Cannabis Intellectual Property Licensing: How to Avoid Litigation

marijuana intellectual property licensing
Licensing agreements can get complicated. Start with who owns what.

We’ve penned extensively about the likely pitfalls of mental home (“IP”) licensing deals, which are prolific in the hashish sector. (For a handful of choose articles, try out in this article, in this article and in this article). Not long ago, news broke of a further licensing-linked lawsuit, this time involving Tommy Chong. In accordance to the lawsuit, Chong and his son allegedly conspired to steal revenue from Evergreen Licensing LLC. The criticism seeks damages for breach of agreement, fraud and unjust enrichment.

The criticism alleges that immediately after a few several years and $1 million used on the project, Chong and his son conspired to “take it all absent, even hacking into Evergreen’s Gmail account in get to misappropriate social media sites that plaintiffs produced for the project.” The plaintiffs more allege that they had been slash “entirely out of the picture, the project and the income and revenue the project was likely to produce and is building.” It all seems pretty unfair.

Sadly, these varieties of allegations appear as no surprise given some of the proposed deals that have appear across our desks. IP licensing is usually witnessed as a speedy and straightforward way to enter the cannabis sector, without obtaining to crystal clear the hurdles of condition and area licensing and regulatory compliance. But unfortunately, this just is not the case. These deals are complicated and fraught with special hashish-linked difficulties outside of those posed by condition and area rules.

In addition to regulatory compliance, those contemplating a hashish-linked IP licensing offer have to have to recognize the fundamentals of mental home, and this usually commences with figuring out who actually owns what. In the hashish sector in certain, info, pressure names, and sector terminology have been shared freely because extensive ahead of condition-stage legalization, and this compounds the difficulty faced by hashish business owners in guarding their IP.

Possession of IP in the hashish sector is fraught with difficulties, as we have talked over ahead of, in big part for the reason that the USPTO will not problem federal trademark registrations for hashish-linked marks. Far much too usually, hashish businesses appear to us with proposed licensing deals the place basic due diligence rapidly reveals the licensor just does not personal what it statements to personal.

If you’re wanting to license IP from a further enterprise, in this article are the most basic concerns you should be in a position to reply about that enterprise and its IP:

  • Does the licensor personal any federal trademark registrations?
  • If so, what items and/or companies do those trademark registrations protect?
  • Was the description of items and/or companies submitted with the USPTO precise and correct? Were being there feasible misrepresentations?
  • Are the trademark registrations centered on precise use, or upon an “intent-to-use?”
  • What representations and warranties is the licensor making (or, usually far more importantly, not making) relating to the marks?
  • If the licensor does not personal any federal trademark registrations, is it licensing a person else’s logos?
  • Does the licensor have a master licensing settlement? Do the terms of any proposed sub-licensing settlement mirror that master licensing settlement?
  • What good quality management benchmarks will you be held to by the trademark owner?
  • Has the trademark owner warranted to hold all USPTO filings up-to-date?
  • Does the licensor personal any condition trademark registrations?
  • If so, has the licensor designed lawful use of its mark in commerce in the condition of registration?
  • Does the licensor have any typical regulation trademark rights? Can the licensor even legally obtain typical regulation trademark rights in your jurisdiction?

This record is only the commencing of the concerns that will have to have to be requested and answered, but failing to tackle these difficulties at the outset of a offer is a recipe for litigation, as we see in the case of Tommy Chong. As a business owner contemplating coming into a person of these deals, really do not be distracted by massive names or massive claims: If the IP does not exist and if ownership are not able to be shown, there is no genuine worth to be experienced. Though IP licensing in the hashish sector is complex, there are innovative and important solutions to be experienced, but those call for a good understanding of both equally IP regulation and condition and area hashish rules to execute.

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