Cannabis: Cultivating an IP Culture

Cannabis:CultivatinganIPCulture

JasonMoscovici
ROBIC,LLP
Lawyer

OnApril13th,2017,thegovernmentofCanadatabledBillC-45,the“CannabisAct”,
effectivelypavingthewayforthecommercialsaleanduseofrecreationalcannabisin
Canada.Timetotakeadeepbreath:yes,cannabiswillbe“legal”foradultsinCanada
andeveryonefromyourneighborSylviatoPappyTimhasanopiniononif/when/how
cannabisshouldbegrown,soldandconsumed.
Whatthepublicseemstoforgethoweveristhatcannabisisalreadylegallybeingsoldto
Canadiansaspartofaregulatoryregimethatprovidesforitsproduction,cultivationand
useformedicalpurposes.Thisprogramisthe“greenrush”thatpeoplehavebeenhearing
about,asitessentiallycreatedanindustryovernightbyestablishingasysteminwhich
HealthCanadacangrantlicensestoapplicantsallowingthemtogrow,cultivateandsell
cannabisformedicalpurposes.
Manyhaveappliedtobecomealicensedproducer,andcomparativelyspeaking,fewhave
thusfarreceivedHealthCanada’ssealofapproval.Intermsofroughnumbers:thousands
ofapplicationshavebeenfiled,hundredshavebeenrejectedorwithdrawn,andwhile
therearehundredsmoreinqueueforreview,therearecurrently58licensesgrantedfor
thecultivationand/orsaleofmedicalcannabisinCanadaatthetimethisarticlewas
written.
WiththeCannabisActpresentlytravellingthroughthedifferentinnerworkingsofthe
governmentbeforebecomingactuallaw,andwhileprovincesarepresentlydebatinghow
theywillimplementthevarioussectionsoftheActthatcircumscribesrecreational
cannabis,there’safrenzyamongststakeholdersastheyspeculateonwhatthemarket
willlooklikeoncethe“greenlight”isgiven(licensedproducerssellingintothecurrent
medicalmarketwillbegrandfatheredintotherecreationalsystem).Presently,itis
unknownhowmostprovinceswillregulatetheretailsaleofcannabistoconsumers.Willit
continuetobebymailorder,likewiththepresentmedicalsystem,orwillitbeby
governmentcontrolledretailoutletslikeOntariohassetouttodo,timewilltell.
Nevertheless,whetheryouarealreadyoneofthechosenfewwithalicense,orwhether
you’vejustappliedtoHealthCanada,wishtodososoon,orsimplywishtoprovide
ancillaryservices,thechallengesofcoursedon’tstartandstopwithHealthCanada.You
alsoneedtofocusonrunningyourbusiness!Andthat’swherewehavenoticedatroubling
trend.Withallthehypeandspeculationsurroundingthe“cannabusiness”,andwithall

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sortsofopportunistslookingtostaketheirclaimatalllevels,itiseasytogetdistractedby
thenoiseandforgetthatthisindustryismuchlikeanyotherandtherearecertainreflexes
thatshouldbetopofmind:likeprotectingyourintellectualproperty!
Itseemsobviousforanindustrythatisbasedonthesaleofthesameproduct,that
protectingandenforcingone’sIPwouldbefrontandcenterinordertodifferentiateyour
offeringsfromthoseofanother.Unfortunately,thishasnotbeenthecasesofarandmany
havealreadyfallenforsomeofthecommonpitfallsthatentrapthosewhoaretoobusyto
gettheirbusinessesupandrunningthattheyforgettotakeeasyprecautionsthatcould
preventheadachesinthefuture.Inotherwords,peopleareeagertobuildtheirhousebut
oftenforgettoputtheappropriatelocksontheirdoors.
Sohereisaveryquickanddirtyguidetosomeofthecommonmistakeswehavenoted
inthisindustry,withthehopethatithelpsdevelopsomeverybasicreflexes.

IPMyths,CommonMistakesandBasicCommercialPrinciples
-MarketinginterestsandIntellectualPropertyinterestsareanalogous.False.
Actually,Marketinginterestssometimesdointellectualpropertyadisservice.Thepointof
marketingistogetthewordoutonyourproductsandservices.Forsomemarketers,the
bestbrandisonethatcommunicatesamessagetotheconsumerwithouthavingto
educatethemastothenatureoftheoffering.Thisoftenendsupatoddswithbasicnotions
surroundingtrademarkprotection,whichbenefitmarksthataredistinctivebutnot
descriptive.Whenwelookatsomeoftheinitialbrandingeffortsinthisindustry,itseems
likeeveryonewassmokingthesamestock.Manyadoptedcommercialnamesandlogos
thatevokedimageryandwordinginvolving“theleaf”motif,aswellasthewords“Mari”,
“Canna”,“Weed”,thecolourgreen,etc.Furthermore,manychoseproductnamesthat
wereinherentlydescriptiveorcommonandtherefore,hardtotrademark.Insodoing,the
industrymayhavealreadyrenderedtheseelementsubiquitous,makingiteasyforother
“Canna”typeplayerswithsimilarmotifs,productnames,orotherwisefromenteringthe
marketandcreatingconfusion.Astrongtrademarkisonethatisdistinctive,not
descriptive,anditbecomeshardtoarguethatthistypeofcommonimagery/nomenclature
isexclusivetoonesourcewhenmanyhavealreadyadoptedit.

