High Time to Protect Cannabis IP

December 17, 2018
By Micheline Gravelle and Jane Wainwright (from Potter Clarkson)


Aspiring biotech businesses looking to gain a foothold in the fledgling European medical cannabis industry should take a leaf from their Canadian counterparts on intellectual property, say specialist life sciences patent attorneys Micheline Gravelle and Jane Wainwright.


After decades of global prohibition, cannabis in 2018 is rapidly going main­stream. Medical access has existed across Canada and swathes of the US for some time, with the former fully legalising adult recreational usage just this October. Eu­rope too is embracing regulatory change, albeit more slowly, with the Netherlands, Germany and – most recently – the UK all permitting medical usage. Indeed, the potential of the wider European market is huge, with projections from market in­telligence firm Prohibition Partners esti­mating a fully legal industry being worth €115.7bn by 2028.

Given the international competition in this hugely dynamic and commoditized industry, robust intellectual prop­erty protection will be absolutely crucial for European businesses looking to make their mark.

As the market evolved in Canada during the 1990s, it was truly eye-opening to see such a patchy understanding of the ba­sics of IP. Typically, bigger biotech play­ers with budgets to match are well-versed in the art of protecting their innovations, but in the rush to bring products to mar­ket, smaller start-ups often found them­selves falling short on the fundamentals. So where are the opportunities?


Harnessing the IP toolbox

Obtaining a patent is often the strongest protection available for cannabis prod­ucts and processes, providing a monop­oly to the owner to exclude others from making, using or selling the invention for 20 years from the filing date once the patent has issued.

There are many patentable products and processes in the cannabis industry, such as novel or modified active ingredi­ents extracted from the cannabis plant or chemically synthesized. This includes the isolation of novel cannabinoids as well as specific combinations of cannabinoids and/or terpenes. Patents can also be ob­tained for novel formulations comprising cannabis active agents or new combina­tions of active agents. New uses of can­nabis or cannabis actives, such as new indications that were not previously treat­ed with cannabis products, may also be patented. In temperate climates, the spe­cialised growing conditions for cannabis may yield new equipment or novel ar­rangements of equipment, for which pat­ents may also be obtainable.

Novel cannabis plant varieties may also be protected in certain countries un­der various regimes. In Europe, plant varieties can be protected by Community Plant Variety Rights (CPVR) or through national protection systems. The variety must be proven to be new, distinct, uni­form and stable. Once the PVR is grant­ed, the cannabis breeder gets exclusive rights to the propagating material of their variety for a period of 20 years, covering the right to sell, produce, reproduce, im­port and export propagating material of the variety.

When the time comes for developing and protecting their all-important brands, companies should also consider conduct­ing clearance searches and file for trade­mark protection. Generally, trademarks can be obtained for words, slogans and designs that function to distinguish a company’s goods and services from others. It is currently difficult to obtain trademarks in the European Community, as a whole, for cannabis products due to the prohi­bition of trademarks for products con­sidered “immoral”. However, it may be possible to obtain trademark protection directly in certain European countries.

Trade secrets can also be a useful tool for cannabis companies looking to keep their IP confidential. These generally ap­ply to methods or formulas that cannot be easily reverse-engineered by competitors. Here, companies may want to keep their method for producing cannabis or their formulations as trade secrets if it provides more economic value than dis­closing the information in a patent.


Diligence pays

Vibrant M&A activity is a feature of any rapidly developing industry, and a further area where robust IP protection is key. The stakes are indeed high. According to fig­ures from PwC, Canadian cannabis M&A activity hit CA$93bn in the first quarter of 2018. While those numbers are some way off in Europe, assessing the existing IP pro­visions of acquisition targets is an integral part of the due diligence process for buy­ers, often meaning the difference between making or breaking a deal.

European companies also need to be es­pecially mindful of the international na­ture of the industry. While there are now 90 publicly listed cannabis-related com­panies in Canada with a market value of about CA$31bn, the top three filers of patents there are actually Swiss, US and British businesses. While more es­tablished businesses naturally have the systems, procedures and capabilities to quickly enter markets across the globe, the Canadian experience has shown that start-ups can be responsible for a great number of market-shaping innovations – but only when their IP is protected.


Tracking growth

Although the Canadian industry is al­ready maturing, it remains uncertain just how swiftly the European market will follow suit. That said, developments from November alone, when healthcare provider Columbia Care became the first US business given a license to oper­ate in the EU and Greece issued its first licences to companies for growing med­ical cannabis, underline the imperative for European businesses to safeguard their innovations before the green rush here hits full swing. 


This article was first published in the European Biotechnology Magazine


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