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Demand This in Your Business Relationships: Transparency, Accountability, Trustworthiness

Cannabis Community, Ethics, Grow Your Business, News, Personal, Social Media, Start Your Business

ON THESE YOU SHOULDN’T COMPROMISE – BUT LEAVE ROOM TO BE FLEXIBLE ABOUT OTHER THINGS

Behaviors of a Good Partner, Whether It’s a Company, Organization, or Person

This blog post isn’t only for the Cannabis industry. I think it applies universally. And I’m not here to rehash Phylos, but it’s impossible to address this week’s topic without starting by acknowledging the “Phylos Effect” on the Cannabis industry. The company’s admitted mistakes (and perhaps others that haven’t been admitted yet) started a dialogue within the Cannabis community centering on some core issues and topics. We have hopefully learned some lessons for which we can be grateful. I would boil the experience down to lessons learned about three principles that are inter-related and of vital importance. They are (1) Transparency (2) Accountability and (3) Trustworthiness. Since I am NOT rehashing Phylos, I will discuss these three principles in a forward-looking way. People who want to look backward certainly can, and their activism undoubtedly energizes these lessons for us all. My approach is no criticism of them. I’m just leaving them to that approach while I take this one.

I’ll frame this discussion in terms of companies because they seem, as a group, to have the hardest time with these things. Part of that might be inherent in corporate formation and function—it seems that the truly special companies take active measures to overcome the pressures, presumptions, and dynamics that disfavor Transparency and Accountability and Trustworthiness. But this discussion applies equally to organizations and to individual people. So as you read this, mentally substitute “person” or “organization” where I write “company.” Ideally all of the parties and entities we deal with would embrace these values and behaviors. That’s what we should demand.

Transparency – literally this means that you can see through something—that there is nothing to hide and nowhere to hide it. Organizations and people who act with Transparency say what they mean and mean what they say. They don’t have a hidden agenda and they don’t have to lie or intentionally mislead about their goals or their business plans. What you see is what you get.

Accountability – this means that you take responsibility for your actions, your values, and your decisions and even (especially) for your mistakes. Organizations and people who act with Accountability may not be mistake-free, but they will not try to dodge the consequences of their actions. If there are some mistakes made or unintended consequences, they address them head-on and make all reasonable efforts to clean up their own messes. And they welcome the opportunity to do so.

Trustworthiness – the meaning of this is clear: a person or a company is deserving of your trust. And it’s hard to imagine a situation in which a person or a company would display real Transparency and behave with Accountability and NOT be worthy of Trust. Does that mean you will always agree with the company’s choices or actions? Probably not. But you can at least trust the company to be real about what it is doing and why.

There is Room for Diversity of Priorities and Values

Let’s distinguish the behaviors of Transparency, Accountability, and Trustworthiness from some of the other things we might wish to find in a company – its values. It’s not realistic to expect every company, organization, and person to have all of the same values that any one of us might have. Diversity of goals, values, priorities, etc., can be good. People who tolerate no deviations from their own values are typically dogmatic, inflexible, unreasonable, and no fun!

There is room to trust a company and still not always agree with it. There needs to be room for that, in any kind of workable industry. That can be hard for some in the Cannabis industry because it’s not just an industry. In many ways it’s also a community, especially among the people who have been in it since before the regulated commercial industry emerged.

Things Have Changed

My sense from conversations I’ve had and observations I’ve made is that in the “old days” there may have been an even greater need for some shared values and priorities, as a matter of survival. Maybe it was easier to draw lines and know who was on which side.

(I wasn’t there so I’m only going on what people have told me. And I don’t in any way mean to be speaking for them or claiming the experience and credibility they uniquely have on this topic. I’m only doing my best to synthesize my own experiences and observations and to do something useful with it.)

But things have shifted. Business pressures can change people from being apparently Trustworthy to behaving differently and being less reliable. I’ve heard numerous stories about that from clients who misplaced their trust in people they had known. They didn’t think legal protections like contracts and patents would be necessary and only learned differently when it was too late.

And, strangely, some groups we may have automatically distrusted have now become essential partners if we want a place in a legal industry. As an extreme example, even if you’re a survivor of intense persecution by the government, you can’t avoid working with the government to get the necessary licenses, pay taxes, and protect your legal rights. It is an interaction that isn’t perfect and is almost never fun, but it’s a necessary one, nonetheless.

Value Fallacies? We All Have Them—Some We Hold Dearly

Here are some examples of things that seem to be mistakenly valued in at least some circles. Some people embrace these values and equate them with measures of Trustworthiness. But I would argue that these are “value fallacies.” They will distract us from a more useful focus on Transparency, Accountability, and Trustworthiness by getting us riled up about the wrong things. You may disagree, even vehemently. But give these some open-minded thought:

