Cannabis intellectual property (IP) licensing deals can be complicated, presenting unique issues. Many companies expect the biggest hurdle to be state cannabis law compliance. Although this is certainly a major concern, it’s important to start with the brand licensing fundamentals by analyzing the validity and strength of the IP itself. With any licensing deal, the first step should be determining who actually owns what IP. This is especially true when it comes to the cannabis industry, where information, strain names, and industry terminology have been shared freely since long before state-level legalization.
Ownership of IP in the cannabis industry is a tricky issue. Far too regularly, cannabis companies come to us with proposed licensing deals where basic due diligence quickly reveals the licensor simply does not own what it claims to own. A little bit of high-level IP due diligence can save a lot of money.
If you are looking to get a license for another company’s IP, here are the most basic questions you should be able to answer about that other company and its IP:
- Does the licensor claim to own any federal trademark or state registrations in cannabis related goods or services?
- If so, what goods and/or services do those trademark registrations cover?
- Are claimed federal protections in those products and services really trademark protection that I can assert to protect my to-be-created federally illegal products?
- Was the exact description of goods and/or services filed with the USPTO, or acquired through state based registration or common law trademark rights? How far and on what products and services have they used the mark, and how far do their protections in the mark extend?
- What representations and warranties is the licensor making (or, often more importantly, not making) regarding the marks? Have they had any prior conflicts with other similarly name brands? Is there there a threat of possible future litigation for continuing to use the mark?
- Who is the creator of the trademark, logo, or design mark, and how did it come to be created? Are there any copyrights in a logo design mark that are held and owned by a third party that must be accounted for?
- What quality control standards will you be held to by the trademark owner?
- Has the trademark owner warranted to keep all trademark registration filings up-to-date?
- What is the breadth and reach of any common law trademark rights in and to the to-be-licensed mark? Can the licensor legally acquire and extend their common law trademark rights in your jurisdiction?
- Who, if anyone, have they licensed the IP to before, and what is the current status of their IP licensing of the mark? Are you just one of many people to whom they are licensing the mark across a state or federally?
This is a substantial list, but it only scratches the surface of the issues you and your cannabis IP counsel must consider before you enter into any IP licensing deal. Cannabis companies are often too quick to skip straight to negotiating commercial terms for a deal, without ever assessing whether the rights they are licensing actually exist. Just like with any other type of property — such as a house or a car — a licensor of intellectual property must actually own the rights to that property to be able to confer all or some portion of those rights to another party. Seems basic, but we’ve seen fatally flawed deals drawn up by attorneys who either do not understand the cannabis industry or, more often than not, do not know the intricacies (or even the basics) of intellectual property law.
Though these licensing deals can be complicated, there are creative and effective solutions to many of these problems. To implement those solutions, an understanding of both IP and state and federal laws governing marijuana is required.
from Canna Law Blog – Harris Sliwoski LLP https://ift.tt/exUYvpZ
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