cannabis patent

Patent Profiteers: Could Jamaican Lion Save The Cannabis Industry From Patent Trolls?

From its initial planning in 1984 through to its conclusion in 2003, a global community of scientists collaborated on the largest undertaking of scientific research in history: The Human Genome Project (HGP). The US National Human Genome Research Institute (NHGRI) compares achieving this feat of mapping the entire human genome to the Apollo moon landing.

After this incredible achievement was accomplished, the darker side of the work emerged. From within the international community working to map the human genome, some were also working to patent it. Because the DNA was modified in order to read it, the institutions working on the project were able to get patents approved by the US Patent and Trademark Office (USPTO) before the project was completed, leading to one-fifth of the human genome being patented by the project’s conclusion, according to the NHGRI.

While the ethics of the HGP patents have been debated endlessly — as has the validity, considering they come from human nature — many of them still stand to this day and have been quite profitable for their owners. Now that federal cannabis legalization is on the horizon, corporations are rushing to also patent cannabis genetics. And while a lot of these patents aren’t necessarily threatening, broad utility patents threaten to lock away cannabis genetics before the legal market fully emerges.

“I lived through the same shit show on the Human Genome Project, which is why I have become a little bit obsessed with this one,” says Kevin McKernan, founder and chief scientific officer of Massachusetts-based Medicinal Genomics, a company working to open source the cannabis genome in order to prevent similar predatory patents. From 1996 to 2000, McKernan worked on the HGP at the Whitehead Institute of the Massachusetts Institute of Technology.

“It was publicly funded [and] one of the largest holders of these patents is the US government themselves … and so when we got involved in the cannabis genome, we wanted to put an end to that and just do it all really quickly, so it wouldn’t end up that way,” McKernan explains. “When we turned to the cannabis genome, we decided the best thing we could do is shotgun this thing, sequence this thing, as quickly as we can and put it all public so there aren’t 20 parties at the table all trying to patent a different piece of it.”

McKernan says that when he founded Medicinal Genomics, he was aiming to breed and understand varieties that could alleviate certain genetic conditions. They started the undertaking by seeking to genetically sequence children with epilepsy, mitochondrial disease and autism to better understand how they were interacting with cannabis. But the work was put on hold because McKernan’s attorneys couldn’t find a way around the patents on the human genome.

“We spent millions of dollars with attorneys, trying to figure out how we navigate patents on the human genome so we can sequence these kids, and it was just a big waste of money,” McKernan admits.

He has since taken a different approach. By using blockchain and cryptocurrency, he has funded the full sequencing of a cannabis variety that, paired with records he has also compiled, could invalidate the one big predatory utility patent that is threatening the global cannabis industry today. It’s both a race against time and a race against big money, but if successful, would ensure that the landrace varieties — which hold the key to a lot of the plant’s medical abilities — will stay in the public domain forever.

Cannabis Patent Profiteers

It is easy to compare today’s cannabis bubble to the dot-com bubble of the late 1990s, especially because in current times, technology and cannabis are two of the fastest-growing industries in the United States and are shaping up to be dominate market forces in the 21st century. Both industries are relatively new and a lot of investors and would-be moguls know very little about what they are dealing with, other than that it is profitable. And as Silicon Valley has learned over the last 20 years, a lot of the profit to be made has very little to do with inventing, producing or selling new and innovative products to a demanding market, but instead owning the rights to those “inventions” before others try to profit from them.

In the case of Silicon Valley, a lot of the early internet pioneers were, much like early cannabis pioneers, idealists who felt their work would “make the world a better place.” As they invented code and software, they shared it with the world, planting seeds they hoped would bloom as the market evolved.

But then came the trolls.

Patent trolls are skilled profiteers who know their way around US patent law and were quick to wick up the technological innovations of others and file patents on them. The process of filing the patent is relatively cheap in comparison to the money to be made enforcing it.