Being anti-corporate – Admit it. Many of us have used the term “corporate” as synonymous with “heartless,” “sterile,” “evil,” and so on. But in the US, it’s virtually impossible to achieve very much commercially without incorporating in some way. Refusal to do so will eventually lead to major negative tax consequences and potentially paralyzing liability risks. And incorporating isn’t a dodge of necessary taxes and all liability. It’s a way to work within the system that is there, to permit a business to function over the long haul. People who refuse to incorporate on some kind of moral grounds are playing a competitive game with one hand voluntarily tied behind their back. It’s simply not realistic or sustainable in most cases. We can and should distinguish between the good and the bad not based on whether they have incorporated, but based on their behaviors of Transparency, Accountability, and Trustworthiness.
Being anti-success – I have heard numerous conversations and seen countless posts that seem to reflect a near knee-jerk reaction to distrusting any company that is experiencing success or even making an all-out effort to succeed. I believe this comes from experience with companies that chose success over the behaviors of Transparency, Accountability, and Trustworthiness. It may also arise partly from some frustrations about who appears to be succeeding and who doesn’t. It often seems that the playing field isn’t remotely level as to some in the community. That is something we should separately address so that all can have an equal shot at success. But I would argue that there is room for truly Trustworthy companies to succeed and, when they do, that should be celebrated rather than criticized or resented.
Being anti-profit – We have been conditioned to treat the concepts of “profit” and “greed” as though they were the same thing. This implies that it’s possible to sustain a business without profit or that it’s impossible to make a sustainable profit unless a business is greedy. But a business that simply isn’t profitable probably won’t be around long to provide jobs, products, or services. It won’t be sustainable. I don’t actually think we mean to criticize the profitability. We instead may be reflecting our experience and assumptions that the profit was achieved through some untrustworthy behaviors. Let’s re-examine that and demand Transparency, Accountability, and Trustworthiness without always distrusting profitable enterprises.
Being anti-growth – Some companies get big by means of all sorts of abuses, but some companies get big just by being very good at what they do. It is a value fallacy to dismiss all big companies as being untrustworthy just because of their size. It may be very appropriate to be skeptical and to demand an even higher level of Transparency and Accountability of larger companies, because it is easy for even the good ones to become distracted or impersonal. But if all large companies are seen as the enemy, we ourselves are distracted from being prepared fully to take on and stand up to the genuinely bad companies.
Being anti-patent – Of course I was going to get to this—I’m a patent attorney. Many believe that patents are inherently wrong. But most of these same people use locks of some sort to protect their own property. They pay for things produced by the labor of others instead of expecting that the labor should have just been donated to the public good. They pay for creative content such as movies and books and music and usually understand that the artist who originated those things deserves to be paid for their work and talent. But then for some reason they still believe there is something inherently bad about all patents, when in many cases patenting is the only way for a plant breeder or an innovator to get paid for her life’s work. Being completely anti-patent means there are certain professions (plant breeder, innovator) that should just dedicate their work to the public domain. That doesn’t mean that all patents are good or properly granted or appropriate. Some patents represent invalid over-reaches and are to “good patents” like greed is to profit. You can hate the abuses without hating the underlying system that sometimes is abused. If you still don’t see how someone can embrace IP protection, such as patents, and still be an ethical and positive member of an industry and a community, please read this.

Demands and Goals

So is there a take-home message? Is there a call to action? Hell yes!

DEMAND TRANSPARENCY – When you are dealing with a business (or an organization or a person), don’t start from a position of trust or distrust. Start from a position of demanding Transparency. Ask questions. Investigate. See what the answers are like. Are they evasive? Do they make sense? Are they consistent? This is all about Transparency. If a business lacks Transparency, that is when it’s time to start distrusting the business. Don’t make it about whether the business is making a profit or trying to. Don’t even necessarily make it about how big the business is. Make it about Transparency first.

Be realistic, though, about the fact that many companies have to keep some secrets in order to function. But there is a difference between keeping company secrets and being deceptive or misleading or outright untruthful. People need and deserve a certain amount of privacy. Even companies may need that. But privacy can’t be a shield for dishonesty.

My goal for all companies is that they would embrace Transparency and welcome investigations and hard questions about how Transparent they really are. They would be who they say they are and do what they say they are going to do. We should not accept less from the companies we work with.

DEMAND ACCOUNTABILITY – Observe and learn what you can about the company’s Accountability. Has the company been clear about its rules and values for itself and is it willing to be Accountable to those rules and values? Does it show real Accountability when a mistake has been made? Does it show a genuine commitment to fix its mistakes and clean up its messes?

Don’t presuppose that all good companies would have the same values or priorities or rules for themselves. Allow for each company to define its purpose and mission and values. But demand to know what they are and how the company will be Accountable for its actions.

My goal for all companies is that they would establish a Company Constitution to articulate the company’s values and priorities, for all to see. This would show both Transparency and Accountability. But a further goal is that Company Constitution would also set rules by which the company commits to abide. Such a company would invite its customers and partners to hold it Accountable in its behavior according to its stated values and rules. A truly Accountable company would create a Constitution strong enough that it could not be swept away with a change in ownership or control. Investors would invest knowing what they are getting and would, in so doing, embrace that Accountability. They would literally “buy in” to the company’s Accountability as part of their investment.

RECOGNIZE AND REWARD TRUSTWORTHINESS – If you demand Transparency and Accountability you will have a Trustworthy company as your partner. If it sounds simple, it’s because it IS simple.

Don’t trust a company that does not consistently show Transparency and Accountability.

My goal for all companies and their customers and partners is that it would become commercially untenable for companies to be unwilling to consistently abide by the principles of Transparency, Accountability, and Trustworthiness.

And finally…

My goal for all of us is that we would not only demand these things of the companies and organizations and people around us, but that we would do our best, day in and day out, to abide by the same principles. That we would also demand Transparency, Accountability, and Trustworthiness of ourselves in our dealings with others.

