By: Rod Berman and Jessica Bromall Sparkman
The cannabis industry is the new investment frontier. Consider the capital investment by Constellation Brands in Canada's Canopy Growth, Aurora Cannabis's acquisition of Mexico's Farmaciea Magistrales, Coca-Cola's discussions with Aurora Cannabis to develop CBD infused drinks, CannaCraft and Lagunitas' co-branded launch of HiFi Hops, an IPA-inspired cannabis sparkling beverage, GUINNESS® owner Diageo's discussions to explore releasing a line of cannabis infused drinks, and Molson Coors Brewing and The Hydropothecary Corporation joint venture to develop cannabis drinks. And, with the decline of cigarette smoking, even Philip Morris is interested in the business. It is reported that other huge companies want to participate in cannabis deals, including BASF, DuPont, and Royal Dutch Shell, as well as Beau Wrigley who has invested in Suterra Wellness, a medical marijuana company with plans to enter the domestic market.
But what important assets do these cannabis companies own or control that justify an investment? In the typical investment scenario, a target's intellectual property is a key bankable asset and questions about the strength and scope of the target's intellectual property are critical. Does the company own any patented technology, and if so, are the patents valid and enforceable? How about company brands? Does the company own its brands? Where does the company stand in terms of the risk of being sued for infringement? What about employee-created intellectual property? Does the company own it? Does it matter if the deal is structured as an asset purchase or an equity transaction?
These and other intellectual property related due diligence topics are discussed below.
Trademarks
A trademark is typically (though not always) a word, phrase, symbol, sound, smell or design that uniquely identifies and distinguishes the source of goods or services. Examples of word trademarks include JUUL®, ROORTM, EPIDIOLEX® or GG4TM. A "service mark" is a mark that identifies services rather than goods, such as EAZE®, LEAFLY®, FLOWHUB®, and MASSROOTS®. The distinction between trademarks and service marks, however, is one without a difference. They function in the same way and, from a legal stand point, are treated in the same way, and the term "trademark" (or sometimes just "mark") is often used to refer to both trademarks and service marks (as is the case in this article). Similarly, "trade dress" refers to a trademark that consists of the appearance – the "look and feel" – of a product and/or its packaging, e.g., the look and feel of the PAX® vaporizer (shown below).
Read more >> http://www.mondaq.com/unitedstates/x/798550/Trademark/What+You+Should+Ask+About+Intellectual+Property+Before+Investing+In+A+Cannabis+Company+An+IP+Due+Diligence+Primer
