Canopy Says CBD Makers Using C02 Extraction May Have Violated Patents


Canadian cannabis giant Canopy Growth says CBD makers that use a specific CO2 extraction method may owe them licensing fees or damages.

Canopy made the claim in a patent infringement lawsuit filed this week against GW Pharmaceuticals, a medical CBD manufacturer in the United Kingdom. The lawsuit could have broad implications for any company that makes both THC and CBD oil. Canada-based Canopy Growth has operations in both hemp and CBD.

"It's possible that everyone who does CO2 extraction could be infringing". Larry Sandell, a Washington, D.C., patent attorney, told Forbes." I don't know how much CO2 extraction falls outside the scope of the patent claims. That's why people should care."

News of the lawsuit was first reported Wednesday by The Cannabis Hour.

Who's at risk?
"Unless GW can prove the patent is invalid, it could mean Canopy will have exclusive rights to an extraction process widely used throughout the market, putting any company that relies on the method at risk of litigation," according to Marijuana Moment.

Ontario-based Canopy Growth said it acquired a U.S. patent in 2019 when it bought Germany's C³ Cannabinoid Compound Co.

While the patent application was first filed in 2000 by an inventor named Adam Mueller, Canopy's filings with the U.S. Patent Office show the company paid Canopy's German subsidiary Spectrum Therapeutics a total of $1 for the technology on Dec. 4, as well as "other good and valuable consideration, both monetary and non-monetary."

Patents, Litigation Coordination
The patent was issued to Canopy on Tuesday by the U.S. Patent Office, and Canopy filed suit the same day in federal court in Texas. Industry experts contacted by Forbes said the timing suggests Canopy's specific intent in obtaining the patent may have been to file the lawsuit.

To prevail in a lawsuit, Canopy would have to prove that its patent is the first documented example of using the technology in question, the experts told Forbes. In its defense, GW would have to prove that its extraction technology is different from that claimed in Canopy's patent, or that the technology under its patent was "known or obvious" at the time of Canopy's original patent application in 2000.

Forbes suggests that if GW Pharmaceuticals is found to have used Canopy's intellectual property to extract CBD into Epidiolex, Canopy could bring patent infringement claims against virtually every major hemp oil manufacturer in the United States.

Rights to Expire in 2022
Canopy's rights only last until mid-2022. But even during that roughly 18-month period, the exclusivity of the C02 technology could be profitable for the company, "creating a chilling effect on competitors in the interim," suggested Marjuana Moment.

Avis Bulbulyan, a Los Angeles-based cannabis consultant and regulatory adviser, said the move could indicate that Canopy is preparing to enter the CBD drug space, currently dominated by GW Pharma's Epidiolex.

Epidiolex, which contains high levels of CBD (100 milligrams per milliliter), is the first cannabis-derived prescription drug to receive federal approval from the U.S. Food and Drug Administration. It has been found to be effective in patients suffering from Dravet syndrome and Lennox-Gastaut syndrome, two debilitating forms of epilepsy.

An aggressive strategic play?
"Or it could be a very strategic play that owns a piece of almost every existing cannabis company," Bulbulyan told Forbes. If GW Pharma settles or loses, "it's fair game for everyone at that point."

"I don't see this as a quick money grab. If it was, Canopy would be trying to pick off a smaller competitor rather than going up against a giant like GW Pharma," Bulbulyan said.

GW Pharma did not comment on the lawsuit.

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