While the purpose of a patent is to protect inventors by allowing them to exclusively profit from their inventions for a set period of time, they seem to be doing the opposite today. If a patent owner finds another company or individual infringing their patent, it is up to them to either demand licensing fees for use of the patent or to take the infringer to court. With the costs of hiring lawyers and going to trial usually outweighing the fee being demanded by the troll, the trolls can reap major rewards for very little work.

In the case of cannabis, a shadowy company named Biotech Institute LLC has filed a broad utility patent that could remove a whole class of varieties from the public domain. In 2013, just after Colorado and Washington voted to legalize cannabis, Biotech filed for a family of utility patents referred to as the “breeding, production, processing and use of specialty cannabis.” The patents were granted in 2015.

Unlike a plant variety patent, this utility patent is broad and covers any variety that produces both CBD and THC and in which myrcene is not the dominant terpene. Because this definition could cover a lot of the cannabis plants that growers, breeders and consumers have relied on for millennia, there is a lot of speculation in the cannabis industry and grow community over what the future could hold when federal law changes and Biotech starts enforcing this patent.

Right now, although the USPTO is issuing patents, cannabis is still a Schedule I drug under the Drug Enforcement Administration’s Controlled Substances Act, meaning it has no accepted medical use at the federal level. As a consequence, these patent cases cannot yet be fought at the federal level without breaking federal law to prove claims. Recent court cases, however, may prove that state-by-state enforcement is a viable option for patent holders.

In July, United Cannabis Corporation (UCANN) filed suit against Pure Hemp Collective Inc. Both Colorado companies produce cannabis extracts, but UCANN holds a broad patent on extractions and is testing the resiliency of its patent in court now.

UCANN’s patent, US Patent No. 9730911, or “Cannabis extracts and methods of preparing and using same,” covers any “liquid cannabinoid formulation wherein at least 95 percent of the total cannabinoids is cannabidiol (CBD).” The patent also covers any liquid cannabinoid formulas containing 95 percent or more THCa, THC or a combination of THCa and CBDa.

UCANN purchased an extract from Pure Hemp and tested it through an independent laboratory. After finding that Pure Hemp’s product indeed fell under its patent, UCANN filed suit. Now, cannabis companies and their attorneys are anxiously waiting to see how this lawsuit plays out, as the implications of a ruling in favor of UCANN could have far-reaching consequences. The next hearing is scheduled for early October.

While UCANN may not have actually invented high-potency extracts, or even the processes to create them, the nature of federal prohibition means the people who have been using these methods (or possibly truly inventing them) have specifically not published their “prior art,” or proof of use before the patent, because they were doing something illegal. Now, with only some regions being legal but the plant remaining a crime internationally, companies like UCANN may have exclusivity over the work of countless others — and nature — for years to come.

Sequencing The Jamaican Lion Cannabis Strain

McKernan tried to prevent these sorts of broad utility patents almost immediately when entering the cannabis space. In 2011, Medicinal Genomics sequenced a high-THC strain, Chemdawg, and sent it directly to the USPTO “so they wouldn’t miss it.” While this prior art could prevent a broad utility patent on Type I cannabis plants, or high-THC producing plants, it was before researchers had identified three distinct classes of cannabis plants.

“It was an attempt to try and liberate things, but it clearly didn’t fully protect the field and people are now patenting the things we didn’t sequence back then. Maybe there is a case for it, but I think in the case of the broadened Mark Lewis [Biotech patents] … lawyers [are] trying to stretch the actual invention to things they didn’t really create,” McKernan says.

Type I cannabis plants refer to plants that produce large quantities of THC and very low quantities of other cannabinoids. Type III plants refer to those that produce large quantities of CBD, while Type II plants produce measurable amounts of both THC and CBD, and potentially higher quantities of rare and medically intriguing cannabinoids.

