First Cannabis Patent Infringement Case Extinguished By Bankruptcy Proceeding

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In 2018 United Cannabis Corporation (“UCANN”) filed the first cannabis patent infringement lawsuit against Pure Hemp Collective, Incorporated (“Pure Hemp”) in the United States District Court of Colorado.[1] In the lawsuit, UCANN asserted that Pure Hemp had infringed U.S. Patent 9,730,911 (‘911) entitled “Cannabis Extracts and Methods of Preparing and Using Same.”[2]

The claims of the ‘911 patent cover various cannabinol formulations using ingredients commonly utilized in the cannabis industry that include tetrahydrocannabinol (THC), cannabidiol (CBD), and several various terpenes.[3] In the lawsuit, UCANN claimed that Pure Hemp’s CBD product infringed on claims 10, 12, 14, 20-22, 25, 27, 28, 31, and 33 of the ‘911 patent.[4]

This lawsuit is significant, because it is one of the first cannabis patent infringement lawsuits to be filed in the United States. This case had the potential to rock the cannabis industry, because of the large number of companies creating products that contain many of the ingredients specified in the ‘911 patent. The ‘911 patent also contained broad claim scope that made it a patent ripe for licensing opportunities from others operating in this space.

The cannabis industry has been steadily growing and expanding since 2012, when recreational legalization in the United States began with Colorado and Washington becoming the first two states to legalize recreational use.[5] It is projected that cannabis sales will grow at a compounded annual growth rate of 21% to reach more than $41 billion by 2025, up from $13.2 billion in 2019.[6]

In response to UCANN’s claims, Pure Hemp counterclaimed that UCANN’s formulations described in the ‘911 patent were unpatentable, because they were commonly known in the industry.[7] However, during the middle of the lawsuit, UCANN filed for Chapter 11 bankruptcy. The bankruptcy filing automatically stayed the pending patent lawsuit, effectively pausing the progression of the suit. In the bankruptcy filing, UCANN claimed that it still intended to move forward with the patent infringement suit. Judge William Martinez ultimately ended up closing the action, however the parties may reopen the case when UCANN’s bankruptcy proceedings are completed.[8]

As patenting activity in the cannabis landscape has continued to increase so has the number of patent challenges. In 2018, the first inter partes review was filed against GW Pharmaceutical’s (GW) patent for the CBD containing drug product Epidiolex, which you can read more about here.[9]

Concurrently, in December 2020 Canopy Growth Corporation (“Canopy”) filed a lawsuit in the Western District of Texas against GW. The lawsuit was filed on the same day that Canopy was issued U.S. Patent 10,870,632 (‘632) entitled “Process for Producing an Extract Containing Tetrahydrocannabinol and Cannabidiol from Cannabis Plant Material, and Cannabis Extracts.”[10] The ‘632 patent covers a carbon dioxide based extraction method that is widely used throughout the industry.[11] While still pending, the ripple effects of this lawsuit may have a significant effect on cannabis start-ups operating in this space. Working with patent counsel to create an effective forward leaning IP strategy is imperative for companies looking to enter this space.

[1]United Cannabis Corporation v. Pure Hemp Collective, Inc., case no. 1:18-cv-01922-NYW

[2] Id.

[3] http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=28&f=G&l=50&co1=AND&d=PTXT&s1=9,730,911&OS=9,730,911&RS=9,730,911

[4] United Cannabis Corporation v. Pure Hemp Collective, Inc., case no. 1:18-cv-01922-NYW

[5] https://en.wikipedia.org/wiki/Timeline_of_cannabis_laws_in_the_United_States

[6] https://www.globenewswire.com/news-release/2020/12/09/2142171/0/en/U-S-Legal-Cannabis-Market-Projected-to-Double-to-41-5B-by-2025.html

[7] United Cannabis Corporation v. Pure Hemp Collective, Inc., case no. 1:18-cv-01922-NYW

[8] Id.

[9] https://caldwellip.com/2019/02/18/first-cannabis-patent-to-survive-ipr-challenge-in-part/

[10]http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=1&f=G&l=50&co1=AND&d=PTXT&s1=10,870,632&OS=10,870,632&RS=10,870,632

[11] Id.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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