We as an industry and as a community will never get what we don’t consistently demand. If there is a single most important lesson to be learned from recent events in this industry, this is it. And it’s a lesson for any industry—maybe any relationship.

July 18, 2019/6 Comments/by Dale Hunt

Still So Much Confusion about IP Options for Cannabis – Let’s Fix That

Genetics, Grow Your Business, Hemp, International Commerce, Patenting - Novelty, PBR, Plant Breeding, Plant Patents, Plant Propagation, Prior Art, Social Media, UPOV, Utility Patents

IT’S NICE TO BE NEEDED, IF NOT ALWAYS BELIEVED!

“UPOV PBR” in the US is Only Available for Industrial Hemp

There are a lot of people out there with some background in plant-related IP and some of them have strong opinions about the right way to do things. I know because I hear from them. That’s a wonderful thing about the open lines of communication available via social media and other tools—it seems nearly everyone is accessible to nearly everyone else. I wouldn’t want it any other way, because this helps me understand what still needs to be emphasized and reinforced in blogs like this.

I’m going to borrow from some interactions this past week or so, editing very lightly to make it more generally useful. Here is a question I was asked very recently: “If you have 20 years of experience with UPOV PBR why suggest to average clients to get an expensive plant patent for a Cannabis variety? Most can neither afford to obtain or defend a Cannabis plant patent unless I am mistaken?”

And here is my answer:

UPOV in the US is Uniquely Unlike the Rest of the World

First, UPOV Plant Breeders’ Rights in the US are only available under the USDA Plant Variety Protection Act (PVPA) and only cover seed-propagated plants. An amendment to the PVPA permitting the USDA PVP system to also cover asexually propagated plants was passed as part of the 2018 Farm Bill, but the USDA is still working out the administrative rules and procedures for this, so applications to cover asexually-propagated plants are still not being accepted.

The original limitation in the PVPA to cover only seed-propagated plants was a special carve-out from the normal UPOV scope that covers both sexually and asexually propagated plants, and it was done this way in the US because asexually propagated plants have been covered under the Plant Patent Act since the 1930s (this Act established the plant-patent system as a special form of protection outside of the normal utility-patent system).

A Special Exception in UPOV Just for the US

The US is unique in having this divided IP system, and the UPOV Act of 1991 was specifically written to accommodate this, by including Article 35(2). If you look at footnote 8 of the list of UPOV members, that “reservation” was exercised by the US and never has been by any other UPOV member. Since the US is the only country with a split system, no other country will ever need to invoke Article 35(2).

OK so IP to cover plants in the US, unlike anywhere else in the world, is really three different systems:

USDA PVP (i.e., UPOV) which is still available only for sexually propagated plants (but that exclusion will go away soon).
USPTO plant patenting, which is only available for asexually propagated plants.
USPTO utility patenting, which is available for both modes of propagation.

Testing for Distinctness, Uniformity, and Stability

Something else that is very important to know about the USDA PVP system is that it requires a seed deposit with the authorized USDA seed depository. And until very recently, no kind of Cannabis seeds were accepted for deposit. Very recently the USDA started accepting deposits of seeds for “Industrial Hemp” as defined in the Farm Bill (Cannabis sativa having less than 0.3% THC). Once the USDA is equipped to work with asexually propagated plants, it will require “witness plants” for DUS examination. DUS testing is the UPOV approach to determining whether a given cultivar is suitable for protection. The D stands for Distinctness and asks whether the cultivar can be distinguished from the closest know cultivars including but not necessarily limited to the parents. The U is for Uniformity and asks whether a group of seeds or a group of clones all grow out to being true-to-type—having the characteristics that define the cultivar. The S comes from Stability and asks whether multiple generations of seeds or clones consistently show the same characteristics as previous generations. These tests are done under consistent conditions to try to remove the variability that would come from different cultivation techniques from one test to the next.

USDA will never accept deposits or witness plants for a form of Cannabis that is still federally illegal. And USDA has not yet worked out exactly how they will do DUS testing for clones of Industrial Hemp or any other clonally propagated variety people may wish to protect under USDA PVP/UPOV.

What this means, and it is part of my answer to your question about why I would suggest that people get a plant patent for their Cannabis cultivars is that UPOV protection in the US (the USDA PVP system) is that quite literally not available for most Cannabis cultivars that people want to protect. The only kinds of Cannabis cultivars protectable via UPOV in the US are cultivars of seed-propagated industrial hemp.

If You Want to Protect Marijuana, You Can’t Go to the USDA

I have clients who want to protect their higher-THC cultivars and even who want to protect hemp cultivars that they are cloning instead of seed-propagating. If I tried to push them toward UPOV protection in the US, I would be committing malpractice because that form of protection is absolutely not available, period.

The “deposit problem” that makes USDA PVP impossible for everything except industrial hemp is not a problem for plant patents, because the plant patent system does not require a deposit of any kind. So, there’s no issue of federal illegality–the USPTO has been issuing Cannabis-related patents since the 1940s and has so far issued three plant patents for Cannabis cultivars, with many, many more that are pending and working their way through the process.

Getting Real About the Cost Comparison

Another part of your question also deserves comment, and that is the part about plant patents being expensive. In fact, a USDA PVP application, including the seed deposit, costs $5150 in USDA fees alone. So even before paying ANY attorney fees for this, the USDA fees by themselves cost more than we charge for preparing and filing a plant patent application.

