In the recent issue of GQ magazine, an article entitled, “The Great Pot Monopoly Mystery,” sought to unravel some of the mystery behind the “shadowy” BioTech Institute LLC. The article made a particular point that should be of immediate concern to those in the Cannabis industry — BioTech’s burgeoning patent portfolio.

BioTech has taken the unprecedented step of acquiring utility patent protection for the Cannabis plant itself. BioTech is attempting to exert control over access and use of the various Cannabis strains that are covered by its patents. Such control over one of the most vital elements of the budding Cannabis industry will impact all parties involved, from growers through all aspects of the supply chain and ultimately to consumers.

While the fear and impact of the BioTech patents are understandable, they are also misplaced for two main reasons. First, no entity can patent ideas or plants that are well-known in the public domain. Because the Cannabis industry is emerging from the shadows of a formerly illegal market, little to no formal documentation of the progression of Cannabis plant strains and Cannabis-related innovation exists, which is known as “prior art” in the patent world. This prior art is traditionally reviewed by patent examiners during review of applicants’ patent applications and is often cited against applications to reject them if the idea an applicant tries to claim has already been publicly known. Without that prior art library, the patent examiners are left with no choice but to allow the patents to issue. Applied specifically to the BioTech Institute portfolio, Cannabis industry leaders may be able to find documentation of well-known strains of Cannabis with coordinated, collaborative effort and build a bank of prior art related to Cannabis plant strains from unique sources not typically used. Such an effort will require cooperation among like-minded industry leaders moving towards a common goal of prohibiting commercial exploitation of well-known ideas. The prior art research will need to be balanced with concerted efforts to also foster protection of new innovation, the driving force of capitalism.

Additionally, many other industries experience — and weather — similar marketplace challenges to those presented by BioTech’s patent portfolio. The modern bioscience industry, for example, is rife with companies using patents to carve out market niches for themselves at the exclusion of others. Similar parallels are found in the tech industry too; the value of an industry drives participants to create zones of exclusion to further their business interests. As the Cannabis industry continues to grow in the U.S. and abroad in both value and legitimacy, it will attract serious and well-funded players (like BioTech) — with big appetites for risk — all vying for the immense reward at stake. Each of them is looking to capitalize on the existing market conditions and to monetize their investments.

Cannabis and Cannabis-related businesses can take steps now to protect themselves and prepare for the industry changes that are coming. It is not an “if” the Cannabis industry will face the same patent-related market pressures that the bioscience and tech industries face, it is merely a matter of “when.” The business risks posed by BioTech Institute and other players like them will affect each Cannabis business in unique and individual ways. Each sector and individual business in the Cannabis industry needs to evaluate its intellectual property position to face these coming challenges. Businesses need to begin developing and executing balanced strategic initiatives now to weather these challenges and to be proactive — rather than reactive — to the threats. Steps such as entering strategic partnerships, engaging in tactical contract negotiations, developing targeted innovation protection plans, cross-licensing intellectual property from key technology owners, pooling resources for common threats and lobbying for favorable legislation, establishing regulatory standards, and the like, will help businesses meet these new challenges and chart a pathway to longevity and prosperity in the industry. Each Cannabis company’s position in the market is unique, which drives a need for a custom strategic plan — there is no generic answer. The Lane Powell team of highly-experienced practitioners in intellectual property and corporate matters has deep industry knowledge and is uniquely positioned to partner with clients to create tailored business strategies to help clients thrive and achieve longevity in an intense and fast-evolving Cannabis industry.

* Sun Tso quote from The Art of War

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Photo of Holly L. Johnston Holly L. Johnston

Holly Johnston counsels clients ranging from startups to Fortune 100 companies on strategically developing and managing their U.S. and foreign intellectual property (IP) portfolios. She handles all aspects of IP procurement and counseling, including developing portfolios of valuable IP assets, providing formal opinions and collaborating with IP owners to thoughtfully enforce rights through licensing and dispute resolution.

Holly is admitted to practice in the U.S. Patent and Trademark Office and is a trained engineer experienced in prosecuting patents in numerous disciplines including medical devices and diagnostics, software, electronics, green technologies, manufacturing equipment and consumer products.

Photo of Alex Harry Alex Harry

Alex Harry is a patent agent with the Lane Powell’s Intellectual Property practice. He focuses on patent preparation, prosecution and analysis.  Alex has eight years of experience in the patent practice, his areas of technical focus include mechanical engineering and the biological sciences.  He has procured patents for clients ranging from individual inventors to public corporations.

Photo of Gregory F. Wesner Gregory F. Wesner

Greg Wesner represents clients in patent, trademark, and other intellectual property litigation and counsels them on regulatory and compliance matters. He serves as the Chair of Lane Powell’s Intellectual Property Litigation Practice Group.

In addition to litigating intellectual property matters, Greg also has extensive experience representing clients in Internet and technology law cases. He was involved in the first lawsuit ever brought under the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA), a case in which his client defeated an effort to enjoin distribution of its file conversion software.

Greg’s patent litigation experience includes work with:

  • Pharmaceuticals and medical devices,
  • Laser telemetry,
  • Wireless infrastructure technology,
  • High-speed scanning radio technology,
  • Algorithms for video and image compression,
  • Sports equipment, and
  • Hand tool designs.

A registered patent attorney, he also counsels clients in:

  • IP matters,
  • Patent due diligence,
  • Freedom to operate,
  • Brand development and enforcement, and
  • Trade secrets protection