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The Need for Cannabis Businesses to Secure Intellectual Property

August 31, 2022

With an increasing number of states legalizing the growth, sales, and use of medicinal and recreational marijuana, the cannabis industry is becoming an increasingly prevalent force in national and world markets. As the industry grows and becomes vigorously competitive, the need for cannabis entrepreneurs to adopt a strategy for intellectual property (IP) acquisition and protection also becomes increasingly important. If a cannabis proprietor does not have control of its IP, then it loses the opportunity to capitalize on it. Moreover, having an established IP portfolio often makes a business more attractive to investors, and facilitates licensing of products and brands for expansion. As a leader in the cannabis industry, it is therefore critical to be familiar with the IP protections available and to seek qualified assistance in the acquisition and protection of those rights.  

Here are a few IP protections that may be applicable to cannabis businesses including trademarks, copyrights, patents, and trade secrets.  

Trademarks provide protection for your brands and can cover any word, name, symbol, or device that consumers use to identify and distinguish you as the source of your goods or services. Such protections can last if the trademark is used in commerce. Trademark protection can be important to help stop a competitor from capitalizing on a successful name or brand while also protecting consumers from being confused about the source of the goods or services they are buying. However, in the cannabis industry, trademark protection can sometimes be difficult to acquire as federal trademark registration is only allowed for lawful use, and marijuana remains illegal under federal law. This rule was modified slightly by the 2018 Farm Bill which allows registration so long as the products, including hemp and cannabidiol (CBD) goods, contain no more than 0.3% tetrahydrocannabinol (THC). Additionally, federal trademark protection is available to designate the source of non-cannabis goods and services including fertilizers, skin products, batteries for vaporizers, machines and appliances, packaging, hemp goods, smoker’s articles and non-cannabis paraphernalia, retail store services, website blogs, consulting services, and even farming. Moreover, state trademark registrations may also be available for cannabis goods comprising psychoactive quantities of THC. 

Copyrights protect any original and creative work of authorship, extending to things such as blog and website posts, music, and any literature or promotional videos that you produce. Copyright protection is long lasting, typically extending throughout the author’s life plus 70 years. Because copyright involves creative expression, it is not restricted by the federal illegality of marijuana. This means that even if a creative work cannot be trademarked for use with goods or services related to marijuana, the author may still prevent others from reproducing, distributing, or displaying that work or any derivates thereof under copyright law.  

Patents protect innovative products, processes, or designs and can last for 20 years. One key area where patent protections become important is in protecting innovative cannabis strains. Patents protect all new and useful methods, devices, articles of manufacture, and ornamental designs by excluding others from making, using, offering to sell, or selling the patented innovation within the United States. Variations of cannabis plants that can be reproduced asexually, such as by cloning, can be protected by a plant patent so long as the cannabis strain has at least one characteristic or quality that is different from all other strains. Alternatively, utility patents provide protection for new plant varieties, whether sexually or asexually reproducing, so long as the patent is novel and nonobvious over previously existing inventions. In other words, to qualify for a utility patent, the innovation must not only be new, but it must also contain qualities or characteristics that differentiate it from previous innovations in such a way that it is not simply an obvious variation. Alternatively, under the Plant Variety Protection Act, one can acquire protections like those imparted under a utility patent. Patents can protect other types of cannabis inventions, including vaporizer devices, extraction methods, and new cannabis compositions. One can also acquire a design patent to protect any original ornamental/aesthetic aspect of a product or invention. A design patent lasts 15 years.  

Trade Secret protection can apply to a distinct formula, practice, process, design, or other innovation that has commercial value and is, well, kept secret. Thus, trade secrets can be useful to protect unique cannabis strains, formulas, recipes, customer lists, manufacturing details, or algorithms. A trade secret usually provides less IP protection than a patent but can last if the secret is successfully held. For this reason, it is important to utilize non-disclosure agreements, employment agreements, and to disclose the details of the innovation to as few people as possible.  

With the rapid growth and commercial relevance of the cannabis industry, it is becoming increasingly important for cannabis entrepreneurs to examine their intellectual property needs and to develop a strategy to protect their rights. However, that is not always easy or simple in the new and complex legal landscape surrounding cannabis IP. The intellectual property attorneys at Clark Hill can assist you in navigating the complexities of this field and determine what intellectual protections are right for you and your growing business.  

The views and opinions expressed in the article represent the view of the authors and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is it intended to be a substitute for professional legal advice.

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