Obviously there are USPTO fees on top of what we charge for our work doing plant patent applications, and there are costs associated with responding to the very common requests from the USPTO examiner to provide more information about the cultivar, but we typically see cost averages for plant patents, start-to-finish, including USPTO fees, between $10k and $12k paid out over the course of the process from examination to issuance. I’m not meaning to imply that this is a trivial amount, but it’s very comparable to the cost of obtaining a USDA PVP registration (if it were even available). ($5150 plus attorney fees for preparing the application and moving it through the process to allowance would likely add up to a total of $8-10k, and potentially more depending upon an attorney’s billing rate and whether anything unusual arose during the DUS testing that would require attorney work to resolve.)

The expensive form of US IP protection for plants is a utility patent. However, it is currently the only option available for seed-propagated non-hemp Cannabis. I won’t go into a lot of utility patents because this email is already getting long. I have blogged about all of this at PlantLaw.com.

I Don’t Tell People What to Do, I Listen and then Tell Them About Their Actual Options

One last part of your question I’d like to address is the part about suggesting to average clients that they get a plant patent. In fact, I don’t. I listen first to what they want to accomplish with their cultivar, how they propagate it, how they are going to commercialize it, why they believe that they need some protection, etc. Then we talk about the options and what their choices are. It’s a matter of giving good legal advice that takes into account a client’s situation. And in some cases, the advice is that if their security is strong enough, maybe they don’t need any formal kind of IP protection, especially if they are having trouble affording it. See this recent blog post, and please do read all of it before deciding it’s incorrect or it’s bad advice.

OK, I hope that explains why I don’t recommend UPOV for my Cannabis clients. I absolutely would outside the US, obviously, and will within the US, as one option, once the USDA PVP system accepts such applications. However, even then, there are numerous considerations that go into deciding the right way to protect a given cultivar. I went into this in a recent blog.

Are Self-Taught Cannabis Breeders Unqualified? I Say No

Just one other comment about plant breeders, and we may just need to agree to disagree on this point. I have worked with PhD plant breeders at universities and with BS- or MS-level plant breeders who work for several of my clients. While they have training in genetics and inheritance, every one of them that I have worked with has been focused on phenotypes. They do a cross of parents that have some of the traits they are looking for and then they grow out many, many of the offspring and select the ones with the best phenotypes and keep propagating and selecting until they have something worth protecting.

This is exactly what I see self-taught Cannabis breeders also doing. While I may understand more about genetics, epigenetics, pleiotropic inheritance, recombination rates, the biochemistry of terpenes and cannabinoids and flavonoids, these breeders know what they are doing, and they get very special results. Obviously, some (including some clients I’m working with) are looking for a particular chemotypic profile or at least for something that meets certain chemotypic criteria. They get their certificates of analysis (COAs), which are now readily available since many states require them as part of the legal Cannabis market. And the breeders I work with definitely know how to read a COA and make decisions based on it. College and formal training is not without value, but from where I sit, having worked with breeders whose training ranges from self-taught to PhDs in plant breeding, it seems to me that they end up doing and looking for the same kinds of things. Now, if one were doing marker-assisted breeding as many in Big Ag do, that would be different. I’m talking about fruit and grass and flower breeders, whose work approach in general terms is very similar to that of Cannabis breeders I know.

Well, that blog kind of wrote itself this week, by being lifted straight out of an email I sent. I hope it’s helpful. You can always get in touch for help with these things by going to PlantAndPlanet.com.

July 11, 2019/3 Comments/by Dale Hunt

A Lesson from Tom Terrific™ on Building Good Fences

Grow Your Business, News, Plant Breeding, Plant Patents, Public Domain, Trademarks, Utility Patents

INTELLECTUAL PROPERTY AND “REAL” PROPERTY HAVE IMPORTANT THINGS IN COMMON

Learning from Cannabis Pros and a Football Pro

I was part of a panel discussion recently in a redwood campground in the hills of Mendocino County, California. That area has become one of my favorite places — partly because of the beauty of the natural setting, one of the few locations where the truly awesome Giant Redwoods can be found. Another reason I love that area so much is that it is one of the places that old-school Cannabis people have made their living and continue to do so. The panel included some industry veterans who have been through many more battles than I will probably ever face. It was educational and exciting to be on this outdoor stage with them, and I learned some new things. That was enough to make any day a good day. But there was one topic we touched on, in this panel discussion, that still stuck with me as I was driving away from that beautiful retreat.

I have several vices, but maybe only one outright addiction: NFL football. I listen to NFL talk on satellite radio year-round. It’s something most of my friends and family seem to think is a combination of obsessive and tedious, but I don’t mind being a minority of one among my dear ones when it comes to this addiction. So why am I confessing my maybe-tedious NFL-radio addiction after leading this blog with the grandeur of the redwoods and weed people?

It’s because, as I was driving to my next stop on this idyllic road trip, I heard Tom Brady’s explanation for why he was trying to register a federal trademark on the nickname “Tom Terrific,” and it completely CLICKED with the topic from the panel discussion that was still in my head. So, I want to figuratively bring Mr. Brady onto that stage to illustrate a very important point about intellectual property, in general, and patents, in particular.

