Lessons in Patent and Trademark Protection

Columns - The Tips issue - Tomorrow in Cannabis

Insights into the process and costs for protecting your IP. Plus 3 things to know before you begin.

Subscribe
December 5, 2016
Kenneth Morrow
Photo: eternalcreative

Note: It is always advisable to consult an attorney experienced in patent and trademark law before taking any action.

In 1994, I conceptualized Trichome Technologies as a molecular genetic research company specializing in cannabis breeding, cultivation, extraction, isolation and formulation, as well as creating proprietary growing systems, extraction and isolation equipment, consulting and other forms of intellectual property (IP). I hired a world-famous artist to help design and create my logo. I printed stickers, posters and hooded sweatshirts, all with my logo on them.

Back then, my company was just a concept, but I did these things because I knew cannabis would achieve some form of legalization and/or regulation in the future, and using the company name/brand/logo establishes its use in commerce and can help in trademark approval. However, in 1994, it was not prudent to walk into an attorney's office, be it a basic, criminal, patent, trademark or any other type, and proclaim yourself a marijuana grower asking for their services.

I used my company name in many articles and interviews, and thereby established it in the community, but I had no way, really, to protect it from use by others. My goal was to gain whatever protection was available at the time, which involved simple steps like securing the TrichomeTechnologies.com domain name and self-filing for ownership of the trademark. At that moment in time, that's as far as it was safe to take it.

Then in 1996, Proposition 215 passed in California. In 1997, California NORML asked me to participate in a study regarding cannabinoid testing of my personal cultigens. I submitted many samples that were analyzed by drug detection laboratories in Sacramento, Calif. A cannabis author did not believe the results, questioning the 27.2% THC content (which was high for 1997) in one of my cultivars. So, all remaining samples were sent to Dr. Mahmoud A. ElSohly at the University of Mississippi (the only university sanctioned by the government to do cannabis research, in partnership with the National Institute on Drug Abuse), as he had provided the original reference standards for the tests. Dr. ElSohly’s tests proved the original test figures were correct.

Through this process, I became the first and probably the last private individual to have my cultigens examined by the government. This sparked the realization that I could actually work within the legal framework and still achieve my end goals.

Skipping ahead, when Colorado legalized medical marijuana, it became safer to attempt to approach the United States Patent and Trademark Office (USPTO) and file for trademarks, etc. At first, the USPTO was open to cannabis applications, but was soon deluged with applications, some good, some not. As a result, the USPTO suspended any cannabis-related activity and returned applicants’ fees. No direct cannabis trademarks were granted.

As laws progressed, I employed the services of Liana Ltd., a San Francisco firm owned by Liana Held. With the firm’s help, I was able to incorporate, separate personal from corporate taxes, prepare and file taxes, form and perform all the functions of the corporation and arrange for counsel. The industry attorney Held recommended assisted not only with incorporation, but also with compliance. She also provided all legal documents, from non-disclosure agreements to material transfer agreements and others, a process that required me to sign an engagement letter and place funds in escrow to be used as needed.

Then Liana provided an IP lawyer who specializes in patents and trademarks, which required another engagement letter and fee to be placed in trust to be used as needed. This second attorney's services ranged from arranging for a patent attorney to draft all patent applications and handle all related details to producing another nondisclosure agreement and a whole host of other valuable services, including patent enforcement.

I met with the patent attorney, which required yet another engagement letter and fee to be placed in escrow. The patent attorney explained that the two provisional patent applications I sought would cost $12,500 each, and the IP attorney explained that to file the trademarks for 15 classes in the United States and all other selected foreign countries would cost more than $50,000.

Fortunately, a friend introduced me to a group that plans to open an extraction facility and wants to license the name Trichome Technologies for a single geographic location and all related IP, which morphed into an agreement to produce equipment using my IP. This, however, created a dilemma. First, funding for patents and trademarks needed to be secured, along with all associated attorney and consultant fees. This, in turn, required more legal documents, such as:

  • legal contracts for the client and another letter of agreement,
  • drafting of a franchise agreement to allow the use of my IP in a given location,
  • drafting of performance and production clauses,
  • letters of intent and
  • the licensing agreement itself.

It all seems to have no apparent end, with costs exceeding $100,000. And, it will be this way in one form or another from now on.

Whether you own a cultivation or extraction facility or make a product of any kind, if you are planning to file for a patent or trademark to protect your IP, ultimately you will need an attorney who suits your specific needs and can address many of the same issues I have had. If you don't at least have a lawyer sourced and have some of the above processes underway, you are already behind, and have a lot of work and expense ahead of you. All of this while navigating an industry that is not allowed to use the banking system the way other companies and corporations can.

