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IP Protection For Schedule I Substances: Trade Secret Law Supplements In The Cannabis Industry

IP Protection For Schedule I Substances: Trade Secret Law Supplements In The Cannabis Industry

By: Cinder Cancilla

The protection of intellectual creations afforded by the law of Intellectual Property is comprised of the following four categories: patents, copyrights, trademarks, and trade secrets.[1] IP law aims to encourage a creative and innovative climate by balancing public interests with those of the innovators.[2] However, this balancing of interests becomes problematic when an inventor or producer is in the industry of Cannabis, where it is legal under State law but remains illegal under Federal law.[3] Fortunately, State-governed trade secret laws provide an alternative route of access to protection for those innovators’s intellectual creations in the Cannabis industry.

Under trade secret law, almost anything may qualify for protection as long as it has the potential to yield commercial value,[4] regardless of novelty.[5] Coca-Cola’s claim to “the world’s most guarded secret” is a famous example of where protection under trade secret law is favored over patent law; had Coca-Cola patented their recipe rather than keeping it a secret, exclusive use would be limited to merely twenty years.[6]

Categorically, trade secrets are fundamentally distinct because liability does not arise from mere appropriation like it does with patent, copyright, and trademark law.[7] Instead, liability under trade secret law requires the misappropriating party wrongfully acquire, disclose, or use an innovation that is, in fact, a secret.[8]  Secrecy need not be absolute, as disclosure may be necessary to exploit the innovation for commercial value.[9] However, reasonable precautions of preventing disclosure are necessary.[10] In the context of trade secret law, the term ‘wrongful’ may include a breach of contract (such as an employment contract), theft, bribery, misrepresentation, or a violation of some other confidential relationship.[11]

If we apply the principles of trade secret law to the cannabis industry, keeping in mind that it is an industry that is and has been largely criminalized for some time, it becomes clear that one’s good will and pedigree are critical to promoting new products or services, and to distinguishing between existing products or services.[12] In a landscape of vast products and services constantly emerging and evolving, intellectual property that the creators and inventors might seek to protect include: methods of treatment or application of cannabis products to one’s person; recipes for cannabis infused edible products; THC, CBD, and other chemical extraction techniques; consumption methods; indoor/outdoor growing processes[13]; customer lists; preferred vendors; business plans; or a variety of other proprietary information.[14] These products or services may be protected under state trade secret law where other categories of IP law can’t under the Controlled Substances Act,[15] so long as they are kept secret, through means such as: employment contracts for those involved in the production or services; non-disclosure agreements with specific vendors or retailers; or perhaps concealing access to greenhouses. Creators and inventors in the cannabis industry might also consider connecting their secret information with other materials, such as marketing collateral, apparel and accessories, etc., as additional means of placing intellectual products into commerce[16] to potentially bolster their ability to enforce protection of their products or services.

At the heart of trade secret laws are relationally specific duties.[17] As long as precautions preventing disclosure are reasonable under the circumstances, creators and innovators, i.e. those in the Cannabis industry, may protect their intellectual products from unauthorized use under trade secret laws. Accordingly, it is critical for those in the Cannabis industry to determine whether protecting their intellectual products under trade secret law is a practical alternative to the other categories of intellectual property that cannot provide adequate protection.

 

[1] https://www.law.cornell.edu/wex/intellectual_property.

[2] https://www.wipo.int/about-ip/en/.

[3] 21 U.S.C.A. § 841(a)(1) (West through P.L. 115-231).

[4] Cal. Civ. Code § 3426.1 (West current with all laws through Ch. 1016 of 2018 Reg. Sess., and all propositions on 2018 ballot).

[5] Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 68 Calif. L. Rev. 241 (1998) [hereinafter A New Look] (introduction to trade secrets).

[6] Alison Malsbury, Now is the Time to Identify and Protect Your Cannabis Trade Secrets, Canna Law Blog (June 12, 2018), https://www.cannalawblog.com/now-is-the-time-to-identify-and-protect-your-cannabis-trade-secrets/.

[7] A New Look, supra.

[8] Cal. Civ. Code § 3426.1 (West current with all laws through Ch. 1016 of 2018 Reg. Sess., and all propositions on 2018 ballot).

[9] A New Look, supra.

[10] Cal. Civ. Code § 3426.1 (West current with all laws through Ch. 1016 of 2018 Reg. Sess., and all propositions on 2018 ballot).

[11] A New Look, supra.

[12] Nicole Grimm, George Lyons III, and Brett Scott, Protect Your IP, Cannabis Business Times (July 11, 2018), https://www.cannabisbusinesstimes.com/article/protect-your-ip/.

[13] Nicole Grimm, George Lyons III, and Brett Scott, Protect Your IP, Cannabis Business Times (July 11, 2018), https://www.cannabisbusinesstimes.com/article/protect-your-ip/.

[14] Larry Sandell, What Cannabis Entrepreneurs Need To Know About Intellectual Property, Marijuana Moment (June 14, 2018), https://www.marijuanamoment.net/what-cannabis-entrepreneurs-need-to-know-about-intellectual-property/#your-business-secrets.

[15] 21 U.S.C.A. § 841(a)(1) (West through P.L. 115-231).

[16] Larry Sandell, What Cannabis Entrepreneurs Need To Know About Intellectual Property, Marijuana Moment (June 14, 2018), https://www.marijuanamoment.net/what-cannabis-entrepreneurs-need-to-know-about-intellectual-property/#your-business-secrets.

[17] A New Look, supra.

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