A Terrific Trademark Tempest

Here goes: Brady was taking a lot of heat in the media for trying to trademark the nickname, partly because it hadn’t even originated with him. Before he was Tom Terrific™, the nickname was applied to a truly great baseball pitcher, Tom Seaver. Some people were up in arms that Brady, who has ALL the money and who pretty much has the rest of the world in his hands as well, would be arrogant or greedy enough to try to go get more by trademarking a second-hand nickname.

His comeback from being in this particular public-relations tempest was not as impressive as his comeback against the Falcons in Super Bowl LI, but it was effective. He explained that he actually kind of hated that nickname, knew of people selling Tom Terrific™ merchandise, and wanted to be able to stop them. He said he wasn’t interested in making money from the nickname — he just wanted the trademark registration so that he could have a way to control (or shut down) its use.

Cow Pies in the Forest

I’m benching Tom for a minute while we go back to the panel in the redwoods. In our discussion, we were kicking around some deep philosophical questions about who really “owns” things like the land and plants. The Cannabis plant is one of nature’s greatest gifts to humankind, given all of the medicines and great genetic potential it promises. So, who can “own” Cannabis? And the land on which it grows was there before people arrived in California; it was there even before the ancient Giant Redwoods evolved. So, who can “own” the land?

Being the lawyer on the panel, I kind of dropped an imaginary wet cow pie on that question (respectfully, of course). I pointed out that — however we feel about the sacred nature of the land we have purchased and therefore hold legal title to — if someone tried to build a road through that land, we would certainly exercise our right to stop them. If desired, we could stop other unwelcome trespasses by building a fence around the land and then decide when and for whom and for what kind of activity we would open our gates and permit passage. A fence around land marks the property owner’s boundary of exclusion — it functions as a way of distinguishing between trespassers and invited guests, based on who or what is kept out and who or what is allowed in. Some property owners will be more welcoming than others. Some may even grant a public easement so that all can pass. We are all pretty familiar with land and fences, guests and trespassers; we understand from experience how that system works.

Building a Fence Gives You Options

It is much the same with patents. Nobody can “own” Cannabis; however, plant breeders certainly have a right to protect their own work — the unique cultivars developed with their skill and effort — from being taken, copied, and commercialized by others. A patent is the legal equivalent of a fence around the work of the inventor. It doesn’t force the inventor to adopt any particular behavior with respect to how to use that fence. Some may keep everyone out and exclusively control and commercialize their cultivars or other inventions. Others may grant licenses, welcoming selected guests within their fence, so to speak. And still others may decide generously to grant access to most, while keeping the “patent fence” as a form of insurance to have legal recourse against some extreme trespasser attempting to do the equivalent of building a road through their property.

This was exactly TB12’s stated goal in trademarking Tom Terrific™. It’s not that he was planning to build a giant business on that piece of property; instead, he was trying to build a fence to keep some annoying trespassers out. A trademark examining attorney at the USPTO will have to decide whether he’s entitled to build that fence. The trademark examiner’s role is, more or less, to survey that land and define the applicant’s property boundaries, based upon established principles of trademark law.

Defining Boundaries

So it is with patents on plant genetics or any other invention. The patenting process is very much one of defining boundaries within which the owner has a right of exclusion and beyond which she or he does not. And what the owner chooses to do with the property right thus obtained is an entirely separate question.

Of course, not all property needs a fence and, in some cases, the fence that would be effective would also be too costly to build or maintain. I knew someone who joked about building a $5,000 fence around a $500 dog. But, of course, the dog’s safety and room to roam meant much more to him than the price of the dog OR the price of the fence. Likewise, it is for each inventor to decide whether it is worth seeking federal endorsement and protection of their inventions with patents; and it is for each owner of common-law trademark rights to decide whether it is worth seeking protection of their trademarks with a federal registration. And, by the way — if Tom Brady gets his federal registration, he will go from Tom Terrific™ to Tom Terrific^®. Those superscripts distinguish between one’s own assertion of a common-law trademark right and a federal trademark registration.

There’s Always a Catch

There’s one other tricky thing about “patent fences” that comes as a big surprise to most people: having a patent does not give you any automatic rights to use your own invention. It only gives you rights to exclude others. Depending on the nature of your invention, if you want to actually use your invention, you still may have to resolve issues of safety with the FDA or EPA or others and deal with the DEA or FBI or local police on issues of legality. In addition, your patented product could infringe someone else’s patent rights. This is roughly analogous to buying land that is subject to someone else’s mineral or water rights or buying land that is encumbered with an existing easement or zoning or code restrictions. Just because you own the land doesn’t mean you can do absolutely anything with it, without respect to any restrictions. These issues are tricky enough for at least a few sessions of a law school course and for some heart-to-heart talks with a well-qualified attorney before you launch a product. So, I won’t do more than just flag those complications here, except to point out that plant patents (as opposed to utility patents) are so narrowly focused on one single cultivar that one patented cultivar literally cannot infringe the patent of a different cultivar. Those fences, at least, are very clear and simple to navigate.

Reminds Me of a Poem

So as I was driving through those beautiful woods, listening to discussion of draft picks and passer ratings and torn ACLs and still pondering the great philosophical discussion we’d had on the stage in the wonderful redwood amphitheater, the voice in my head changed from Tom Brady’s to that of two imagined voices from a famous poem-conversation. One voice was Robert Frost’s, as though speaking for the industry vet who raised the philosophical issue of who can own what; the other voice was that of his neighboring landowner:

Before I built a wall I’d ask to know
What I was walling in or walling out,
And to whom I was like to give offence.
Something there is that doesn’t love a wall,
That wants it down.

