Law students are taught that one purpose served by the civil legal system is to provide predictability in business. For the cannabis industry, predictability remains a work in progress in view of conflicting federal and state laws and regulations. Cannabis is a Schedule I controlled substance under the Controlled Substances Act, and possession of cannabis is a Class I felony under federal law. Nevertheless, 33 U.S. states and the District of Columbia have legalized medical cannabis, and 10 U.S. states and the District of Columbia have legalized recreational cannabis. This legal patchwork creates challenges for companies in the cannabis industry in banking, taxation, real estate, insurance and other areas that are routine for businesses in other industries.

Patent procurement for cannabis-related inventions is not beset by unpredictability. The U.S. Patent and Trademark Office (USPTO), a federal agency, routinely examines and grants patents covering cannabis-related technologies despite cannabis remaining a controlled substance under federal law. The USPTO applies the same standards to cannabis-related applications as it does to patent applications covering any other technology. An applicant must show that the claims are new, useful and not obvious, and must teach one of ordinary skill in the art how to make and use the invention. The number of granted patents and newly filed patent applications in the cannabis industry is increasing steadily and shows no signs of tapering off.

In contrast to patent procurement, patent enforcement in this emerging industry is at an early stage. A patent is a valuable business tool that provides the patent holder with the right to take legal action to prevent a competitor from engaging in activities such as making or selling the patented technology. Because enforcement of patent rights is governed by federal law, the Schedule I status of cannabis continues to cast uncertainty over whether cannabis patent rights can actually be challenged or enforced. Recent legal proceedings focused on cannabis-related patents show that the Schedule I status of cannabis is not an impediment to patent proceedings at either the Patent Trial and Appeal Board (PTAB) of the USPTO or U.S. Court of Appeals for the Federal Circuit. Although the sample size is small, these cases provide some insight to what patent holders, challengers and other cannabis industry stakeholders might expect in the area of patent enforcement going forward.

  • Cannabis patent litigation before the PTAB: Insys Development v. GW Pharma Limited and Otsuka Pharmaceutical

Inter partes review (IPR) is a trial proceeding at the PTAB of the USPTO that permits a third-party to challenge the validity of claims of a granted patent. If the challenger demonstrates that the claimed technology was known to the public before the patent application was filed, then the claims fail to meet the novelty and nonobviousness requirements and the PTAB can declare the claims invalid.