In this inaugural article we will introduce each type of intellectual property protection and set out some preliminary questions raised by the legalization of hemp. In the series of posts which follow, we will explore the answers to those questions and continually update those answers as the hemp and CBD regulatory and legal landscape continues to evolve.
By way of background, state and federal law provide an arsenal of regimes for the protection of intellectual property (IP)—protection that is critical for fostering innovation and maximizing commercialization. As both states and the federal government legalize hemp and hemp derivatives, such as cannabidiol (CBD), businesses operating in this increasingly lucrative and newly-legal space may want guidance on available IP protections.
With lawyers highly proficient in the business law of this marketplace, DLA Piper is here to help. The Intellectual Property segment of Cultivate will explore how various IP regimes such as trademark, patent (including patents for FDA-approved CBD-derived drug products in the FDA’s Orange Book), copyright, trade secrets, and licensing intersect with hemp and CBD commerce. In addition to providing regular updates on developments related to hemp and IP, this blog will set out a series of deep dives exploring the role IP can play in protecting companies that operate in the hemp and CBD industry. But first, lets identify each type of IP protection and discuss some preliminary questions raised by the legalization of hemp.
The 4 Forms of Federal IP Protection
Federal intellectual property law broadly recognizes four types of IP protections that may be relevant to developers of hemp and hemp-derived products:
- Trade secrets
Each of these rights play a unique role in protecting business assets. However, certain characteristics of hemp make IP protection challenging – including the fact that many cannabis species and their derivatives are naturally-occurring (more on these issues to come). Moreover, the enforceability of these rights in state and federal courts is likely to be affected by ongoing changes to the legal status of hemp and CBD.
Patents & Hemp/CBD
In general, patents are designed to provide protections for new and useful inventions. The basic theory behind a patent is that in exchange for an inventor’s public disclosure of a new invention, the inventor is awarded patent rights for a specified period of time—by statute, 20 years. The patent right affords the inventor (or the patent owner, if the inventor sells or licenses the patent to a third party) the right to exclude others from making, using, selling or offering for sale, the invention claimed by the patent.
To secure a patent, one must file a patent application with the United States Patent and Trademark Office (USPTO) and have that application allowed and issued. This requires a showing that the invention is novel, non-obvious, and directed to patentable subject matter. Having a robust patent portfolio helps companies to maintain a competitive advantage in the market and can potentially provide additional sources of revenue through licensing opportunities. For startups, patents can also help signal innovation and reliability in competing for scarce funding sources.
Many companies in the hemp and CBD space have already begun to increasingly file patent applications with the USPTO in anticipation of excluding others from using their inventions as the laws regulating cannabis, hemp, and CBD continue to evolve. In fact, over the last few years, the USPTO has issued an increasing number of cannabis, hemp, and CBD-related patents—and the number of patent applications being filed for these types of patents continues to rise.
There are two types of patent that are relevant to businesses in the hemp and CBD space: “utility” patents and “plant” patents. Broadly speaking, plant patents provide protection for key characteristics of new and distinct varieties of plants—including new strains of hemp. For example, the USPTO granted the first hemp plant patent (U.S. Plant Patent No. 30,649P2) to Charlotte’s Web in 2019, covering a new and distinct hemp cultivar designated “CW2A” that is hardy, resistant to cold, and capable of producing up to 6.24% CBD and only 0.27% THC (below the 0.3% legal threshold under the Controlled Substance Act).
One unique aspect of a plant patent is that the inventor must not only invent or discover a distinct new variety of plant, but also must asexually reproduce the plant. This grants the inventor the right to exclude others from asexually reproducing (using clones of the patented plant), selling, or using the plant.
Utility patents typically cover new inventions that use the plant for a new and useful purpose. For example, Charlotte’s Web has also secured utility patents that cover methods of plant production and cannabinoid extraction (See U.S. Patent No. 10,653,085). Utility patents can also cover methods for producing CBD-based drug formulations derived from hemp and methods of treating patients with these drugs. For example, innovator GW Pharmaceuticals has been issued several patents covering its drug Epidiolex® (cannabidiol), the first FDA-approved form of CBD for use in the treatment of seizures associated with Lennox-Gastaut syndrome (LGS), Dravet syndrome, or tuberous sclerosis complex (TSC).
While utility patents are by far more common than plant patents as a historical matter, ongoing commercialization of hemp may change that. In the series of posts which follow, we will explore the details of how both plant and utility patent protection intersects with hemp and CBD businesses.
Copyright & Hemp/CBD
Federal copyright law is designed to protect original works of creative authorship, including books, music, and works of art. Copyright law is focused on protecting creative expression, but does not extend protection to facts, ideas, or methods of operation.