In a 2018 study, titled, “Pharmacological Foundations of Cannabis Chemovars,” Mark Anthony Lewis (one of the listed owners of the Biotech patent), KM Smith and well-known cannabis researcher Ethan Russo wrote the following:

While high-Δ9-tetrahydrocannabinol and high-myrcene chemovars dominate markets, these may not be optimal for patients who require distinct chemical profiles to achieve symptomatic relief. Type II Cannabis chemovars that display cannabidiol- and terpenoid-rich profiles have the potential to improve both efficacy and minimize adverse events associated with Δ9-tetrahydrocannabinol exposure.

McKernan says that the patent is ridiculous because it is “probably the natural state of the plant.” He is referring to cannabis landrace varieties, or those that evolved in nature, which mostly all fall into the Type II designation.

“There is a precursor called cannabigerol [CBG], and both THC and CBD synthase compete for that same precursor. In some genetics, you get plants that make equal amounts of THC and CBD [Type II], some that make only THC [Type I], and others that make only CBD [Type III]. The going thought is it is prohibition that made humans only breed it for THC,” McKernan explains.

Traditionally, Western medical ideology dictates that plant medicines have “active compounds” that are responsible for their effects and that when extracted, isolated or synthesized, these medicines are safer to test and use on humans than in their natural state. Delta-9 THC was identified as the single active ingredient in cannabis in the 1960s and was synthesized into the pharmaceutical isolate Marinol in the 1980s. Because people kept opting for the real thing, Israeli researchers under Prof. Raphael Mechoulam hypothesized the entourage effect in the early 1990s, meaning that the effects of the cannabis plant are a summation of all the compounds that occur naturally, which are almost always different and can vary by genetics and grow conditions.

Type II plants fell out of favor during prohibition because of their low-THC production. But with the rising demand for higher-CBD cannabis strains, Type II plants have become some of the most sought-after varieties for patients and medical producers alike.

Seeking to invalidate the Biotech patent and free the Type II plants, McKernan worked to fully sequence a landrace strain, Jamaican Lion, sold at California’s Emerald Pharms and available by breeder GanJahnetics. Jamaican Lion made an excellent candidate for the task; there are a lot of online sites pointing to a breeder named Shadrock bringing the strain to California in 2007. Jamaican Lion was also one of the earliest identified high-CBD strains coming out of the San Francisco Bay Area’s early medical markets, with proof of chemical composition thanks to testing from Oakland-based lab Steep Hill and documentation work done by the nonprofit Project CBD.

Further, Jamaican Lion took the second-place award in the high-CBD category at the 2011 High Times Medical Cannabis Cup in San Francisco. Lab tests at the time show it producing higher amounts of the terpene beta-caryophyllene which, with its THC and CBD content, would prove prior art against the Biotech patent. But it still may not be enough.

“Clearly [what we sequenced] is not the original plant, it is a seed that came from it. The sequence we have matches other Jamaican Lions [that Medicinal Genomics] has sequenced from other sources in the field. … We think we have good evidence this goes back to the original line,” McKernan insists. “This is kind of a new field in terms of precedent on cannabis patents. I don’t want to speak as if there is any strong legal advice, because we really don’t know how it is all going to shake out in court.”

Cannabis Patent Challenges From Canada

While groups like the Open Cannabis Project and Medicinal Genomics are working stateside to invalidate the Biotech Institute patent, similar patents have been filed in both Canada and the European Union. Allan Rewak, executive director of the Cannabis Council of Canada (CCC), says his organization has hired a law firm to protest the patent and are working to invalidate it in Canada, where adult-use legalization goes into effect October 17.

Rewak says that although the patent in Canada is far less broad than the American version, and there is no current evidence that Biotech Institute is seeking to enforce their patent there, it was concerning to the CCC because it wants to keep the market “as competitive and diverse as possible,” because he and his team finds it problematic for people to make broad claims of ownership on any of these individual strains.

The CCC is a nonprofit organization representing 85 percent of Canada’s licensed producers, including Canopy Growth Corporation, Aphria and Aurora Cannabis. He says that the CCC’s position is that if there is a proven history that something truly new has been patented, they would “of course” have the right to patent it.

