Two of the biggest players in the marijuana space are on their way to federal court over a dispute over an alleged violation of a patent on a method of extracting cannabis.
Canopy Growth Corporation, a Canadian-based marijuana company, filed a lawsuit on Tuesday against GW Pharmaceuticals, a UK-based company that produces Food and Drug Administration-approved cannabis-derived anti-seizure drug Epidiolex.
The legal case came the same day that the U.S. Patent and Trademark Office issued a new patent to Canopy granting it broad and exclusive rights to a process of extracting cannabinoids from plant material in the United States. This issue gives Canopy more leverage to pursue lawsuits and potentially receive compensation from GW if the suit plays in its favor.
Canopy’s original patent – which was issued in 2014 (and originally filed as an international patent application in 2001) – was narrower, giving companies like GW leeway to adopt their own extraction practices that fall outside the scope of the patent.
That is no longer the case, and if the U.S. District Court for the Western District of Texas joins the plaintiffs, it could have far-reaching consequences for the marijuana industry.
Canopy claims that GW’s violation of a patented extraction method “has been and continues to be intentional and deliberate.” Because of this violation, “Canopy has suffered and continues to suffer injuries and irreparable damage,” the case says.
The looming problem for the industry is that unless GW is able to prove that the patent is invalid, it could mean that Canopy would have exclusive rights to a mining process that is widespread throughout the market – leaving any company that is depending on this method at risk of litigation.
Of course, Canopy’s exclusive rights do not last indefinitely. The newly issued patent, which is the basis for its latest iteration, expires in just under a year and a half. But even within that time frame, Canopy could make a huge profit on exclusivity, and that could have a cooling effect on competitors in the meantime.
“It could really be a big threat to the extraction industry. Once they know about it [the patent], companies can be considered to be intentionally infringing the patent, which could potentially triple damages if sued, ”Larry Sandell, a patent attorney and litigator at Mei & Mark LLP, told Marijuana Moment. “Although there are steps that can be taken to reduce the risk of infringement liability, CO2 extractors can essentially have this anvil hanging over their head when the business continues – at least until the patent expires or someone succeeds in knocking it out.
It remains to be seen whether Canopy will pursue lawsuits against other companies using the extraction process. GW is one of the largest players since the pharmaceutical company that received the first U.S. federal approval of a cannabis-derived drug.
“The lawsuit alleges that GW manufactures CBD – the active pharmaceutical ingredient in Epidiolex, GW’s leading cannabinoid product – using Canopy Growth’s patented CO2-based extraction process,” Phil Shaer, legal director at Canopy Growth, told Marijuana Moment. “We have no interest in restricting access to Epidiolex, but the company must be reasonably compensated for GW’s use of our intellectual property rights.”
A spokesman for GW told Marijuana Moment that the company “is aware of the patent infringement case brought by Canopy Growth.”
“As a policy, we do not comment on any pending litigation except to say that, based on our preliminary review of the complaint, we are confident in our position and will defend ourselves strongly against this lawsuit,” they said.
One possibility would be for Canopy to license its extraction method to other companies producing cannabis products.
But it is unlikely to sit well with others in the burgeoning industry. And it may be the case that GW or other companies will challenge the legitimacy of the patent in question in court.
On a symbolic level, all of this speaks to the growing pains of a business – a fear expressed by some lawyers as the market has expanded. And how it shakes out in this case could, at least in the short term, be of significant importance to cannabis companies across the country.
Read Canopy’s new patent and complaint against GW over a cannabis extraction process below:
Canopy vs. GW CBD Extractio … by Marijuana Moment
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Photo by Kimzy Nanney.
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