We have previously written on the fundamentals of cannabis patents, which is a significant area of growth within the cannabis industry, and we have written extensively on litigation involving cannabis brands (see some of our posts here, here, and here) has been very productive in recent years, but we have have seen very little in relation to patent litigation related to cannabis. This is beginning to change.
Last month, Canada-based Canopy Growth Corporation filed a lawsuit in the U.S. District Court for Western Texas against GW Pharmaceuticals, the UK-based maker of Epidiolex, the first cannabis-based, CBD-based anti-seizure drug approved by the U.S. Food and Drug Administration (FDA). The lawsuit was filed on December 22, 2020, the same day that the USPTO received US Patent No. 10,870,632 (the “632 Patent”) entitled “Process for Making an Extract That Contains Tetrahydrocannabinol and Cannabidiol Cannabis plant material and cannabis extracts contain “granted canopy.”
The scope of the ‘632 patent is much broader than an earlier patent granted to Canopy in 2014, and the grant of overly broad patents has been a matter of great concern to the cannabis industry for some time. To the extent that the extraction process covered by the ‘632 patent becomes widespread across the industry, Canopy’s enforcement of its patent rights could have a tremendous impact. The ‘632 patent expires in about a year and a half, but it could allow Canopy to benefit from patent litigation like this case against GW Pharmaceuticals and could have an industry deterrent that could lead to a significant competitive advantage.
In an interview with Larry Sandell, a patent attorney for Marijuana Moment:
It really could be a huge threat to the extraction industry. As soon as they know about it [the patent]It can be assumed that companies are deliberately infringing the patent, potentially tripling the damage if sued. While steps can be taken to reduce the risk of liability for infringement, CO2 extractors may essentially continue to hang over your head that anvil continues – at least until the patent expires or someone manages to take it off.
We assume GW Pharmaceuticals will try to turn it off. According to Phil Shael, Canopy’s chief legal officer:
The lawsuit alleges that GW produces CBD – the pharmaceutical ingredient in Epidiolex, GW’s leading cannabinoid product – using Canopy Growth’s patented CO2-based extraction process. We have no interest in restricting access to Epidiolex, but the company should be adequately compensated for using GW of our intellectual property.
According to the complaint filed by Canopy:
GW understands or should be aware that the extraction process used to make Epidiolex violates the claims of the ‘632 patent. Although based on information and belief, the recently issued ‘632 patent has been monitoring the’ 632 patent family for over fourteen years. In May 2006, GW proactively challenged the granting of a European counter-application (European Patent No. EP 1 326 598) by filing an objection with the European Patent Office. By the time GW filed the opposition, the parent application of the ‘632 patent – US Patent Application No. 10 / 399,362, granted as US Patent No. 8,895,078 (the “078 Patent”) – had already been filed. Given its monitoring and proactive steps to invalidate a European counterpart, GW knew or should have known of the existence of the US counterpart applications in the ‘632 patent family.
Based on the foregoing, Canopy claims that GW Pharmaceuticals ‘infringement of the’ 632 patent is willful and willful. Under 35 US Code Section 284:
[u]Once the applicant is established, the court will grant the applicant reasonable compensation to compensate for the violation, but in no event less than a reasonable royalty for the infringer’s use of the invention, along with the interest and costs determined by the court. The court can increase the damage to three times the amount determined or determined.
Note that according to the complaint, “GW had approximately $ 366 million in net sales with Epidiolex in the United States for the first nine months of 2020.” Canopy is seeking compensation that is three times a “reasonable royalty” for the Use of the ‘632 patent, along with attorney fees that may be granted to the dominant party in “exceptional cases”.
The impact of this lawsuit can have a profound impact on the cannabis industry as a whole, and we will closely monitor its progress.