Navigating this emerging industry also means becoming informed on the crucial topic of IP. I regularly attend events and have noticed companies knocking off the protected IP of major corporations, including their fonts, slogans and characters. As the industry becomes more widely legalized and thereby regulated, those using others' IP will become susceptible to lawsuits.

I'm sure, for instance, that the Disney Corp. will not appreciate a cannabis company using its characters or likenesses to represent cannabis products (which at least one company does) and that its corporate lawyers will deal vigorously with this matter in the future. One case already has been pursued and decided: In October, “Starbucks Corp. won a trademark and copyright infringement judgment against an Oregon artist behind a line of ‘Dabuccino’ water pipes designed to look like the chain’s Frappuccino cups,” reported Law360. The artist was ordered to repay Starbucks $410,800 in damages and attorneys’ fees.

That said, why would anyone continue such practices, knowing the brands they are creating will not exist the second they received a cease and desist order from a major corporate law firm?

Cannabis, Trademarks and Patents

As I mentioned in my column in Cannabis Business Times' July/August issue, the USPTO received and awarded a patent for a high-THC cannabis cultigen. This creates many questions, such as: Will cannabis plant patents withstand scrutiny in the future? Should a breeder immediately attempt to patent his non-public-domain genetics or wait to see what materializes from the back-and-forth of challenges or lawsuits?

Waiting could mean settling for a smaller patent law firm because major firms will have multiple clients and face conflicts of interest. And waiting could have another serious consequence: Recently, I spoke with a larger firm that intends to accept fewer cannabis plant patent clients so they can focus on the ones they already have.

Considering costs between $15,000 and $50,000 associated with patenting a single cultigen, filing multiple patents simultaneously will get very expensive very quickly. That leads to the question of how to pay for multiple patents and how to do so rapidly?

Throughout this process, I have had to give myself a crash course in patents writing, trademarks and all things related for 15 different trademark classes, which is not an easy task. After trademark filing, some issues require further attention, such as a reassignment of a case to a special division tasked with handling all cannabis-related trademarks, after the trademark examiner realized the proposed trademark is cannabis-related. (Any trademark applications for actual cannabis products, not those simply “related,” would be rejected.)

And the possibility exists that the trademark will be rejected anyway. After all, cannabis is still classified as a federally prohibited, Schedule 1 drug. A rejection ultimately requires even more time, work and money to pay the lawyers to reply to the rejection. But, at this point, all you can do is try. All they can say is no. Nothing ventured, nothing gained, right?

Of my 15 filings, over half have been sent to special examiners for review. For those that were approved, all it has accomplished is that I'm allowed legally to put my logo on products and services, and I'm given priority for litigation in pursuit of enforcement, all of which would, again, cost thousands of dollars.

Why would anyone continue such practices, knowing the brands they are creating will not exist the second they received a cease and desist order from a major corporate law firm?

Prepping for the Future

With California ranked as the sixth largest economy in the world (it surpassed France this year, per Fortune), the cannabis industry as we know it is about to change, and become recognized and legitimized. Cannabis has long been the No. 1 agricultural product in California, even though it was illegal. Proposition 215 passed in 1996 and completely changed everything. I suspect Proposition 64 (voted into law Nov. 8, legalizing adult-use cannabis) will again change everything.

There are incredibly well-funded groups of investors poised to spend millions of dollars to obtain those permits that will become available. I know of one group (with $80 million in capital) that intends on filing for 10 cultivation permits, 10 extraction permits and 10 dispensary permits, all under the umbrella of one corporation, each independently operated. The group intends on cultivating, extracting and formulating concentrates and compounds into pharmaceuticals and nutraceuticals, utilizing proprietary cannabinoid and terpenoid extraction and isolation methodologies, as well as investigating all forms of compound application. It stands to reason that many other groups just like them exist, poised and ready to move.

Las Vegas inevitably will be the second-largest cannabis market. When Nevada implements recreational cannabis sales (Nevada voters also legalized adult-use cannabis Nov. 8, so the process has begun), visitors will expect to partake in the products and activities tourists enjoy, which will then include cannabis in its many forms. In the future, casinos will vie for the cannabis market economy and its consumers.

With countries like Canada, Uruguay, Jamaica and others legalizing, decriminalizing and possibly even permitting exportation abroad, the whole world is subject to change. All of this does not, of course, take into account that changes in the U.S. presidency and administration could swing the pendulum in either direction.

That being said, we are upon the New Year. We shall see what 2017 brings.

About the Author:Kenneth Morrow is an author and writer who has been covering cannabis-related subjects for more than 20 years. He is the owner of Trichome Technologies™, a cannabis research and development company. Morrow also is an award-winning grower and breeder. He has made contributions to many of today's extraction methodologies and holds multiple patents in the field. He currently specializes in product formulation and consults on all cannabis-related subjects. Find him on Instagram (TrichomeTechnologies) or Facebook (Trichome Technologies).