And as to the other voice:

And he likes having thought of it so well
He says again, “Good fences make good neighbours.”

Don’t Destroy Other People’s Property, or My Hopes

We can be good neighbors to our good neighbors; do business with them; build partnerships; welcome the opportunity to work with them through licensing our IP; and help each other succeed. The patent fences don’t prevent that potential; in many ways they enhance it. And we can also keep out the trespassers who would disrespect and destroy what we have worked to build. The fences we establish just give us choices we wouldn’t otherwise have.

Don’t think from this that I want Tom Terrific™ to succeed at everything. Next February, if he’s facing the Vikings in Super Bowl LIV, I hope he will be Extremely-Super-Un-Terrific.

By Dale Hunt – The opinions expressed here are the author’s own and do not necessarily reflect those of his professional colleagues or his clients. Nothing in this post should be construed as legal advice. Meaningful legal advice can only be provided by taking into consideration specific facts in view of the relevant law.

July 1, 2019/4 Comments/by Dale Hunt

Let’s Talk About Reproduction and How You Will Get Paid

Genetics, Grow Your Business, Hemp, Marketing, Patenting - Novelty, Plant Patents, Plant Propagation, Utility Patents

HOW’S THAT FOR A TITLE? YOU’D BETTER READ ON

Hubbub Is a Word and It Happened This Week

I always get the best blog ideas from questions that come up during the week, and this week was no exception. A friend of mine whom I haven’t yet met in person (interesting times, these) brought to my attention some controversy on social media about a plant patent and asked me a series of great questions about the patent itself and the hubbub around it. (I’m surprised my spellcheck didn’t go nuts just now, but apparently hubbub is a word.)

The crux of it was this: There was a plant patent posted somewhere on social media and certain portions of the description were highlighted. One portion described that the new cultivar was made from an open cross between two traditional varieties. Another highlighted portion pointed to some phenotypic features of this new variety that could apply broadly to a huge number of other varieties as well.

When you look at a plant patent, you’ll typically see several pages of detailed botanical description like “Stem morphology.—Rugose — longitudinal ribs with corky lenticels on older portions.” Or you might see curious botanical terminology like “hirsute peduncle.” And, after you google “hirsute peduncle” to see if that’s even real (it is) and what it looks like (it’s not as weird as it sounds), you will still be left wondering how it helps protect this particular cultivar or distinguish it from others.

Plant Patents Got People Worked Up

People seemed concerned that — although plant patents are supposed to only cover clones — the written description was so broad it could cover much more than just the clones of this one variety. Could it also cover their plants and, therefore, be an over-reach? Is this the next bad patent that is going to cause trouble for the industry? Or, on the other hand, if this patent really ONLY covers clones, what is the point of even getting a plant patent when Cannabis is often propagated by seeds AND clones?

These are common questions and they deserve some respectful discussion. The fact that these questions come up a lot reveals that this topic needs to be explained in better ways and in more detail. I hope this helps.

Let’s start with some historical background. The original Plant Patent Act was passed in 1930 and updated in 1952, long before there was any DNA testing. So it required (and still does) a description “as complete as is reasonably possible.” For this reason plant patents go into all kinds of detail describing the plant botanically, providing pictures, describing how the cross was made, describing the closest known varieties, etc.

Ignore That Hirsute Peduncle

What you need to know is this: NONE OF THIS DESCRIPTION MATTERS when it comes to infringement. Everybody knows — especially with plants like Cannabis — that phenotype and especially chemotype can be highly variable based on where and how the plant is grown. They also know that a lot of plants that are not genetically the same can be very similar in appearance.

When it’s time to prove infringement, DNA tests will be done and the plants will have to be genetically identical or there will be no infringement. Not similar; identical. Plant patents strictly and narrowly only cover clones of a single variety, where that variety was originally created by a sexual cross or a mutation — a single genotype with no equivalents or near-misses. So everybody can take a deep breath and ignore what’s in the detailed description; it’s only there because the statute requires it.

Interestingly, you don’t need any DNA information when you file a plant patent (another historical legacy of when the statute was written); but that’s OK, because that sequence isn’t changing — it will be there ready for its day in court when you need it. You may have other reasons to lock in the record of your DNA information and your proof of ownership now, but you won’t need it to get a plant patent application filed or allowed.

But Please DO Focus on This

Now that we’ve covered what to ignore, let’s talk about what to focus on. I’m going to start with a short list of the most important things you should know about plant IP in the US.

First determine whether you are looking at (or talking about) a Plant Patent, a Utility Patent, or a USDA PVP Registration. They are very different kinds of protection and don’t necessarily all make sense for the same kind of business.

The easiest way to do this is to look at the number on the first page, upper right corner. If it has PP followed by five digits, it’s a Plant Patent. If it has seven or eight digits, it’s a Utility Patent. If the number starts with a string of digits that looks like a year, it’s either a published patent application or a USDA PVP Registration. That will be easy to tell based upon which agency published the document.

Now that you know what you’re looking at, it’s time to know (or remember) what kinds of rights it grants.

