New Opportunities in America’s Enormous, Emerging Marijuana Market: Patent Landscape Overview & Strategic Analysis

Part I. Patent Landscape Overview

Sampled by at least one third of American adults – and more than 55% of those born between 1938 and 1974 – marijuana forms the basis of what may be the largest (legally) untapped consumer market in the United States. Marijuana was found to be one of the top three cash crops in 30 states between 2003 and 2005, and size estimates of the total U.S. marijuana market – legitimate and otherwise – range from $10 to $120 billion. In 2013, medical marijuana alone accounted for a reported $1.43 billion in sales – and residents of Washington State consumed an estimated 175 metric tons of it, which works out to an annual marijuana expenditure of about $500 per household.

Marijuana is huge, but intellectual property rights are still rather sparse. The USPTO created an official category for marijuana-related trademarks in 2010, but this was quickly revoked after officials concluded that the plant’s legal status was incompatible with trademark requirements.

This same issue may underlie the relative dearth of marijuana-related patents, as well. In the U.S., fewer than 400 patents issued since 1980 mention cannabis sativa (or cannabis indica) in any context. Compared to other agriculture-based industries, which are not known as patent-heavy fields, this number is particularly striking. Cotton, which occupies a proportion of the U.S. market similar to that claimed by marijuana, according to more conservative estimates, has been mentioned by its botanical name (gossypium spp.) in more than 3,600 issued U.S. patents, over the same time period.

The estimated market size of various cash crops, compared to the number of issued U.S. patents that mention the crop by its botanical name.  a) www.agmrc.org b)https://www.icac.org/econ_stats/country_facts/e_usa.pdf c) http://www.cnbc.com/id/36179677

The estimated market size of various cash crops, compared to the number of issued U.S. patents that mention the crop by its botanical name. [a]www.agmrc.org [b]https://www.icac.org/econ_stats/country_facts/e_usa.pdf   [c]http://www.cnbc.com/id/36179677

 

In recent years, however, the number of marijuana-related patents filed both in the U.S. and in worldwide patent offices has steadily increased. From 1997—the year after California became the first U.S. state to legalize medical marijuana—to 2012, the number of marijuana-related patents filed in the U.S. increased by 600%, from 8 to 48. This is more than twice the increase in the overall rate of patent filing in the U.S., during that same time period.

Annual Marijuana-Related Patent Filings, by Region (WO = PCT Publication, USG = U.S. Issued Patent, USA = U.S. Patent Application, EPB = European Issued Patent, EPA = European Patent Application)

Annual Marijuana-Related Patent Filings, by Region (WO = PCT Publication, USG = U.S. Issued Patent, USA = U.S. Patent Application, EPB = European Issued Patent, EPA = European Patent Application)

Despite this rush of patenting activity, the issuance rate for marijuana-related patent applications remains surprisingly low. No more than 50% of the patents filed in any year since 2003, the first year that the USPTO published all pending patent applications, have issued; the average annual issuance rate for marijuana-related patents is just 20%. Comparatively, the overall issuance rate for U.S. applications has hovered around 60% during the same time period, although it has increased in more recent years.

Examining the relative dearth of marijuana-related patents in light of the recent trademark category debacle, one could reasonably conclude that issues relating to the legality of interstate commerce are at fault. This supposition seems relatively specious, however, when one considers recent patents granted to GW Pharmaceuticals, a British biopharmaceutical company best known for its production of Sativex®, the first natural cannabis derivative approved for medicinal use in any country. For example, US 8,481,091, issued in July 2013, and US 8,512,767, issued one month later, both describe: “an improved mode of administration for cannabis and its natural and synthetic derivatives.” Similarly, US 7,344,736 describes a method of extracting and preparing a “botanical drug substance” from the cannabis plant. A selection of other patents disclosing marijuana-related compositions and technologies that, if practiced by an operating company, would be treated as felonies under federal law, are shown in the table below:

U.S.-issued patents describing compositions, devices, and processes that are generally understood as illegal under Federal law.

U.S.-issued patents describing compositions, devices, and processes that are generally considered illegal under Federal law.

Developing (and patenting) a legally prohibited technology carries a certain amount of risk. From the increase in patenting activity related to marijuana, particularly in recent years, it is evident that, at least for certain individuals and organizations, this risk is outweighed by the sheer size of the marijuana market, and its associated economic opportunities. Even the U.S. government is getting in on the action, last year filing a patent, “Use of FAAH Inhibitors for Treating Abdominal, Visceral and Pelvic Pain,” that mentions marijuana as a potential therapeutic agent.

Protecting an invention directed at only the burgeoning, $1.43 billion medical marijuana market appears more than worth the risk, even if full legalization–which 58% of Americans currently support–remains a pipe dream. Nevertheless, if recent events in Washington and Colorado are any indication, farsighted organizations and inventors can reasonably surmise that a patent filed today could provide protection for the entire $35 billion U.S. marijuana market, well before its 20-year term expires.

In our next installment, we will discuss the current state of the marijuana related-patent landscape, including leading innovators, areas of relatively high activity, and white space for those interested in entering this very lucrative, wide-open technology area.

Check back soon for an in-depth assessment of the marijuana-related patent landscape.

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