Erasing the Stigma
Fully embracing the startup culture, Millennials are quickly adapting the learning and teachings from their experiences into distinguishable cannabis brands. Like most startups that spring from the voids of basements and garages, this counter-culture market is looking to adopt the same strategies that many small and large businesses use to make their companies not only more successful, but also more legitimate. Cannabis companies that own and enforce their trademarks, patents, copyrights, and trade secrets are not only protecting their brands, but are also showing their sophistication to potential investors in this fast growing space.
1. Trademark
A trademark is a legal instrument that allows its owner to have the exclusive right to use a logo, design, slogan, or brand in connection with goods and/or services being offered bearing that mark.
Many companies in the cannabis space create logos centered around the stylized looks of the industry’s most coveted mascot, the marijuana leaf. This can make distinguishing your brand from others a challenge. However, it is important to note that while some may stay away from including the leaf in their brand’s name or logo, the United States Patent and Trademark Office (USPTO) actually has a specific design code (05.13.09) dedicated to branding that incorporates marijuana leaves for those wishing to use the plant’s likeness. By having a design code, as well as the existence of over 1,000 recorded logos and names attached to the pot leaf, the USPTO has established a proper legal channel for cannabis startups looking to incorporate the leaf on their branding. Interestingly, some states such as Massachusetts only approve certain renditions of the marijuana leaf. Also, and unfortunately, companies that touch the plant will not be allowed to get federal protection.
Trademarking your slogans, branded clothing, or other merchandise is also a viable business investment that may lend more credibility to your canna-company. Having these trademarks in place on your merchandise can act as a shield against knock-offs and infringers.
Still not convinced you need a trademark?
Another advantage to having a trademark for various aspects of your canna-company is that it may give you more leverage at the negotiation table for when Big Pharma and Big Agro start to heavily invest in the industry. There is a growing fear that once it is legal in more states, that a few larger companies will start to consolidate the industry and the services from the sea of cannabis startups. Having your intellectual property portfolios in order may help you fend off the impending concentration of power.
2. Patent
A patent is a legal instrument that grants its owner a limited monopoly over the invention claimed in said patent. In order to obtain this monopoly, the inventor must disclose and teach the public how to make and use the invention described in the patent. Once the patent is granted, the owner gets the exclusive right to make, use, sell, offer to sell, or import the goods described by the patent in the U.S. or U.S. territories.
While there are ways to protect your patents internationally, patent rights are awarded by each nation, so a U.S. patent (granted by the USPTO) would only protect the inventor in areas where U.S. law controls. Additionally, there are varying types of patents such as plant patents, utility patents, and design patents that offer different scopes and terms of protection to specific items or inventions.
Utility Patents
Utility patents currently make up the vast majority of applications filed in the cannabis space. From medical applications to inventive accessories such as grinders and rollers, the cannabis industry has applied the utility patent to a diverse group of goods.
For canna-companies looking to get involved on the medical side of the cannabis industry, getting a patent on a new and novel cannabis delivery system for patients is just one of many viable options. Inventions of improved grinders, more efficient rollers, vape pens, dab-rigs, and at-home grow kits are just a few of the many items canna-companies may patent. Since medical marijuana is often the first domino to fall in route to a state’s legalizing, gearing your products and inventions towards the medical and health aspects may be a safer angle to aim for. However, nothing is guaranteed to be safe as there are numerous regulations surrounding these products and uses, and due to their illegality under federal law, face heightened scrutiny by the government. Another patent angle to take could be with the development and integration of terpenes and cannabinoids such as cannabidiol (CBD) with other compounds. Canna-companies that can find further applications for their products, through other integrations, may establish more flexibility in the market.
Design Patents
The dark-horse of the patent world, design patents protect ornamental designs that are attached to an article of manufacture. A design patent protects only the appearance of the article and not structural or utilitarian features.
If your product has a certain style or design attached to it, for example, some ridges, grooves, or some twisting tubes that serve no actual purpose other than look, then maybe design patents may make the most sense for you.
3. Copyright
Due to the very photogenic nature that cannabis plants and products have, in some instances copyright may afford the best option for canna-businesses. If you are writing books on how to grow certain strains, designing cannabis or hemp-centric clothing, or even just want to protect your website, then copyright protection is likely a good fit for your business.
One of the main benefits to getting a copyright on your creative works is that it is relatively inexpensive to do so. While patents and trademarks can grant you a wider range of rights, they are more expensive than the copyright application process.
Another benefit of a copyright is that they last longer than patents. A copyright lasts the lifetime of the author plus 70 years. Copyrights may be a good fit for budding startups looking for solid bootstrapping options.
4. Trade Secret
Trade secrets cover confidential information that adds value to your business. This includes things such as customer lists, proprietary formulas, algorithms, manufacturing techniques, methods, and processes. It’s important to take the proper steps to appropriately safeguard this information as failing to do so can lead to you having no real recourse against corporate espionage, or similar theft.
Trade secrets can serve as a valuable tool for any company, including those in the cannabis space. Having a secret recipe (whether it be for butter, cookies, gummies, or oils), a special harvesting/treatment process, or certain marketing strategies are all important business knowledge that can qualify for trade secret protection. As part of maintaining your information as a trade secret, you must take “reasonable measures” to keep your trade secret information safe.
This includes a number of precautions. One such option is having proper company processes in place such as marking, labeling, and stamping of documents and materials as confidential. Another very important measure is to have employees and third parties that handle or that could come in contact with trade secret information sign a Non-Disclosure Agreement (NDA). This can help insulate a company from damages and add recourse for them against past employees who are sharing confidential business knowledge. Also, conducting regular and proper training for employees handling these sensitive materials or secret information is very important to keeping your trade secret rights.
What about talking to investors?
This can be sticky because on one hand you want to pitch the true value of your company (and many investors may expect a certain level of transparency before investing), and on the other hand, opening up about your trade secret can jeopardize the trade secret itself. As mentioned before, it is very important to have people who are in contact with sensitive materials to sign the proper legal documents. Unfortunately, investors will more-likely-than-not be willing to sign such a document. The work-around here is to pitch the safety measures you are taking to protect your proprietary information as a way of preserving your canna-company’s value. If an investor presses too much or doesn’t respect what precautions you are taking on behalf of your company, then maybe look for one of the many other investors looking to get involved in the cannabis space.
Bottom Line
As outlined above, all of these strategies can create a mosaic of protection for your canna-company. You can arm your company to fend off infringers, get a limited monopoly on your invention, have long-lasting protection on creative works, and keep your company secrets safe. Startups in the cannabis space need to start incorporating these 4 intellectual property tools and join the other businesses that have been using intellectual property measures to aid the growth of their companies.