What if a company patented any liquid form of high-potency cannabis? And, what would happen if that company used the patent to shut down the operations of anyone making these liquid forms? Those are the questions raised by a lawsuit filed in Colorado federal court on July 30, 2018, and the answers could have existential consequences for many cannabis businesses.

In July, United Cannabis Corporation (“UCANN”) sued Pure Hemp Collective, alleging infringement of U.S. Patent No. 9,730,911, “the ’911 patent.” The UCANN case has major implications for U.S. cannabis businesses, and it is critical for the industry to understand exactly what UCANN is claiming, and the strength of its claims. This will require understanding a bit about U.S. patent law, and, importantly, the limitations inherent in the U.S. patent system.

A patent provides its owner with statutory protection over patented “inventions,” including “any new and useful process, machine, manufacture, or composition of matter….” 35 U.S.C. § 101. The scope of protection is defined by the “claims” in the patent, which are succinct descriptions of what is covered by the patent, similar to the “metes and bounds” description on a real property deed. Each claim operates like a “mini patent” in the context of the patent as a whole. Patent infringement occurs when someone, without permission, practices the “invention” described in any of the claims of a patent.

UCANN claims that Pure Hemp is infringing the claims of the ‘911 patent, which is directed to compositions of matter, and it alleges specifically as follows:

UCANN purchased Pure Hemp’s Vina Bell 5000mg product and ran chemical composition tests on it to determine whether the cannabinoid formulations within the product are covered by the ’911 Patent.  The analysis revealed that the product contains a cannabinoid formulation that directly infringes one or more claims of the ’911 Patent, including exemplary claim 10: “A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids is cannabidiol (CBD).”  Specifically, the Vina Bell 5000mg product contains a cannabinoid formulation wherein at least 95% of the total cannabinoids is CBD.  Pure Hemp sells other cannabis products with similar cannabinoid compositions that infringe other claims of the ’911 patent.

Complaint, ¶ 22.  UCANN references Claim 10 of the ‘911 patent, which reads in its entirety as follows:

A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids is cannabidiol (CBD).

On its face, Claim 10 would appear to cover any liquid formulation containing CBD so long as at least 95% of the cannabinoids in that formulation consist of CBD. This is a very broad claim, apparently encompassing a significant number of CBD products currently on the market. Of the thirty-six claims in the ‘911 patent, claims 1, 5, 16, 20 and 25 are similarly broad, and would appear to cover, in turn, high-potency formulations containing: THCa; THC; THCa and CBDa; THC and CBD; and CBD, CBN, and THC. Assuming the ‘911 patent is valid, any cannabis company selling such formulations could risk a similar lawsuit.

It is not possible, however, to infringe an invalid patent. Under 35 U.S.C. § 101, an invention must be “new” to be valid and to qualify for patent protection.  This “novelty” requirement is analyzed by the U.S. Patent & Trademark Office (PTO) during the application process for the patent. Although, the PTO is not the final word in our U.S. patent system. The federal courts are empowered to review the validity of patents made the subject of federal lawsuits.

In reviewing the validity of a patent, the federal courts will be guided by the principle that “that which infringes, if later, anticipates, if earlier.” This means that the reviewing court will look at the patent claim(s), determine their scope, and then look at both the accused infringer, and also the “prior art” that predates the patent. If the invention is described in the prior art, it is not “new,” and therefore fails the novelty requirement under § 101. It will be ruled invalid, and cannot be enforced.

Here, UCANN has asserted that Pure Hemp infringes because “[Pure Hemp’s] product contains a cannabinoid formulation wherein at least 95% of the total cannabinoids is CBD.” Taking UCANN’s assertion at face value, any prior art that establishes the existence of “a [liquid] cannabinoid formulation wherein at least 95% of the total cannabinoids is CBD” will invalidate Claim 10 of the ‘911 patent.

Qualifying prior art will include any patent or printed publication, or corroborated evidence of the existence of such a formulation, prior to the “critical date” of the ‘911 patent. The earliest effective filing date of the ’911 patent is October 21, 2014. The critical date under the U.S. patent system will be one year prior, i.e., October 21, 2013.

So to be clear, Claim 10 of the ‘911 patent will be invalidated by a showing essentially that on any date prior to October 21, 2013, there existed a liquid cannabinoid formulation wherein at least 95% of the total cannabinoids was CBD.*

For one with familiarity with the history of the cannabis, and cannabinoid biopharmaceutical industries, this would appear to be easy to show. GW Pharma’s Epidiolex, for example, is a 99% pure liquid formulation of CBD and has been in development for well over ten years. In addition, high-potency liquid CBD formulations have been sold in the U.S. for a very long time. This leads to the question: how did the PTO miss this in allowing the ‘911 patent to issue with these very broad claims? One answer: there is a lack of published prior art of the sort upon which a patent examiner typically relies. The federal illegality of cannabis in the U.S. has contributed to this shortage of published art.  One group that is trying to remedy this shortage by establishing a library of cannabis prior art is the Open Cannabis Project. Their stated goal is “keeping cannabis in the public domain.”

Maintaining an open and accessible marketplace for cannabis products depends on tracking this kind of patent activity. Lane Powell closely monitors this activity for its clients, and stands ready to assist.

___________

* To my colleagues in the patent field: you will recognize that I have simplified some of the patent issues including the process by which prior art is evaluated.