Kristina Etter   |   September 21, 2018

The Cannabis Industry’s First Patent Collective

Growing pains are developing in the cannabis industry as genetic code, and proprietary processes start to become patent-protected. CannabisTech spoke to Stephen Martin at The Gene Pool this week to discuss the future of cannabis patents.
Before becoming a freelance cannabis writer, Kristina Etter, spent 20 years in corporate information technology with companies including Maytag Appliances, Wells Fargo Financial, and DuPont Pioneer. With a niche in mobile technology and…

Working in the cannabis industry, it's not uncommon to hear fearful whispers of the future “Monsantization” of the industry. Most are familiar with doomsday scenarios involving a large corporate conglomerate holding a patent portfolio the size of an encyclopedia comes barreling through the cannabis industry door on a hostile takeover warpath. The industry is largely dismissive of the hazard, and it’s not uncommon to hear the adage, “Cannabis is federally illegal, how will they enforce it in federal court?”

While it is true, cannabis businesses are not federally recognized or protected; circumstances could change in an instant. Now, with Canada going legal federally, and with United Cannabis Corp’s recent filing against Pure Hemp Collective, many believe it is high time to start paying closer attention to the industry’s patent practices and issuing dire warnings. Leading the way, Stephen Martin is a co-founder of the cannabis industry’s first patent collective, aptly named “The Gene Pool.”

Martin does not mince words when talking about the current patent landscape, going so far as to claim, “If you run a plant touching business, you are virtually guaranteed to be liable for hundreds of thousands or millions of dollars in patent damages.”

CannabisTech spoke with Gene Pool Co-Founders Jay Yonamine and Stephen Martin to discuss the cannabis patent landscape, and what industry players can do to prepare.

The Coming Storm

Martin and his colleagues believe any ‘plant touching business’ is likely to be liable for patent lawsuits in the near future. Explaining the impact patent laws could have the industry Martin stated, “If your business uses Co2 extractions, or any products made from them or containing ingredients made from them, you’re liable. If your business sells pre-filled [vaporizer] cartridges, or infused beverages, or any sort of liquid or oil or gel product, you’re liable. If your business sells any flower containing one or more of over ten highly common genetic markers, or any products made out of them, you’re violating at least one patent and possibly more. The vast majority of products on shelves are already patented.”

Many in the industry think patents won’t be enforceable in court due to the illegal status of cannabis in the eyes of the federal government. As an illegal substance, cannabis does not get the same federal law protections as other products. However, Martin points out, this isn’t a safety net, “That’s wishful thinking, and with United Cannabis Corp’s lawsuit against Pure Hemp Collective, we know it’s false. The USPTO isn’t going to exempt you from patent damages the same way the IRS isn’t going to exempt you from paying taxes.”

With the recent lawsuit filed by United Cannabis Corp, it appears the winds of change are building. Despite being unable to answer in detail, Martin did mention they are assisting PureHemp through process, but makes an urgent warning, “the industry should take notice, there are plenty more patents out there just as dangerous as UCANN’s, and these patent holders aren’t just going to sit around and play nice forever. They will eventually come after you if you don’t take steps to prepare.”

The Gene Pool Initiative

Martin explained there are two things The Gene Pool does to help protect your business: research and collective bargaining. “Regarding research, we proactively prepare files on all the patents which could be applied to our members,” he said. “If they do find themselves on the wrong end of a lawsuit, we already have many of the documents they need to challenge that patent to get it dismissed, or hopefully get the suit dropped.” Continuing, Martin included, “We also help contribute financially to any settlements or agreements they might need to pay, in return for having said settlement-free our other members from litigation risk. We’re not above buying out a troll so that they can’t sue any of our members.”

Additionally, patent holders are also encouraged to look at how The Gene Pool can help protect their assets, as well. Martin stated, “we help facilitate deal flow within the pool. If a patent holder brings their asset to the pool, we’ll help them negotiate licensing deals with our other members as well as find them companies outside the pool who might be interested. We also help inventors research and file their patents properly, so they get top-notch patents instead of some of the highly-broad but highly-weak patents you’re seeing come to the forefront now.”

The Gene Pool is a unique venture aimed a providing a cooperative approach. “While there are other patent collectives in the tech industry like RPX or Unified Patents, but our model is a little more cooperation focused and a little less litigation focused than theirs,” Martin proclaimed.

Martin believes the writing is on the wall for cannabis businesses and warns with imagery from how big pharma and big ag came into existence. “Take a look at the cannabis market comps. Monsanto doesn’t dominate agriculture because everyone loves its brand, and Pfizer doesn’t dominate pharmaceuticals because their advertising is great,” Martin warned. “They dominate because they own the rights to make the high demand products, and if you don’t cooperate, they will take you down.”

If the industry continues on its current path, this may be an inevitable truth for cannabis’ not so distant future. To keep your business safe and be part of the movement to keep cannabis free and open, go to www.genepool.io and reach out to the experts at The Gene Pool.

 

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