Cannabis Company Loses Bid to Sanction Lawyers in US Pot Patent Battle

Palo Alto, California-based international law firm Cooley and its client United Cannabis Corporation (UCANN) do not have to pay their opponent's legal fees in a patent lawsuit over CBD extraction technology, a U.S. appeals court ruled Monday.

The U.S. Court of Appeals for the Federal Circuit rejected claims by wellness company Pure Hemp Collective Inc that Cooley and UCANN should be forced to cover its fees for allegedly ignoring a conflict of interest and omitting important information from a patent application.

The companies' attorneys did not immediately respond to requests for comment on the decision.

UCANN sued Pure Hemp in Denver federal court in 2018 over a patent related to extracting CBD from cannabis, in one of the first patent lawsuits in the emerging cannabis industry. The companies agreed to dismiss the case in 2021 after UCANN declared bankruptcy.

Pure Hemp requested nearly $300,000 in attorneys' fees later that year. It accused a Cooley attorney of copying from another client's application in its application for UCANN's patent -- which would have made UCANN's patent invalid -- and concealing it from the U.S. Patent and Trademark Office.

Pure Hemp also said Cooley had a conflict of interest because it represented a UCANN competitor applying for an identical patent, "taking different positions in different forums" on who invented it.

The Federal Circuit upheld the Colorado court's ruling for UCANN. The appeals court said Pure Hemp dismissed its misconduct claims before the Denver court could make any findings on them, and that there were facts that cut against them in the "limited record."

The circuit court noted UCANN and Cooley's arguments that the information omitted from the patent application was not important and had been withheld in good faith. It also said Pure Hemp lacked evidence to support its conflict-of-interest argument.

The court also said Pure Hemp's arguments were "extremely weak," but stopped short of calling the appeal frivolous.

The case is United Cannabis Corp v. Pure Hemp Collective Inc, U.S. Court of Appeals for the Federal Circuit, No. 22-1363.