-RegulatoryrestrictionsreducetheinherentvalueofIntellectualPropertyrightssuchas
Trademarks.–False.
Ok,theCannabisActandthecurrentmedicalregulatoryschemecontainrestrictionson
howcannabiscanbepackaged,advertisedanddisplayedtothepublic.Certain“brand
elements”arealsorestrictedorprohibited.Manyhaveinterpretedthisasmakingany
trademarkingeffortsmoot(what’sthepointofregisteringatrademarkifIcan’tuseit?).
Thisisofcoursefalse.Theserestrictionsmirrorsimilarrestrictionsalreadyfoundinthe
alcohol,tobaccoandpharmaceuticalsectors.Closeyoureyesandthinkofacigarette
brand,analcoholbrandandapharmaceuticalbrand.Eachofthebeforementioned
industriesaresubjecttobrandingandadvertisingrestrictions,andyet,youwerelikelyable
tonameatleastoneexampleofeach.Getcomfortablewiththecreasesofyouradvertising

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restrictions,protectyourdistinctivetrademarksbyregisteringthemanddefendyour
goodwill.

-Giventhesubjectmatter,thereisnoroomforinnovationinthisfieldsincecannabishas
beengrown,usedandsoldforhundredsofyears,sonoonecanclaimamonopolytoany
aspectofthisindustry.False.
Thisalludestohowpatentprotectionisnotanavailableresourcebecauseofhowcommon
thetechniquesthatarebeingusedare.Thisisofcoursefalse.Newandinnovative
technologiestogrow,cultivate,track,extractandstorecannabismoreefficientlyarefront
andcentertotheactivitiesofmanyancillaryserviceprovidersandpatentprotectionisof
courseveryrelevantinthisregard.Asthecultureshiftsfromanillicitactivitywhere
participantsneededtoshareinformationoutofnecessity,towardsprivateenterprise,the
abilitytoidentifyandprotectinnovationsviapatentregistrationsorotherwise(industrial
designs,tradesecrets),willplayakeyroleinmanysuccessfulcompetitivecommercial
strategies.

-AndwhatifIameventuallyconfrontedwithsomething“new”?
Conversely,justbecauseyouarepresentedwithsomethingthatis“new”tothefieldof
cannabis,thisdoesnotmeanitdoesnotalreadyexistinanotherapplication.Inother
words,DOYOURDUEDILIGENCE.Likethegoldrush,likethewebboom,thegreenrush
hasattracteditsfairshareofsnakeoilsellersandthelastthingyouwantistobedragged
intolitigationbecauseadevice,technology,or“uniquegenetics”thatisbeingofferedto
youasexclusive,oras“new”,didn’treallyendupbeingwhatwaspromised.Isthatnovel
technologythatwillhelpyougrowbetterqualityyieldsreallynew?Doesthatproducer
reallyowntherightstothestrains(plantvarieties)itislookingtolicensetoyou?Things
becomeevenmorecomplexasyoustarttoconsiderinternationaltradeinthisfield.
Exciting,yes,butmorereasontodoyourhomework.

-Youcan’tprotecttheplant.Thisisbothtrueandfalse.
Whilepatentprotectionislimitedtothegeneticsoftheplant(acelloftheplantcanbe
protected),theplantitselfcan’tbeprotectedunderthecurrentCanadianpatentsystem.
Nevertheless,plantvarietiesareprotectedunderaseparateregimeknownas“Plant
Breeder’sRights”inCanada.Thosebelievingtohavedevelopedanewandviablestrain
ofcannabisshouldseekthehelpofanIPprofessionaltoseeifthePlantBreeder’srights
programissuitableforthem.

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-Anyuseofcannabiswillbelegal.False

-Isyourbusinessmodelevenpossible?

Strangely,wehavealsoseenalotofeffortthrownatsettingupcannabisrelated
operationsthatclearlyviolatethecurrentregulatoryregime.Therearemanyrestrictions
onhowcannabiscanbesold,inwhatformats,andhowitcanbeconsumed.Thatnew
restaurantideafeaturingcannabiscocktailsisnotgoingtohappenunderthepresent
program.Talktoago-tospecialistandgetagraspoftheregulatoryrestrictionsbefore
investinginanylong-termplans.

-Lessonslearned:Crossborderrelations.
Therearepresentlynoterritorialrestrictionsapplicabletowhocanownandoperatea
cannabusinessinCanada.However,thatdoesnotmeanthatyournewinternational
partnerswon’trunafoulofthelawintheirownlocaljurisdictions.Theseissues
notwithstanding,itisinterestingtonotethatthelargestresourcescrossingtheborderthus
farisn’tcannabisitself(youcanonlyimportorexportcannabisforresearchormedical
purposes)buttheimportandexportofknow-how,technologyandbrands.Thisofcourse
goesbacktothetopicofduediligencesowhenengaginginsuchcross-borderdiscussions
fortechnologytransfers,knowledgesharing,consulting,oranyotherformoflicensing,
alwaysmakesureitisclearwhoownswhatfromanintellectualpropertyperspective,
beforemovingforward.Furthermore,thetopicof“exclusivity”shouldalsobetopofmind.
Itisgreattohaveaccesstoknow-how,butifthissameknow-howisalsobeingsoldto
yourcompetitor,itmaychangethevalueofthiscommercialrelationship,likeinanyother
business.

Conclusion
Yes,theabovecontainedsomeverybasicinformation,butthepurposeofthepresent
articlewassimplytocreateawarenesstothosewhoarecuriousaboutthisindustryabout
therolethatintellectualpropertywillplay,andtohelpdevelopsomereflexes.Great,your
“cannabusiness”planissetupandyou’relookingforfinancing.Whilemanypartstothis
industrypresentnew,neverbeforeseenchallenges,itisabusinesslikeanyother.Identify
andprotectyourintellectualpropertyandfamiliarizeyourselfwiththefollowingterms:
trademarks,patents,industrialdesigns,copyrightsandplantbreeder’srights.Bottomline,
whenyou’rereadytodelveintomoredetailregardingtheabove,talktoanIPprofessional
that’salsospecializedinthisfield.