To illustrate the distinction between patents and copyrights, consider an illustrated recipe for brownies. A patent on brownies entitles the patentholder to prohibit anyone from making brownies until the patent expires. A copyright on a brownie recipe, by contrast, only prohibits copying the specific wording, illustrations, and arrangement of the recipe—it does not give the copyright holder a right to the brownies themselves.
Unlike patents, a copyright automatically exists as soon as the work of creative authorship is made. Prior registration with the U.S. Copyright Office is not required to obtain a copyright under U.S. law. However, registration of the copyright (including a deposit of a copy of the work for archival in the Library of Congress) is required before the copyright holder can perform certain acts, such as bringing a lawsuit for copyright infringement. Once created, a copyright exists for either the entire duration of the author’s life plus seventy more years, or—in the case of a work of corporate authorship (called a “work for hire”), for 120 years.
Copyright intersects with hemp and CBD businesses in many of the same ways it intersects with other areas of commerce. Copyright is likely to protect everything from marketing publications to advertising materials, as well as artwork and illustrations (including artwork in a logo). However, copyright does not protect the name of a business or may not protect a logo, depending on certain considerations—those materials are frequently protected by trademark law, if at all. Our subsequent posts will investigate the types and enforceability of copyright protection in hemp and CBD-related works.
Trademark & Hemp/CBD
Trademark law is focused on the use of marks—words, images, or both—to identify the source of a good or service. Trademark law protects companies who use a mark in commerce from having that mark reused, as an indicator of the source of goods, by unauthorized third parties. The purpose of trademark law is to protect a company’s brand, by preventing third parties from passing off their goods under a company’s trademark.
Like copyright, trademark law does not require federal registration, but federal law confers benefits to those who choose to register their marks. Unlike copyright (but like patent law), trademark law involves a vetting process at the USPTO before the federal government will register the trademark. Trademarks do not have a time-limit: they can last as long as the legal requirements for registration of the mark are satisfied.
Until recently, trademark law prohibited all trademarks related to hemp and CBD based on the requirement that a mark be “used in commerce” to qualify as a trademark. Since hemp and CBD-based products were unlawful, the USPTO refused to register any marks related to CBD or hemp because the marks could not be legally “used in commerce.”
However, legislation passed by Congress in December of 2018 clarified that CBD products which contain “no more than 0.3% THC on a dry-weight basis” are authorized under federal law. As a result, the USPTO has been hesitantly—though increasingly—authorizing hemp-related trademarks. A deeper dive into the relationship between trademark law and hemp and CBD will be included in subsequent posts.
Trade Secrets & Hemp/CBD
Trade secrets law generally protects information that derives value from being secret. Specifically, trade secrets law requires that the information actually be secret, derive value from secrecy, and be subject to reasonable efforts to keep the information secret.
Trade secrets law may be attractive because unlike trademark, copyright, and patent law, trade secrets have no subject-matter limitation. That is, any type of commercially valuable information may be protected by trade secrets law, while patent law, trademark law, and copyright law all impose limitations on the type of information that is protectable.
Information that qualifies as a trade secret may not be used or disclosed without authorization of the trade secret’s holder. Importantly, trade secrets do not have a fixed term: federal law imposes protections for trade secrets indefinitely, so long as the information remains secret.
Trade secrets law may play a unique role for businesses that develop hemp or hemp-derived products. For example, sourcing information and cultivation techniques involved in producing certain strains of hemp may be protected by trade secrets law. Similarly, techniques that are used to create derivatives of hemp, such as CBD, may also be protected by trade secrets law.
Trade secrets law will likely also be useful for many of the same reasons it is useful outside of the hemp context: customer lists, pricing data, and other general commercial information may also be protectable by trade secrets law. We will explore the different types of trade secret issues that arise in the hemp context through follow-on posts.
The 3 Forms of State IP Protection
In addition to federal protections, states are empowered to issue additional protections for intellectual property. These include state-level trademarks, state-level copyrights, and—perhaps most frequently used—state-level trade secrets. States can also protect intellectual property through legal regimes related to unfair competition and other limitations on commercial conduct. For example, states may treat violation of a nondisclosure agreement as both a breach of contract and a form of trade secrets misappropriation. However, under controlling federal law, states are constrained from offering patent protection. We will explore different state-level IP regimes in follow-on posts.
As with every area of commerce, intellectual property law will play a robust role in American commerce in the hemp and CBD space. Particularly in light of growing calls for legalization—and growing receptivity at the state and federal level—guidance and leadership are needed to address the role of IP in protecting hemp and hemp-derived products. This blog is intended to help those in the hemp and CBD industry stay well-informed of important issues that may arise before and during the commercialization process.
If you have any questions about this topic, please contact Ellen Scordino.