Court Claim: Are Cannabis Medical Formula Patents Enforceable?

Cannabis plant-based medicines have the potential to treat a range of medical conditions, such as epilepsy, and are part of a growing multi-million dollar industry. Some inventors have patented their medical cannabis plant-based inventions, although it’s unclear how their patent infringement claims would fare in federal court, because cannabis is illegal under federal law.

United Cannabis Corp., which makes cannabis plant-based medicines, is testing the legal waters with an infringement lawsuit that could lead to a wave of similar litigation—if a federal court decides to hear its case. It is seeking damages from Pure Hemp Collective Inc. that it accuses of infringing its patent on extracting cannabinoids to make botanical drugs to treat conditions such as paralysis, seizures, and cancer. It also wants an injunction to stop its competitor from selling cannabis-based wellness products that allegedly infringe its intellectual property.

The infringement complaint, filed July 30 in the U.S. District Court for the District of Colorado, is one of the first infringement cases bringing a patent on a cannabis composition into the heart of a federal court dispute, Jeremy Kapteyn, a partner at KW Law said.

If the Colorado court allows the lawsuit to proceed, despite the fact that marijuana is illegal, it could open the door to more patent-related cannabis litigation that legal practitioners and cannabis businesses already forecast is on the horizon.

Clarity on Enforceability

“There’s a great deal of uncertainty as to how these cases will be handled in district courts, given the subject matter is illegal under federal law,” Kapteyn, who advises cannabis businesses on intellectual property issues, told Bloomberg Law. But rulings in cases such as United Cannabis’ lawsuit will start to provide some clarity on how federal courts will treat cannabis patents, he said.

The ability of businesses in the legal medical marijuana market to protect their intellectual property hangs in the balance. The legal medical marijuana industry — which is distinct from the recreational marijuana market — is projected to grow from $5.1 billion in 2017 to an estimated $12.5 billion in 2025, according to cannabis market research firm New Frontier Data.

Pharmaceutical companies such as Insys Therapeutics that sell synthetic marijuana drugs can protect themselves against patent infringement related to their treatments that aren’t derived from plant-based marijuana.

The Patent and Trademark Office has granted more than 500 cannabis-related patents since 2000, covering plant strains, chemical formulations, medical treatments, and devices to make and consume cannabis, according to Bloomberg Law data.

Emboldened by FDA Approval

The Drug Enforcement Agency classifies marijuana as a Schedule 1 drug, in the same category as heroin and LSD. United Cannabis is betting that a recent move by the Food and Drug Administration will pave the way for marijuana to be taken out of its dangerous drug category and shifted to a category of drugs with medical value and lower potential for abuse.

United Canabis’ lawsuit points to the FDA’s June 25 approval of GW Pharmaceuticals Plc’s Epidiolex, which treats two rare forms of childhood epilepsy. Epidiolex is made from cannabidiol, or CBD, which differs from tetrahydrocannabinol, or THC, which gets users high. The approval marked the first time patients in the U.S. will have access to a cannabis-derived drug that has undergone the government’s safety reviews.

The FDA’s report on Epidiolex “evaluated the abuse risk associated with CBD and ‘concluded that CBD has a negligible abuse potential,’” the United Cannabis lawsuit stated. It argues that the DEA will likely reclassify CBD by the end of September from a Schedule 1 substance to a category that covers drugs such as the insomnia drug Ambien (Schedule III). Schedule I drugs cover substances with high abuse potential and no approved medical use.

The company “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,” United Cannabis Vice President and General Counsel Jesús M. Vázquez told Bloomberg Law in an email. “For those reasons and others, we believe our patent can be enforced in federal district court.”

The FDA’s Epidiolex approval doesn’t mean all CBD or cannabis-based compositions will become legal, DEA spokeswoman Katherine Pfaff told Bloomberg Law. The DEA won’t reclassify CBD or cannabis-based compositions without a green light from the FDA, and that hasn’t happened yet, she said. Pfaff declined to comment on United Cannabis’ lawsuit.

United Cannabis’s U.S. Patent No. 9,730,911, titled “cannabis extracts and methods of preparing and using same,” was granted in 2017. It purchased Pure Hemp’s products and ran composition tests when it found that Pure Hemp’s chemical formulations infringed the ‘911 patent, according to the lawsuit.

Pure Hemp Collective will likely challenge the validity of the ‘911 patent as it defends infringement allegations, KL Law’s Kapteyn said.

Pure Hemp Collective didn’t respond to a Bloomberg Law request for comment.

“Cannabis companies will become increasingly sophisticated with respect to monitoring competitor IP positions to evaluate freedom to operate and challenging competitor patents prior to enforcement,” as the industry matures, Kapteyn said.

The case is: United Cannabis Corporation v. Pure Hemp Collective Inc., D. Colo., No. 1:18-cv-01922, Complaint filed 7/30/18