The market for cannabis-derived products has expanded rapidly in recent years due to the legalisation of some cannabis products in several countries. As discussed in my previous article, patent filings for cannabis/cannabinoid-related inventions have also increased significantly since 2014 and intellectual property (IP) will play in important role in the cannabis marketplace.
While the number of granted patents in the cannabis field is increasing, there has been speculation recently on whether it will be possible to enforce some of these patents, particularly in the US where the distribution and sale of cannabis products remain actionable crimes under federal law, even in pro-cannabis states.
A potential hurdle to the enforcement of cannabis patents may arise from the so-called "Illegality Doctrine", which stems from UK case law (Holman v. Johnson (1775)). In this case, Lord Mansfield held that "No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act" on the basis that enforcing claims based on illegal activities would harm the integrity of the legal system. Notably, some US Courts have refused to hear cases founded in illegality following a much more recent decision from the US Supreme Court (Gonzales v. Raich, 545 U.S. 1 (2005)).
In view of the potential uncertainty regarding the enforcement of patents directed cannabis-relative inventions, what is the value in filing patents in this field?
The first thing to note is that many cannabis-related inventions are not directed illegal products, i.e. products containing cannabis or THC. For instance, many cannabis-related inventions concern formulations containing cannabidiol (which is non-psychoactive) and their use. Similarly, a new growth chamber that may be useful in propagating cannabis plants may be patentable and is not illegal in itself, even though using it to propagate cannabis plants may be illegal.
While some patents may cover cannabis products that would be illegal if put on general sale to the public, their sale under a suitable marketing authorisation, i.e. as an approved drug, would not be prohibited. In this respect, courts regularly consider patent infringement cases relating to drugs, the sale of which would be illegal without the appropriate marketing authorisation.
Thus, it would seem that the illegality doctrine may apply only to a minority of cannabis-related patents. As such, we might expect instances of courts refusing to hear patent infringement cases concerning cannabis-related inventions to be the exception, rather than the rule.
It is important to note that the vast majority of patents are not litigated. Enforcement of a patent is a risk for both parties: the patentee risks losing their patent if a counterclaim for invalidity is filed; and the potential infringer risks both financial penalties and being blocked from the market should the claim for infringement be upheld. Accordingly, most disputes are settled outside the courts, often resulting in licensing agreements that meet the commercial goals of both parties. That said, it is inevitable that as the number of patents in this field increases, more cases will be considered by the courts. Hopefully the decisions that result from these cases will provide more certainty for all parties working in this area.
Thus, while there is currently some uncertainty on how courts will handle patent infringement cases in the field of cannabis-related inventions, there is still commercial value to be gained in filing patent applications to innovations in this growing field. It will be important for companies active in this area to consider their IP strategy and how they can use IP to help secure their position within an increasingly competitive market.
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