First Cannabis Patent Lawsuit Launched in the United States
The tremendous growth in the cannabis industry in recent years has led to a corresponding surge in patents protecting cannabis strains and cultivation processes. Those patents have largely been untested – until now. In what is understood to be the first case of its kind, Colorado-based United Cannabis Corp. (“United”) launched a lawsuit against Pure Hemp Collective (“Pure Hemp”) for infringement of its cannabis patent.
Background
United States Patent No. 9,730,911 (the “911 Patent”), titled “Cannabis Extracts and Methods of Preparing and Using Same”, was awarded to United in August 2017. The 911 Patent claims “liquid cannabinoid formulation, with or without specific terpene profiles, including formulations wherein at least 95 percent of the total cannabinoids is cannabidiol (CBD).”
In an action filed on July 30, 2018, United alleges that Pure Hemp willfully infringed the 911 Patent by continuing to sell Pure Hemp’s “Vina Bell” product (wherein at least 95% of the total cannabinoids is CBD). The action asserts that United discovered the infringing contents after the company ran lab tests on a purchased bottle of Vina Bell tincture.
United alleges that it has lost sales, market share, and goodwill as a result of the infringement and is seeking a permanent injunction preventing Pure Hemp from continuing to sell its Vina Bell product and an accounting of damages resulting from Pure Hemp’s infringement. Because of Pure Hemp’s alleged willful, deliberate and intentional conduct, United also seeks triple damages under U.S. statute law.
Implications
Although this is the first lawsuit of its kind, it is unlikely to be the last. Given the relative infancy of the industry and the lack of legal guidance around intellectual property relating to cannabis products and processes, it is likely Canadian litigation of a similar nature will follow in short order. Of particular interest (and concern) will be the U.S. Court’s use of prior art in its consideration of whether a patent is sufficiently novel and non-obvious to be patented.
While the markets and legal regimes for cannabis and intellectual property protection in the U.S. are not identical to those in Canada, they are sufficiently similar that cannabis companies carrying on business in Canada or in possession of Canadian patents should pay close attention to the United lawsuit. Notably, United filed a similar patent application in Canada in April 2017, though that patent has not yet issued.
The consequences for infringing a patent can be serious and cannabis companies should be prepared for their implications – new entrants can expect to face cease and desist threats or risk being ordered to disgorge their profits if they are found to infringe an existing patent. On the other hand, established producers and patent holders should consider how to make use of these legal challenges to protect their intellectual property.
Goodmans Intellectual Property (IP) and Cannabis Groups
The Goodmans IP and Cannabis Groups are experienced in IP issues and well-positioned to advise clients in the cannabis industry on protection and enforcement of their IP.
Goodmans has leading IP and cannabis practices. Our IP Group has won numerous landmark cases in the IP area, many of which have defined the extent of IP rights available in Canada. Our award-winning lawyers are recognized for their breadth of expertise and years of experience in trademarks, patents, industrial designs, copyright and trade secrets. Our corporate cannabis lawyers have extensive knowledge of the various players in the industry and have provided strategic business advice on governance, financing, licensing, regulation, capital markets, mergers and acquisitions and real estate matters. Our clients include start-ups, importers and exporters, and financial institutions related to the cannabis industry.
In addition, Goodmans is uniquely positioned with its extensive regulatory, health and IP practices to advise new and existing market entrants. In particular, given our extensive work with respect to “traditional” pharmaceuticals regulated under the Food and Drugs Act and its associated regulations (legislation used, in part, as the model for the upcoming Cannabis Act regulations), we uniquely understand the industry, are equipped to address regulatory concerns that may arise, and know how to best protect and enforce our clients’ IP. This includes matters such as licensing and regulation in the industry’s preliminary stages and future issues that may arise with regulators and competitors, including with respect to labelling and packaging, patent and trademark applications and prosecutions and the protection of trade secrets and confidential information.