However, he is quick to add, “If there are questions of it, we will fight for the rights and interests of consumers, patients and our membership.”

He says the Canadian patent is less concerning than the US patent because it makes a narrower claim in comparison, particularly in regard to the clause that the dominant terpene be beta-caryophyllene, not “anything but myrcene” (Jamaican Lion fits this description). Rewak says it was still important for CCC to take a stand against it now.

“It is something we ethically felt we should take a stand on because we don’t want this to start a trend,” he explains. “It is important for all of us in the cannabis industry to work together to transition the illicit market to a legal one. To do that, we need to work collaboratively and we need to compete on price and product, but we need to work together in the best interest of Canada and Canadians to build a dynamic, diverse competitive marketplace, and part off that is free and fair competition. And that is why we took the action that we did.”

San Francisco-based insurance and risk management firm Emergent Risk provides the legal cannabis industry with the tools needed for protection of intellectual property in order to defend against broad enforcement of utility patents like Biotech’s. In particular, Emergent Risk is insuring cannabis companies so they can afford to enforce their own variety patents or challenge enforcement of broad utility patents, should Biotech or others determine it is in their interest to enforce the United States patent.

“Litigation is expensive, the average cost of patent infringement is $2.8 million,” says Gil Shaheen, VP of sales and marketing at Kentucky-based Intellectual Property Insurance Services Corporation, which works closely with Emergent Risk to provide patent-litigation coverage. “These cases usually take one and half to three years to litigate.”

Shaheen adds that, according to the USPTO and data assembled by the American Intellectual Property Law Association, patent litigation has risen sharply since 2009, perhaps as high as 88 percent.

With heavy costs to litigate and challenge utility patents in particular, it makes them that much more valuable to fund open-sourced research to invalidate them.

Could The Answer Be Found In Crypto Cannabis?

McKernan is sequencing, open sourcing and notarizing DNA using blockchain technology, which he says is more reliable and secure than a typical website, as far as proving prior art.

“We need something that is going to last 20 years and the blockchains right now look like the most reliable databases on the planet. They are now securing billions and billions of dollars’ worth of monetary wealth because they are considered the most secure networks in the world,” McKernan says. “No one in the world in 10 years has managed to hack bitcoin [a blockchain-enabled cryptocurrency] and now it is holding a couple hundred billion dollars’ worth of money, and if anyone could find out how to hack it, that’s a pretty huge hack bounty.”

Cryptocurrencies are quickly captivating the imagination of financiers and tech developers around the world. And just like cannabis, a lot of big bets are being placed on what the best investment will prove to be. Part of the ideology behind cryptocurrencies is to take away financial power from government-controlling central banks. There are now thousands of cryptocurrencies around the world and a whole industry of cryptocurrency day traders capitalizing on the speculation.

Thanks to federal law, cannabis is an all-cash industry, with no access to banking — and many cryptocurrencies are rushing to fill the void. Some dispensaries in legal states have used cryptocurrency-enabled systems in order to accept credit and debit cards to get around the all-cash-no-bank quandary. Medicinal Genomics is looking to the blockchain to notarize the open-sourcing of DNA, and to blockchain-enabled cryptocurrency to help fund the work, including the full sequencing of Jamaican Lion.

“We submitted a grant to one particular blockchain that is a for-profit bitcoin called Dash that has some interesting attributes that will probably make it more amenable to the cannabis industry,” McKernan reveals.

“Bitcoin takes 10 minutes to resolve transactions and Dash takes a couple seconds, so it can actually be used at a dispensary,” he continues. “Bitcoin can’t be used at a dispensary, no one is going to wait 10 minutes to get a $72 purchase. They need to have it resolved like credit cards. They like the idea of building a cannabis genome that could be the foundation for a seed-to-sale tracking system and perhaps even a point-of-sale system for their currency, and so they funded the program to sequence this genome and put it public and maybe even crack a little bit more freedom into the marketplace by taking the teeth out of this current patent.”

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