The federal Controlled Substances Act has long been the primary thorn in the side of the U.S. cannabis industry at-large. Despite state-legal marijuana cultivation, production, sales, and possession, its status as a Schedule I narcotic by federal law has had all kinds of adverse impacts. Among these: Companies struggle to protect their California cannabis patents, thanks to something known as the illegality doctrine.
Basically, the illegality doctrine is a principle arising out of English common law (first articulated by American courts way back in 1775) that basically says courts don’t have jurisdiction over claims that arise from acts that are illegal. So for example, if someone is unlawfully selling heroin and robbed, the victim may have no recourse for restitution of the stolen heroin or trafficking funds – because they were illegal in the first place.
With regard to cannabis company patents, there have been a flood of new state-legal marijuana brands and products on the market in recent years. But protecting those unique patents and trademarks has proven extremely challenging because of the illegality doctrine. Patents and trademarks are protected under federal law – which also considers the underlying substance they’re trying to protect as illegal.
However, as our Los Angeles marijuana business lawyers can explain, that may not be the last word on it.
Take, for instance, the case last year of Gene Poole Technologies, Inc. v. Coastal Harvest, LLC. This was a decision handed down by the U.S. District Court for the Eastern Division in California. This was a noteworthy case because up until then, no federal court had addressed whether it would allow state-legal cannabis companies to pursue patent protections. Here, the court held that the illegality doctrine was not a bar to enforcing a California cannabis product patent.
The outcome of this case wasn’t a guarantee, particularly given that in a number of other non-patent cannabis cases in federal court, the effectiveness of the illegality doctrine as a defense has been a bit of a mixed bag.
For instance, a number of bankruptcy courts have held that cannabis company businesses – in clear violation of the Controlled Substances Act – weren’t entitled to the same bankruptcy protections as other companies. But then in a federal breach of contract case involving a state-legal cannabis company (Siva Enterprises v. Lance Ott) , the court held that it did have jurisdiction because it wasn’t being asked to consider any remedy that might compel one side or the other to violate federal laws on controlled substances. The actual production or sale, in that case, was not at issue.
So future claimants need to tread carefully, because despite the Gene Poole ruling (wherein the Siva ruling was cited), other federal courts aren’t necessarily bound by that finding – especially as it hasn’t even been cleared by the regional appellate court. Unless/until the law changes or the U.S. Supreme Court decides, the success of a cannabis company patent protection claim may depend on the regional precedent.
If you have questions about pursing cannabis patent protection or defending against such a claim, we can help.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.
Fighting The Cannabis ‘Patent Trolls’ – This Company Is Filing IPRs Against Gene Pool Technologies, Sept. 9, 2022, By Vuk Zdingjak, Benzinga Staff Writer, Benzinga.com
More Blog Entries:
Potential Complications for California Cannabis Company Real Estate Lending & Commercial Leases, Dec. 22, 2022, Los Angeles Cannabis Lawyer Blog