Cannabis Operators Should Develop Patent Strategies Now
If You’re Selling Cannabis Products, You Better Have a Patent Strategy
Guest post by Jay Yonamine, Co-Founder at Gene Pool Technologies
Patent Strategies Are Mission Critical for Cannabis Operators
Patents are mission critical to virtually all industries, and especially so during their early stages of growth. From glass to golf balls to sweeteners to smartphones and everything in between, the development and enforcement of patented technology is a core element not only of business operations but also of industrial growth and maturity. Plus, patents are big business: corporations spend an estimated $40B a year on filing and maintaining their patent portfolios alone, with hundreds of billions more spent on R&D used to generate the innovations, and billions on patent litigation and licensing fees. For example, in 2019 alone, smartphone manufacturers paid an estimated $2.6B in patent royalties.¹
Although the cannabis industry has not yet spent similarly large dollars on patent royalties, it is inevitable that patents will also play a crucial role in the cannabis industry. Today we are at an inflection point in the industry driven by a rapid increase in patented innovation (cannabis-related patent applications have more than tripled since 2015, according to Law360), growing revenue, and a pervasive indifference to patent rights that all but ensures widespread infringement.
Despite the ramp up in patent filings, most operators are still woefully unprepared to face the potential onslaught of infringement claims and lack a robust risk-mitigation strategy. This is especially true of companies selling concentrates-based products—be it edibles, topicals, shatter, butter, or vape cartridges—since all of these products directly or indirectly utilize extraction equipment, which represents some of the most advanced and heavily patented technology in the industry. Companies that produce and sell concentrate-based products are almost certainly infringing someone’s patents and are at serious risk of being subject to patent litigation.²