I’ve covered over 50 cannabis related patents and patent applications since we founded TheCannalysts. It’s time I write an article summarizing the landscape of cannabis patents to see what works and what doesn’t. This is a followup to my article on The Value of Patents.
When people spend a lot of money to try and get around a patent, that patent ‘works’. Jon Page’s patents covering the cannabinoid biosynthetic pathway are a perfect example of how patents can provide barriers to competition. Cronos has spent $22 million + up to 14.7 million common shares at specific milestones to try and get around these patents. Other companies like Hyasynth Biologicals and InMed have also spent time and money trying to develop similar workarounds. This shows the time and money the patent owner put into developing the contents and going through the patent process has paid off. These patents are the most successful I’ve seen in the industry to date at providing barriers to competition.
Patents owned by BASF for the production of fatty acids in oilseed crops, including cannabis, are other examples of what works. These patents limit the available routes to production of speciality commodities that cannabis could be used to produce, any company wanting to compete with BASF in this specific market using cannabis would need to find an alternative. It’s important to note that finding and engineering biochemical alternatives is more complex than trying to find alternatives to things like extraction. There are many ways to isolate compounds, but not many ways to biochemically synthesize a range of specialized chemical compounds.
GW Pharmaceuticals owns a patent covering the use of their Epidiolex formulation for the treatment of epilepsy. This patent is the product of GW Pharmaceuticals many clinical trials; they’ve also gotten approval from the FDA to sell their product for the use outlined in their patent. The clinical trials and FDA approval for the use of their formulation means the patent offers real barriers to competition. GW Pharmaceuticals can legally sell a cannabis product in the USA and make claims to patients backed by clinical trials. For the life of the patent no one else can sell a similar formulation for the same use.
What doesn’t work:
Those who keep up with my patent analyses will know I rarely praise the contents of a patent. From my perspective, the cannabis industry has not produced many patents that provide barriers to competition. The most obvious example of patents that don’t work are Canopy’s many patents trying to cover the medical use of cannabinoids. Examples include Cannabis for Cessation of Chemical Dependence and Hemp Extracts to Treat Diseases, which include little to no novel research and can only be practically applied if clinical trials are conducted to validate the medical claims. When Canopy stepped away from pharma, they effectively gave up any desire to validate the many patents and patent applications they own covering the medical application of cannabis for specific ailments. If Canopy doesn’t find someone to buy these patents, their shareholders will be left in the same position as they would if Bruce used their money in an attempt to patent the shape of his bowel movements. It’s confusing to me why a company would amass so many patents that include medical claims without following through on any of them.
Other examples of what doesn’t work include:
- Patenting things that could work in theory but offer no protections to alternatives
- Patenting things very similar to what other people have already done, meaning the original that people can use has no protections
- Patenting specific cannabis plants in a framework so restrictive it only covers identical plants
- Patenting cannabinoid delivery systems before comparing to the many alternatives
From my perspective all the above patents or applications don’t work because the ‘inventor’ failed to justify why they created the patent before filing it. In many of these cases I’d classify the ‘inventor’ as more of an ‘appropriator’ than an inventor.
What could work:
Extraction, it’s a numbers game, how cheaply can you produce “X”. “X” can be THC isolate, live rosin or any number of different extraction formats that cannabis can be turned into. The key metric for any extractor producing each of these formats is cost. I’ve covered some of NextLeaf’s and Radient’s extraction patents, both cover an extraction process these companies use. From my perspective these patents only work if the assignee is able to demonstrate their process is cheaper to alternatives for any given format of cannabis extract. It’s a pretty simple comparison if you have access to the production numbers: how much does it cost to produce a kilogram of THC isolate given identical inputs? Unfortunately the public is unlikely to ever be given access to data that would allow for this type of comparison.
All of the patents I’ve classified as ‘work’ contain novel R&D that outlines an advantage/protocol to producing specific chemical components in cannabis or using them in a specific way. Competitors would likely have to spend more time and money than the inventors to find a way around those patents. Patents that ‘don’t work’ are either framed in a way the inventor can’t defend the patent or many alternatives to the framework are known. The inventors of patents that ‘could work’ need to justify, through quantitative metrics, why their patents offer barriers to competition.
The preceding is the opinion of the author, and is in no way intended to be a recommendation to buy or sell any security or derivative. The author holds no position in Canopy Growth, Cronos Group, NextLeaf Solutions, Radient Technologies, Organigram or GW Pharmaceuticals .