Like a Copyright – Meaning It’s about Direct Copying

A Plant Patent is very much like a copyright on a single cultivar – it protects ONLY clonal copying of the exact genotype of the claimed cultivar. Note that this is NOT defined by the chemotype. Chemotypes can vary depending on how the plant is cultivated, but genotypes remain constant. Plants are like us in this way — we might be thin in the summer and chunky after all the holiday meals, but we have exactly the same genes all year long.

A Plant as An Invention – Protecting an “Idea” Several Different Ways

A Utility Patent treats a plant (or anything) as an invention. You can claim pretty much anything you can put into words if you can convince the patent examiner that what you have claimed is (i) new; (ii) not obvious; (iii) adequately described; and (iv) “patentable subject matter” (which means, among other things, not something already existing as an unmodified product of nature).

This flexibility in claiming matters a lot, especially with a plant like Cannabis that can be reproduced with clones and seeds and that can be commercialized as flower and extracts, as well as the clones and seeds themselves. This is because, in a utility patent, you can claim more than just the clones of one genotype. You can at least try to claim things like*:

1. 1. Plants having the same genotype as the seeds or tissue on deposit as accession #ABC at XYZ depository.
  2. Progeny of the plants of claim 1, or any part of said progeny.
  3. Seeds of the plants of claims 1 or 2, and progeny thereof, and any part of said progeny.
  4. Harvested material or extracts from any parts of the plants or seeds of any of claims 1-3.
  5. A medicinal or recreational product made from any of claims 1-4.
  6. A vape cartridge containing an ingredient from claims 4 or 5.
  7. A method of making a medicinal or recreational product by providing a material from any of claims 1-4, performing at least one processing step on the material, and obtaining a product.

*These are simplified – this is a blog rather than a law school course

Seed Rights – With Important Exemptions

A USDA PVP Registration

- - protects seeds* from being “copied” in bulk to compete with the owner of the variety
  - but expressly permits use of the seeds for breeding to make other new varieties (this is called the “Breeder’s Exemption“)
  - and also expressly permits a purchaser of protected seeds to keep enough seeds to replant the same acreage as the seeds he/she originally purchased for planting (this is called the “Farmer’s Exemption“).

*USDA has recently expanded PVP to cover non-seed varieties, but that is beyond the scope of this post.

It’s All About How You Plan to Get Paid

The reason that it’s so very important to understand the differences among these three kinds of protections is that some of them MAKE NO SENSE and have ALMOST NO VALUE, depending upon your business model. In other words, going back to the (hopefully) provocative title of this blog:

Let’s talk about reproduction/propagation and how you will get paid.

If you are selling seeds, and only selling seeds, would it make any sense to spend your money on a plant patent? Almost certainly no, if your IP funds are limited. The only reason I could think of to still file a plant patent is if the cultivar that is the source of the seeds you want to sell is, itself, so valuable that you would want to control its propagation, behind the scenes. In that scenario, the plant patent would be insurance against theft of the propagating material of that “seed parent” cultivar. That plant patent would certainly give you good legal recourse against anyone who showed up in possession of plants of that genotype later on, since that exact genotype would never come from the seeds you are selling. But a plant patent would not directly fit or support the seed business itself at all.

So what kind of protection would make sense if you are selling seeds? Well, it really depends on what the seeds are for. The first question you’d ask today is whether the seeds are for industrial hemp because, if they are not, your only option in the US is a utility patent. USDA PVP registrations are available for industrial hemp, but still not for higher-THC Cannabis (over 0.3% THC).

If you are selling clones… well, you REALLY NEED a plant patent, but you also need more than that. Let’s talk about what your business is about. Are you selling clones to nurseries who will propagate and sell more clones to other people? Then you need a plant patent AND a license agreement with that nursery requiring them to pay you for every clone they make and sell.

There are other ways to do this, but you can’t just rely on a patent and you really can’t sustainably be in the clone business without a plant patent AND some meaningful, well-crafted license agreements. Get professional help. I know a guy.

If you are only selling harvested flower or extracts and you do all your own farming and you are super careful with every last bit of your propagating material, then you could get by without any IP protection. In that case, if you chose to get IP protection if would be a form of insurance. You could have plant patents to protect your genetics in case someone were to take a cutting and start competing with you.

And if you wanted to be extra careful, you could get a utility patent to claim the same genetic line more broadly. This IP approach would be all about having recourse if your efforts to control the physical material were to spring a leak somewhere. We all know this can happen, which is exactly what insurance is for.

Think it Through – Make a Plan – Get Help

There are many variations on these three main approaches to reproduction and getting paid. Whatever your business model, there will be an IP approach that can help protect what you’re trying to do; and there are others that could be pointless. There is definitely not a one-size-fits-all solution in plant IP, especially with a plant like Cannabis that can be propagated via seeds or clones and that can be commercialized as anything from industrial hemp to craft marijuana to pharmaceutical-grade cannabinoids to who knows what else?

So think about YOUR business model and be careful with YOUR genetics and then — when you need some help putting it all together — get some help. Like I said, I know a guy.

June 5, 2019/2 Comments/by Dale Hunt

Protection for Your Genetics That Is Free* and Never Expires** (Read the Fine Print)

Genetics, Grow Your Business, Plant Patents, Plant Propagation, Public Domain

AN ALTERNATIVE OR ENHANCEMENT TO YOUR PATENT STRATEGY

Ask A Lawyer a Question and This is What You Get

I was asked recently about whether it is true that, if you never sell your plants, you can renew your patent or your patent never expires. My answer was that like a lot of things people ask lawyers — there is a short answer and a longer, more detailed explanation and, of course, I’ll give both.

