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CBD makers using C02 extraction may be violating patent, Canopy says

Canopy Growth Corporation to invest $500 million in U.S. market
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Canadian cannabis giant Canopy Growth says CBD makers employing a specific CO2 extraction method could owe them licensing fees or compensation.

Canopy made the claim in a patent infringement lawsuit filed this week against UK-based medical CBD maker GW Pharmaceuticals. The suit could have broad implications for any companies making both THC and CBD oil. Canada-based Canopy Growth has business in both marijuana and CBD.

“Potentially everybody who does CO2 extraction may be infringing.” Larry Sandell, a Washington-DC patent attorney, told Forbes: “I don’t know how much CO2 extraction falls outside the scope of the patent’s claims. This is why people should care.”

News of the lawsuit was first reported by Marijuana Moment Wednesday.

Who’s at risk?

“Unless GW is able to prove that the patent is invalid, that could mean Canopy would have exclusive rights to an extraction process that is widely used across the market, leaving any company that relies on this method at risk of litigation,” according to Marijuana Moment.

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

Forbes reported that while the patent application was first filed by an inventor named Adam Mueller in 2000, Canopy’s filing with the U.S. Patent Office shows the company on Dec. 4 paid Spectrum Therapeutics, a German unit of Canopy, a total of $1 for the technology and “other good and valuable consideration, monetary and non monetary, Forbes reported.”

Patent, lawsuit coordinated

The U.S. Patent Office issued Canopy the patent on Tuesday. Canopy filed its lawsuit in federal court in Texas that the same day. Industry experts contacted by Forbes said the timing suggests Canopy may have obtained the patent with the specific intent to file the lawsuit.

To prevail in the suit, Canopy will have to prove that its patent is the first recorded example of the use of the technology in question, the experts told Forbes. In its defense, GW will have to demonstrate that its extraction technology is different than that claimed in Canopy’s patent, or that Canopy’s technology under the patent was “known or obvious” when the original 2000 patent application was filed.

If GW Pharmaceuticals is found to have used Canopy’s intellectual property to extract CBD into Epidiolex, Canopy could make patent infringement claims against almost every major cannabis-oil manufacturer in the United States, Forbes suggested.

Rights expire in 2022

Canopy’s rights last only until mid-2022. But even in that roughly 18 months, exclusivity on the C02 technology could bring the company profits and “have a chilling effect on competitors in the interim,” Marijuana Moment suggested.

Avis Bulbulyan, a Los Angeles-based cannabis consultant and regulatory adviser, said the move could indicate Canopy is getting ready to enter the CBD medicine sector, currently dominated by GW Pharma’s Epidiolex.

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

Aggressive strategic play?

“Or it could be a very strategic play to own a piece of almost every existing cannabis company,” Bulbulyan told Forbes. If GW Pharma settles or loses the case, “everybody’s fair game at that point.”

“I don’t think it’s a quick money grab. If it was, Canopy would try to pick off a smaller competitor rather than go against a giant like GW Pharma,” Bulbulyan said

GW Pharmaceuticals has not commented on the litigation.

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