What Marijuana Businesses Need To Know About Enforcing Patent Rights (Op-Ed)

A recent ruling opens the door for cannabis patent owners to consider enforcement actions to protect the value of their patent rights and obtain damages in federal courts.

By Jayashree Mitra, Fox Rothschild LLP

As states across the country legalize cannabis for recreational and medical use, the question of intellectual property rights is likely to become a growing concern for patent owners. Even in the absence of federal legalization, patents covering cannabis-related subject matter are routinely being sought and granted.

Patent enforcement has been lagging in comparison, with only a handful of actions being initiated to enforce patent rights.

There could be multiple reasons for this, and a key concern has been the perception that federal courts may be unwilling to enforce patents where infringement allegations concern the use, possession and/or distribution of products that are prohibited under federal law. That concern may soon change in light of a recent decision from the U.S. District Court for the Central District of California, which recently held that the illegality doctrine did not bar a patent owner from asserting a cannabis-related utility patent against a company involved in cannabis extraction.

Although the court’s ruling in Gene Pool Techs., Inc. v. Coastal Harvest, LLC* was tailored to specific facts where the court found that the allegations were broad enough to include infringing activities that were not prohibited under the Controlled Substances Act (CSA), the ruling nonetheless opens the door for patent owners to consider enforcement actions to protect the value of their patent rights and obtain damages in federal courts.

But, to develop a successful litigation strategy, a patent owner must consider the framework for the infringement argument, evaluate whether the infringing activity may be federally legal and develop a damages or injunctive relief strategy ahead of any proposed litigation.

Potentially different strategies for pharmaceutical versus medical marijuana products is a good example of where the approach and outcomes would be contingent on where the product falls within the framework of federal versus state legalization.

For pharmaceutical cannabis-derived products—that is, for drugs where the Food and Drug Administration (FDA) has approved a marketing application for the treatment of a disease or condition—litigation may follow the framework provided by the Drug Price Competition and Patent Term Restoration Act, or the Hatch-Waxman Act. Under this framework, a generic manufacturer can challenge a brand manufacturer’s patents on the pharmaceutical product in federal court, and the patent dispute is then adjudicated within the framework set out in the Act.

In contrast, medical marijuana products that may be used under specific state laws to ease symptoms cause by certain medical conditions are not approved by the FDA and are also subject to FDA enforcement action if the product claims to treat or mitigate disease conditions.

This poses a challenge to enforcement activity for patent owners who may wish to bring claims against products that infringe patents covering the unapproved medical condition.

Unlike the Hatch-Waxman Act—which establishes that the submission of an abbreviated new drug application (ANDA) to the FDA constitutes patent infringement—the patent owner in the context of medical marijuana must be constantly examining the marketplace for potentially infringing products against which to assert the claims.

Another hurdle for medical marijuana is that the product, which may be legally sold within the state for certain disease conditions, may not be making the claim on its label out of concern for FDA enforcement actions. Thus, even if the patent owner has reason to believe that a particular medical marijuana product is being sold within a state for the treatment of disease condition that is covered under its patents, the patent owner may still face an uphill battle gathering evidence of infringement by the medical-marijuana product.

Further, the FDA has made it clear that it has not approved any medical marijuana product. Thus, even if the product does not violate the CSA, it could still be barred under the Food, Drugs and Cosmetics Act (FDCA). While the court in Gene Pool declined to apply the illegality doctrine where the infringing activities did not fall under the CSA, if the claim for damages are based on activities prohibited under the CSA and/or FDCA, a court may find differently.

However, even in the absence of monetary damages, a patent owner may still be able to request an injunction under 35 U.S.C. § 283 to curb the infringing activity, thereby removing the accused product from the marketplace.

Takeaways:

• Patent owners seeking to enforce their IP rights against medical marijuana products should consider policing the marketplace to identify infringing activity.
• While patent owners may face challenges collecting on damages, it may be able to obtain injunctive relief against competitors in the medical marijuana marketplace.
• In the event the patent owner is able to establish that the infringing activity is not federally illegal, it may have a pathway to collecting monetary damages.

*Gene Pool Techs., Inc. v. Coastal Harvest, LLC, No. 5:21-cv-01328-JWH-SHK, ECF 101, 13-14 (C.D. Cal. Nov. 22, 2022).

 Jayashree Mitra, Ph.D., is an intellectual property attorney at Fox Rothschild LLP.

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