We’ve written beforehand in regards to the basics of cannabis patents, that are a considerable space of progress inside the hashish business, 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 way in which of cannabis-related patent litigation. That is starting to vary.

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 Prescription 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 way 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 business for fairly a while now. To the extent that the extraction course of lined by the ‘632 Patent is broadly used all through the business, Cover’s enforcement of its patent rights might have enormous implications. The ‘632 Patent is ready to run out in a few yr and a half, however might permit Cover to revenue off of patent litigation like this case towards GW Prescription drugs, and will have a chilling impact on the business that would lead to a major aggressive edge.

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

It actually might be a significant menace to the extraction business. As soon as they find out about [the patent], firms is perhaps thought-about to be willfully infringing the patent, which may probably triple damages if they’re sued … Though there are steps that may be taken to scale back infringement legal responsibility dangers, CO2 extractors might primarily have this anvil hanging over their head because the enterprise continues on—no less than till the patent expires or somebody succeeds in knocking it out.

And knocking it out is what we anticipate GW Prescription drugs to try. 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’ve got no real 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 not too long ago issued, on info and perception, GW has been monitoring the ‘632 Patent household for over fourteen years. In Might 2006, for example, GW proactively challenged the issuance of a European counterpart software (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 dad or mum software 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 purposes within the ’632 Patent household.

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

[u]pon discovering for the claimant the court docket shall award the claimant damages sufficient 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 court docket … the court docket might enhance the damages as much as thrice the quantity discovered or assessed.

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

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