Short answer: No, it’s not literally true but, in practical terms, it could seem like it is.

Whaaaat???

That is what long answers are for.

Long answer: Patents always expire, and courts and policymakers really hate it when patent owners try to get tricky and get around patent expiration. So don’t go there. HOWEVER, your right to ownership and control of what is rightfully yours without having it stolen from you doesn’t expire, and that is where the answer circles back to the way the question was asked. So I’ll paraphrase it now to put the concept into the right context.

Q: If you never sell your plants, will your right to control what happens to them outlast the expiration of your patent on the plants?

A: Yes, of course.

Common Sense

And you’re realizing that’s common sense; you don’t need an expensive lawyer to answer that. But you will definitely need a carefully crafted business strategy and commercial operation to put it into action. If you think this sounds difficult, you’re right. However, for some valuable cultivars it’s very much worth the trouble, because their value persists long after the patent expires; and in other situations it’s worth considering as an alternative to ever even filing for IP rights.

Patents always expire at the end of their set term, allowing, of course, for whatever term-extension may have been granted, if any. There’s no getting around that. But the patent is only an enforceable right against an infringer who illicitly propagates the cultivar, which requires possession of the plant or some propagating material in the first place.

A Growing Business Practice

This idea of trying to create some kind of post-patent-term exclusivity is actually a business practice that is becoming more widespread in ag sectors where money is made from selling harvested material (like fruits or flowers), rather than selling whole plants. The practice is to exercise (where possible) very strict exclusive control of important cultivars. The practice must, however, be exceedingly strict — essentially perfect — at least, in theory, never losing control of any propagating material (even pruning material). Under that practice, there is never any third party — anywhere in the world — who can claim legitimate ownership of even one plant of the cultivar in question.

Thus, when any patents expire (which they still will), the owner of the rights to the cultivar still has other legal causes of action (right to sue) against anyone else who tries to commercialize the cultivar, because the owner can still claim misappropriation of tangible personal property (i.e., theft). The challenge, of course, is that anyone who can show that they had legitimate access to the propagating material after the expiration of the patent term has a complete defense.

The Fallen Prunings Case

This actually happened to a fruit company in California. Someone was growing one of their proprietary grape cultivars without permission and the two parties ended up in litigation over it. The patent on the cultivar had expired. The plaintiff argued that they had never sold any plants, so the defendant must have stolen the plants they were growing, or at least the propagating material from which those plants had originated.

The defendant said emphatically that they did not steal anything. Their defense was that they had driven behind the plaintiff’s truck on a public road after a pruning and picked up some plant material that fell off the truck, took it back to their farm, and propagated it. The court found that the material which fell off the truck on the public road was in the public domain — essentially trash — and it was not theft for the other party to recover and propagate the plant material. This should have been on TV, but it wasn’t.

What does this all mean? Well, in the stolen grapevine case, the defendant would have been in trouble if they hadn’t had the public-domain defense because, otherwise, the plaintiff had a good case. The fact that the patent had expired wasn’t the main question. The main question the court was interested in was whether there was really any stolen property. And because the defendant had an apparently plausible story that didn’t amount to theft, case closed.

Multiple Forms of Protection or Recourse

So, back to the question I was asked: What is the relationship between never selling your plants and the expiration of plant patents? My answer: there’s no direct relationship; however, if you never sell your plants, any patents you get to protect them are less important. IP coverage fades from being your main protection to being just one more way to go after someone if your plants or propagating materials fall into the wrong hands. In such a situation, you could decide whether to sue for patent infringement, or theft, or both. And then, even after the patent has expired, suing for theft would still be an option.

Does this sound overbearing and hyper-aggressive? I hope not. I don’t believe in suing people frivolously or as a first option. But if you don’t have some form of recourse against people who will come in and literally steal your property, you can’t stay in business, provide jobs for your employees, and put your products out there for people to enjoy. So it IS important to be able to use IP and other forms of recourse to protect against competitors who would choose illegal ways of competing with you. And if you never sell your plants, they are still YOUR plants — YOUR special genetics. Period. (Wow, I guess I needed to say that!)

The Fine Print

Obviously, this strategy only works in some industries — those that make their money from selling harvested material, rather than from selling whole plants. So, if you’re in the business of selling fruits or flowers, great. If you’re selling whole plants, this approach doesn’t help you. And, even if you’re in the business of selling fruits or flowers, it can require some very strict business and agricultural practices to make sure that neither a single plant nor a single propagatable pruning discard ends up in the public domain, such as the trash.

For those who can’t afford to protect their cultivars, this approach is obviously better than nothing; but it only works if 1) it is taken seriously; 2) no plants are sold; and 3) the propagating material is very carefully policed from theft.

Hopefully this is helpful to someone who was wondering about alternatives to filing a patent application or who had heard the not-literally-correct rumor that inspired this article. If you ask a lawyer a simple question, watch out — you might get a short answer AND a long answer.

May 16, 2019/2 Comments/by Dale Hunt

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Let’s Talk About Reproduction and How You Will Get Paid

Protection for Your Genetics That Is Free* and Never Expires** (Read the Fine Print)

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