Given the recent influx of cannabis-IP licensing deals on which we have worked, I thought it important to discuss some of the issues potential licensees often face when negotiating with brand owners.
These licensing deals are complicated and fraught with unique cannabis-related issues. Many companies come to us with such licensing deals expecting the biggest hurdle to be state cannabis law compliance. And though this is certainly a major concern, it’s important to start with the fundamentals by analyzing the validity and strength of the intellectual property itself. With any licensing deal, the first step should be determining who actually owns what intellectual property. 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, in large part because the USPTO will not issue federal trademark registrations for cannabis-related marks. 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:
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 own any federal trademark registrations?
If so, what goods and/or services do those trademark registrations cover?
Was the description of goods and/or services filed with the USPTO accurate and true? Were there possible misrepresentations?
Are the trademark registrations based on actual use, or upon an “intent-to-use?”
What representations and warranties is the licensor making (or, often more importantly, not making) regarding the marks?
If the licensor doesn’t own any federal trademark registrations, is it licensing someone else’s trademarks?
Does the licensor have a master licensing agreement? Do the terms of any proposed sub-licensing agreement mirror that master licensing agreement?
What quality control standards will you be held to by the trademark owner?
Has the trademark owner warranted to keep all USPTO filings up-to-date?
Does the licensor own any state trademark registrations?
If so, has the licensor made lawful use of its mark in commerce in the state of registration?
Does the Continue Reading
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