SAM KAMIN AND VIVA MOFFAT JANUARY 28, 2015 Marijuana Regulation and Intellectual Property

Stages of Marijuana Regulation  Federal Prohibition (1937-present)  Medical Marijuana (1996-present)  Legalization (Nov 2012-present)

The Colorado Marijuana Business  4 Types of Licensed Businesses: grow, MIP, retail, testing  State regulations govern these entities  Background check  Residency Requirement  Other Entities Aren’t Licensed

Federal Prohibition under the CSA  Marijuana Is a Schedule I Narcotic  Legislative and Legal Challenges to Schedule I status consistently fail  Gonzales v. Raich, 545 U.S. 1 (2005)  United States v. Oakland Cannabis Buyers’ Cooperative, 532 U.S. 483 (2001)

Federal Views on State Experimentation with Marijuana Law Reform  Prior to Legalization  Ogden Memo – October 2009 –  Cole Memo I – June 2011–  After Legalization:  Cole Memo II – August 2013 – Federal enforcement kept in abeyance as long as states competently manage 8 federal priorities.

Continuing Tensions  The Cole Memo Brought Needed Clarity, but…  It is an act of prosecutorial grace  Administrative priorities could change – administration could change  Feds could decide a state is not meeting its obligations

Ancillary Consequences  Employment  (Coats v. Dish Network, 303 P.3d 147, 149 (Colo. App. 2013))  Contract  (Hammer v. Today’s Health Care II, CV , Superior Court of Arizona, Maricopa County, April 17, 2012.)

More Ancillary Consequences  Banking – FinCEN announcement hasn’t been much help.  Taxation –280E  Public Benefits  public housing, student loans, etc.

Even More Ancillary Consequences – Access to Law and Lawyers  Rule 1.2(d)  Comment 14 – lawyers may “assist a client in conduct that the lawyer reasonably believes is permitted” by state law.  Local Rule D.C.COLO.L.Atty.R. 2(b)(2) – Attorneys may counsel re: CO marijuana laws, but may not “assist a client in conduct that the lawyer reasonably believes is permitted by” such laws.

Intellectual Property Consequences  The fact that marijuana sale, possession, and use remains a federal crime has profound effects on the intellectual property rights of marijuana entities in Colorado.  Patent law  Trademark law  Copyright law

Federal Intellectual Property Law & the Marijuana Industry  Patent and trademark law are the most obvious, but both are unavailable to the marijuana industry.  Trademark law has an “illegality” doctrine  Patent law is effectively unavailable because of the difficulty of access to the federal courts  Copyright law is available but not very useful  May mean a greater reliance – and pressure – on state law doctrines

Patent Law & Marijuana  No “illegality” doctrine in patent law.  Discredited version of the utility doctrine might have prohibited a patent.  Federal government owns some patents on cannabinoids.  A number of patents on marijuana-related processes and manufactures, as well as applications in the pipeline.

Patent Law & Marijuana  Under the current federal prohibition – patent law is likely to be relatively useless for the marijuana industry.  Risk in filing for and taking ownership of a marijuana patent  High chance of denial on some grounds  Likely unavailability of the federal forum to protect patent rights  Ethical considerations for lawyers  Bottom line: unless the CSA is amended, patents unlikely to be a valuable route for the marijuana industry.

State-level alternatives to patent law?  Trade secret law  Contractual mechanisms  Non-disclosure/confidentiality agreements  Non-competes  State law property doctrines?  Trespass to chattels? Conversion or theft?

Trademark Law and Marijuana  Trademark rights for the marijuana industry are clearer.  Federal trademark law does have an illegality doctrine, and it has been asserted to deny registration for marks for businesses that manufacture or sell marijuana.  Ancillary businesses can and do receive federal trademark rights  Also, Colorado marijuana businesses might not be able to register marks because of the “use in commerce” requirement.

Federally-registered trademarks – for ancillary businesses  “MARIJUANA INTERNATIONAL” for “cannabis advertising and marketing”  “MARIJUANAHOLIC” for “clothing”  “PERFECT MARIJUANA” for “counseling services in the fields of health, herbalism and lifestyle wellness”  “CANNABIZ” for “educational services”  “CANNABIS COUNSEL” for “legal services”

State law alternatives – trade name and trademark Examples:  DIXIE ELIXIRS --  THE CLINIC –  MEDICINE MAN --  SWEET LEAF --

Unfair competition and deceptive trade practices  Colorado Consumer Protection Act – C.R.S. § et seq.  Includes C.R.S. § – Deceptive Trade Practices, which offers trademark-like prohibitions: passing off, false representations of origin, etc.  Similar protections to those of the Lanham Act, but the geographic reach is obviously limited

Copyright Law & Marijuana  Copyright protection is available –  no illegality doctrine,  first amendment principles permit expression that includes depictions of illegal drugs and drug use.  But, copyright is probably not that useful to the marijuana industries. That is, they don’t need it much.

A possible silver lining?  How much innovation can and will happen in the (relative) absence of intellectual property protection?