or services. So cannabis vape pens, E-cigs, THC extraction techniques, and all other cannabis technology can be patented so long as they are novel inventions and comply with the other requirements of patent law.

Patents are most powerful during a growth period of an industry. The early years of cell phones provided a flurry of patent cases as the major players tried to claim position atop a skyrocketing commercial period. The same can be said for the semiconductor industry. Or the electric vehicle industry. Or even the smokeless fire pit industry.

What about cannabis? The cannabis industry has not yet found itself in a "patent wars" scenario, with some exceptions. Companies in the extraction and E-cig space have tried to elbow out competition by aggressively enforcing their patents against competitors.

The prevailing thought is that patent enforcement will become much more prevalent when federal legalization occurs. Indeed, it would be naïve to think cannabis would avoid the "patent wars" scenario that so many other industries faced during their growth periods. It is more likely that legalization-based growth will cause the larger players to flex their patent muscle in order to claim the throne of their respective sector of the cannabis space.