This post was originally published on Seyfarth’s The Blunt Truth blog.
Federal bans, lack of knowledge, and misinformation all stifle IP protection in the cannabis industry. Previously, one of our colleagues attended MJBizCon in Nevada and noted that “there is so much more to be done to bring this industry on par with other advanced industries that rely on IP to protect innovation and provide commercial advantage.” After attending the New England Cannabis Convention (“NECANN”) in Boston, we are pleased to observe that the industry appears to be making headway to address these trailing efforts.
We spoke with innovators in the extraction, testing, and humidity controlled storage space who have successfully obtained patent protection on their developments around cannabis. As these patents are not claiming the cannabis product themselves, they are not barred by federal law. Additionally, we were heartened to see the use of the common law trademark symbol TM on company advertising and swag. Federal law prevents trademark registration for many cannabis products. But various exhibitors offered “uninfused” versions of their food and beverage products (i.e., not containing cannabis) that could be protected under federal law.
The industry faces headwinds from the current financial outlook and a pullback on venture investing. However, the growing rush of companies seeking to protect their gadgets, gigabytes, and goodwill through IP strategies demonstrates recognition of the inherent value in companies’ brands, and research and development. Many of the cultivators we spoke with expressed a passion for their craft and an impressive amount of time sunk into developing their growing processes. The knowledge they have of how to best extract, test, and store their product isn’t just for making the best product they can. As demonstrated by those on the ground at NECANN, that knowledge can also represent an additional source of revenue after obtaining IP protection (e.g., through licensing patented technology).
Having seen the industry transition from a dearth of interest in IP to a strong appetite for protection, we are left with the sense that the next hurdle may be enforcement. Young industries often shy away from IP enforcement out of a sense of camaraderie or the desire to avoid conflict. However, IP enforcement is crucial to carve out commercial advantage in any industry. And enforcement can lead to collaboration and joint ventures that bloom into high yielding returns.
NECANN illustrates that the cannabis sector continues to transition to a mature industry with IP enforcement mechanisms necessary for that transition. As legal precedent develops alongside the industry, we expect to see many of these businesses find new sources of revenue that were previously untapped. For example, we discussed cracks in the barrier to patent enforcement in our previous post on litigating cannabis patents. See here.
As the industry awaits a change in federal legislation, those businesses that take the leap now to protect their IP may find themselves standing head and shoulders above their competitors. But those that don’t plant seeds soon may find themselves playing catch-up. We will continue to watch as this field blooms into maturity.