May 9, 2019

Liquid Cannabis Patent Survives Section 101 Challenge

Holland & Knight Alert
Anthony J. Fuga | Taite R. McDonald | Michael Obeiter

The U.S. District Court for the District of Colorado on April 17, 2019, upheld United Cannabis Corp.'s (UCANN) patent claims concerning a liquid cannabinoid formulation, "wherein at least 95% of the total cannabinoids is a specified cannabinoid or combination of them."1

Pure Hemp challenged the claims in an early motion for summary judgment, arguing that UCANN's claims are directed to "the unpatentable natural phenomenon of the specified chemical compounds (cannabinoids, terpenes, and flavonoids), as if UCANN is trying to secure a monopoly on those compounds."

The court walked through the relevant precedent going back to the Funk Brothers 1948 U.S. Supreme Court opinion, which invalidated a new mixture of nitrogen-fixing bacteria: "Patents cannot issue for the discovery of the phenomena of nature. The qualities of these bacteria . . . are part of the storehouse of knowledge of all men."

The court then acknowledged the current reality: the "proper application of the Supreme Court's Alice standard is an evolving and sometimes hazy area of law . . . not as straightforward as the Supreme Court makes it sounds in Alice itself."

Despite the "hazy area of law," the court found that the challenged claims are not directed at unpatentable subject matter. Instead, "the obvious thrust of the patent is a supposedly new means by which humans can consume cannabinoids so that those cannabinoids can produce the pharmacological effect they are known to have, thus (hopefully) treating or ameliorating various diseases and symptoms."

The court found Pure Hemp's argument unpersuasive: "Pure Hemp has failed to establish beyond genuine dispute that a liquefied version of cannabinoids and related chemicals specified in the [patent claims] is anything like a natural phenomenon . . . Pure Hemp nowhere claims that these precise concentrations, or anything close to them, occur in liquid form in nature. Accordingly UCANN's claims are not restatements of the 'handiwork of nature.' "

The court finally noted that it sees reason to question whether the patent "claims anything novel, useful, or nonobvious" but its analysis here was limited to the Section 101 Alice inquiry.

Beyond the patent claims at issue in this case, it is important to note that cannabis-derived goods also occupy a "hazy area of law," though one that is getting clearer every day. While hemp – defined as any part of the cannabis plant or a derivative with less than 0.3 percent delta-9-tetrahydrocannabinol (THC) on a dry weight basis – was legalized in the 2018 Farm Bill, in most states these products will continue to be illegal until the U.S. Department of Agriculture (USDA) issues regulations and states subsequently have their licensing and regulatory plans approved by USDA. And while changes are coming at the U.S. Food and Drug Administration, cannabis-derived products are still not permitted in food, drugs or supplements, and companies cannot make any unfounded and unproven claims of medical benefits.

In short, this is a rapidly evolving area of law at the federal and state level that requires all existing and potential market participants to remain vigilant.

Clients seeking further information on the District Court's ruling and its impact or the current regulatory landscape may contact the authors.


Notes

1 United Cannabis Corp. v. Pure Hemp Collective, Inc., No. 18-cv-1922-WJM-NYW (D. Colorado, April 17, 2019)


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.


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