Expertise
Authors
Insights
-
Cannabis
World Law Group 2020 Cannabis Guide
Victor Liu, Neil Sheehy and Danielle Levesque are contributors to the Canada section of the World Law Group 2020 Cannabis Guide. The Guide covers legislation, governing bodies, import and export… -
Cannabis
CSA Further Scrutinizes Disclosure by Cannabis Reporting Issuers
On November 12, 2019, the Canadian Securities Administrators (CSA) published Staff Notice 51-359 (the “Staff Notice”), highlighting inadequacies in disclosure of financial interests in M&A… -
Cannabis
Legal Landscape Applicable to the Regulation of Cannabis in Canada
On April 13, 2017, the Government of Canada introduced Bill C-45, the Cannabis Act, in the House of Commons. Based on the input of public health, law enforcement and justice experts, the Cannabis Act… -
Cannabis
Ontario Retail Cannabis Update… The Limited-Licence Lottery System
On December 13, the Ontario government announced significant changes to the province’s planned rollout of its retail cannabis regime. Ontario made regulation 497/18 (the “Amending Regulation”) under… -
Cannabis
Ontario Retail Cannabis Update"¦New Rules Rolled Out for Future Cannabis Retailers
The Alcohol and Gaming Commission (AGCO) released its Registrar’s Standards (the “Standards”) which provide further operational rules for cannabis retailers in Ontario. As detailed in our November… -
Cannabis
Ontario (Late to the Party) Retail Cannabis Update… With More to Come…
On October 17, 2018, Ontario enacted the Cannabis Licence Act (CLA) to permit the sale of recreational cannabis in privately owned stores. The CLA and its regulations, the Cannabis Licence Regulations…
Featured Work
-
Restructuring
MJardin’s Restructuring Proceedings
Goodmans LLP acts for KSV Restructuring Inc. (“KSV”) in respect of MJardin Group, Inc. (“MJardin” or the “Company”), a publicly traded licensed Canadian cannabis producer, in its ongoing restructuring… -
Capital Markets
Medicine Man Technologies NEO Listing
Goodmans LLP acted for Medicine Man Technologies, Inc., dba Schwazze (OTCQX: SHWZ) (NEO: SHWZ) in connection with their listing of common shares on the NEO Exchange – a tier one Canadian stock… -
Mergers and Acquisitions
Nova Net Lease REIT IPO
Goodmans LLP acted for Nova Net Lease REIT ("NOVA" or the "REIT") (CSE: NNL.U), Canada’s first Cannabis REIT, in connection with its initial public offering of 3,167,478 trust units (the "Units") at a… -
Mergers and Acquisitions
OrganiGram Holdings Inc. Acquisition of Laurentian Organic Inc.
Goodmans acted for Organigram Holdings Inc. (TSX: OGI and NASDAQ: OGI), the parent company of Organigram Inc. (collectively “Organigram” or the “Company”), a leading licensed producer of cannabis, in… -
Mergers and Acquisitions
Kiaro Closes Acquisition Of Hemisphere Cannabis
Goodmans LLP acted for Aegis Brands Inc. in connection with the acquisition of all the issued and outstanding shares of its subsidiary, Hemisphere Cannabis Co. by Kiaro Holdings Corp., which comprises… -
Capital Markets
Subversive REIT's Qualifying Transaction with InterCure
Goodmans LLP acted for Subversive Real Estate Acquisition REIT LP in the closing of its qualifying transaction to combine with InterCure Ltd., Israel’s leading cannabis company…
News & Events
-
Banking and Financial Services
Goodmans Continues to Receive Top Tier Recognition from The Legal 500 Canada
We are pleased to announce Goodmans LLP has once again received top tier recognition from The Legal 500 Canada in their 2024 Guide released today. Recognition from The Legal 500 is based on… -
Banking and Financial Services
The Legal 500 Canada Continues to Recognize Goodmans with Top Tier Rankings
We are pleased to announce Goodmans LLP has once again received top tier recognition from The Legal 500 Canada in their 2023 Guide released today. Recognition from The Legal 500 is based on… -
Cannabis
Michael Wilson quoted in "Ontario mulls legalizing cannabis lounges as it moves to a more open market", Globe and Mail
Michael Wilson was recently interviewed by the Globe and Mail on legalizing cannabis lounges in Ontario: Edibles-only cafés would also have to navigate federal rules that only allow cannabis to…