We’ve written beforehand in regards to the basics of cannabis patents, that are a considerable space of development throughout the hashish trade, and we’ve written extensively about hashish trademark litigation (see a few of our posts here, here, and here), which has been prolific within the final couple of years, however we’ve seen little or no in the best way of cannabis-related patent litigation. That is starting to alter.

Final month, Cover Development Company, based mostly out of Canada, filed a lawsuit within the U.S. District Court docket for the Western District of Texas towards GW Prescribed drugs, the UK-based producer of Epidiolex, the primary cannabis-derived CBD-based anti-seizure medication accredited by the U.S. Meals and Drug Administration (FDA).  The lawsuit was filed on December 22, 2020, the identical day the USPTO issued U.S. Patent No. 10,870,632 (the “’632 Patent”) titled “Course of For Producing An Extract Containing Tetrahydrocannabinol And Cannabidiol From Hashish Plant Materials, And Hashish Extracts” to Cover.

The scope of the ‘632 Patent is far broader than a earlier patent issued to Cover in 2014, and the issuance of overly broad patents has been a difficulty of nice concern to the hashish trade for fairly a while now. To the extent that the extraction course of coated by the ‘632 Patent is extensively used all through the trade, Cover’s enforcement of its patent rights may have big implications. The ‘632 Patent is ready to run out in a few 12 months and a half, however may enable Cover to revenue off of patent litigation like this case towards GW Prescribed drugs, and will have a chilling impact on the trade that might lead to a major aggressive edge.

In an interview with Larry Sandell, a patent legal professional, by Marijuana Second:

It actually could possibly be a significant risk to the extraction trade. As soon as they learn about [the patent], firms may be thought of to be willfully infringing the patent, which might doubtlessly triple damages if they’re sued … Though there are steps that may be taken to cut back infringement legal responsibility dangers, CO2 extractors could primarily have this anvil hanging over their head because the enterprise continues on—not less than till the patent expires or somebody succeeds in knocking it out.

And knocking it out is what we count on GW Prescribed drugs to aim. In accordance with Phil Shael, the Chief Authorized Officer of Cover:

The lawsuit asserts that GW manufactures CBD—the lively pharmaceutical ingredient in Epidiolex, GW’s main cannabinoid product—utilizing Cover Development’s patented CO2-based extraction course of … We now have little interest in proscribing entry to Epidiolex, however the firm needs to be pretty compensated for GW’s use of our mental property.

In accordance with the grievance filed by Cover:

GW is conscious, or needs to be conscious, that the extraction course of it makes use of to fabricate Epidiolex infringes the claims of the ‘632 Patent. Though the ‘632 Patent lately issued, on info and perception, GW has been monitoring the ‘632 Patent household for over fourteen years. In Could 2006, for example, GW proactively challenged the issuance of a European counterpart utility (European Patent No. EP 1 326 598) by submitting an opposition earlier than the European Patent Workplace. By the point GW filed its opposition, the guardian utility of the ‘632 Patent—U.S. Patent Software No. 10/399,362, which issued as U.S. Patent No. 8,895,078 (the “’078 Patent”)—had already been filed. In mild of its monitoring and proactive steps to invalidate a European counterpart, GW knew, or ought to have recognized, of the existence of the U.S. counterpart functions within the ’632 Patent household.

Based mostly on the foregoing, Cover alleges that GW Prescribed drugs infringement of the ‘632 Patent is willful and deliberate. Below 35 U.S. Code § 284:

[u]pon discovering for the claimant the courtroom shall award the claimant damages ample to compensate for the infringement, however in no occasion lower than an inexpensive royalty for the use manufactured from the invention by the infringer, along with curiosity and prices as fastened by the courtroom … the courtroom could enhance the damages as much as 3 times the quantity discovered or assessed.

Observe that in accordance with the grievance, “GW reported roughly $366 million in internet product gross sales of Epidiolex in the USA within the first 9 months of 2020.” Cover is searching for compensation that might quantity to 3 instances a “cheap royalty” for the use manufactured from the ‘632 Patent, along with attorneys’ charges, which can be awarded to the prevailing social gathering in “distinctive circumstances.”

The implications of this lawsuit could have a profound impact on the hashish trade as an entire, and we might be following its progress intently.