Cannabis Patents: Will the Illegality Doctrine Ruin Everything?

26 Jun Cannabis Patents: Will the Illegality Doctrine Ruin Everything?

Recently, William J. McNichol, Jr., Adjunct Professor at Rutgers University School of Law, wrote an article regarding the enforcement of cannabis patents that should definitely be discussed. As we’ve noted starting last summer, we expect to see an increasing number of patent infringement cases. We’ve also been providing updates on the very first patent infringement case here and here.

Professor McNichol predicts that “the [US]PTO’s willingness to grant cannabis patents is unlikely to be matched by a willingness of the Federal Courts to enforce cannabis patents.” This is because of a centuries-old principle called the Illegality Doctrine (or, Illegality Rule) – the illegality of the use, possession, and distribution of cannabis products will create an undefeatable barrier to the enforcement of most cannabis patents.

So, what is the Illegality Doctrine?  It can be summed up by Lord Mansfield’s dicta in Holman v. Johnson (a case from 1775!): “No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act.” The doctrine is based on the public policy that a person shouldn’t be able to benefit from his/her own wrongdoing, and the courts shouldn’t enforce claims that harm the integrity of the legal system. An even older English decision that’s instructive is the “Highwayman’s Case,” where two “highwaymen” committed a string of robberies and ended up in Court because one claimed that he had been cheated out of his share of the monies robbed. The Court refused to consider the lawsuit entirely, turned both men over to the sheriff, and fined their lawyers for bring a suit “both scandalous and impertinent” (talk about a bad outcome).

The Court’s refusal to hear cases founded in illegality is well established and known today and, given the U.S. Supreme Court’s holding in Gonzales v. Raich, 545 U.S. 1 (2005) that the distribution and sale of cannabis products remain actionable crimes under federal law (even in pro-cannabis states), any plaintiff in a patent infringement action would be asking a federal court to protect its illegal enterprise from the unlawful competition posed by another illegal enterprise.  Professor McNichol concludes:

“The likely refusal of the Federal Courts to entertain Cannabis patent infringement actions reflects a principle generally applicable to the Cannabis industry and having far reaching consequences that are beyond the scope of this paper. The Illegality Rule will likely operate to close the Federal Courts to all manner of business disputes. Some of these, such as bankruptcy, are like patent infringement actions in that they can be entertained only in Federal Court. Other business matters, such as licensing disputes and complex contract disputes involving diverse parties, are typically and most conveniently handled by Federal Courts. In bringing patent infringement actions, the Cannabis industry draws attention to the Illegality Rule and so hastens its application, which may operate broadly to the Cannabis industry’s detriment.”

One reason of many why the UCANN case is one to watch, is to see if the Illegality Doctrine will be raised by the Court. Judge Martinez hasn’t raised the issue yet, and for all intents and purposes, has treated the UCANN case as any other patent infringement case. If it does come up and sets a precedent that cannabis patents will not be enforced in the federal courts, Professor McNichol is probably right in that it will likely not only effect intellectual property cases, but also other commercial disputes involving cannabis. We’ll continue to keep you posted on how the UCANN case develops and whether Judge Martinez begins to hint that he’s giving the Illegality Doctrine some real consideration.