United Cannabis Corp. v. Pure Hemp Collective Inc. (D. Colo. 2019)

By Donald Zuhn --

Last week, in United Cannabis Corp. v. Pure Hemp Collective Inc., District Judge William J. Martinez of the U.S. District Court for the District of Colorado issued an order denying a motion for partial summary judgment filed by Defendant Pure Hemp Collective Inc., finding that Pure Hemp was not entitled to summary judgment on the record.  Pure Hemp had filed an Early Motion for Partial Summary Judgement, arguing that the asserted claims of U.S. Patent No. 9,730,911, which is owned by United Cannabis Corp. ("UCANN"), were invalid under 35 U.S.C. § 101 (claims 10, 12, 14, 20–22, 25, 27, 28, 31, and 33 of the '911 patent) or 35 U.S.C. § 112(e) (claim 31).

UCANN had initiated the dispute between the parties by filing a complaint against Pure Hemp for infringement of claims 10, 12, 14, 20–22, 25, 27, 28, 31, and 33 of the '911 patent.  Pure Hemp responded by filing its motion for partial summary judgment, contending that all of the asserted claims were invalid.

The '911 patent, which is entitled "Cannabis extracts and methods of preparing and using same," is directed to liquid cannabinoid formulations.  Claims 10, 20, and 25 (the independent claims asserted in UCANN's complaint) recite:

10.  A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids is cannabidiol (CBD).

20.  A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids are THC [tetrahydrocannabinol] and CBD.

25.  A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids are CBD, cannabinol (CBN) and THC.

Asserted claim 31 also recites:

31.  The formulation of any one of the proceeding claims, wherein the formulation is infused in a medium chain triglyceride (MCT).

Judge Martinez began his Order by describing the two-part patent eligibility inquiry set forth by the Supreme Court in Alice Corp. Pty. v. CLS Bank Int'l, 573 U.S. 208, 216 (2014):

"[D]istinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts" first requires a court to "determine whether the claims at issue are directed to one of those patent-ineligible concepts."  Id. at 217.  If the answer is no, the inquiry ends; but if the answer is yes, a court must then determine whether the claims in question nonetheless offer "an inventive concept—i.e., an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself."  Id. at 217–18 (internal quotation marks omitted; alterations incorporated).

Judge Martinez then "summarize[ed] certain Supreme Court and Federal Circuit decisions in which those courts have examined questions of patentability in roughly similar contexts," including Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948); Diamond v. Chakrabarty, 447 U.S. 303 (1980); Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012); and Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015).  After providing summaries of the above cases, Judge Martinez offered his comments on the Alice test, stating that:

[T]he proper application of the Supreme Court's Alice standard is an evolving and sometimes hazy area of law.  Deciding whether a patent claim is "directed to" a law of nature is not as straightforward as the Supreme Court makes it sound in Alice itself.  Moreover, the Federal Circuit itself has remarked on the difficulty, at times, of distinguishing the first Alice inquiry from the second, see, e.g., Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016); or distinguishing the two Alice inquiries (comprising a patentability analysis rooted in 35 U.S.C. § 101) from other common inquiries such as anticipation and obviousness (which are rooted in 35 U.S.C. §§ 102–03), see, e.g., Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 1052 & n.2 (Fed. Cir. 2016).

However, after applying the Alice test to the asserted claims, Judge Martinez determined that "[d]espite the potential ambiguities [of the Alice test], the Court is convinced under the current state of the case law that the challenged claims of the 911 Patent are not directed at unpatentable subject matter."  With respect to the first Alice inquiry, Pure Hemp had argued that the asserted claims are "directed to" the patent ineligible natural phenomenon of the specified chemical compounds (cannabinoids, terpenes, and flavonoids).  UCANN had countered that "the claims are not directed to laws of nature or natural phenomena because they claim human-modified liquid formulations that require converting solid cannabinoids into a different state with markedly different physiological characteristics" (citation omitted).

The Court was persuaded by UCANN's argument that the claims are directed to human-modified liquid formulations, and did not feel the need to address the second part of UCANN's argument (i.e., that the claimed liquid formulations had been converted into a different state having markedly different physiological effects).  Judge Martinez explained that:

Pure Hemp has failed to establish beyond genuine dispute that a liquefied version of cannabinoids and related chemicals at the concentrations specified in the 911 Patent is anything like a natural phenomenon.  It may be true, as Pure Hemp insists, that cannabinoids in nature can take the form of a resin; that a resin can be highly viscous; that a highly viscous substance may at times be considered a liquid; and therefore it is logically possible that cannabinoids in nature might appear in a form that could, in some sense, be deemed a "liquid."  . . .  Even accepting as much, the 911 Patent specifies threshold concentrations of cannabinoids and related chemicals.  Pure Hemp nowhere claims that these precise concentrations, or anything close to them, occur in liquid form in nature.  Accordingly, UCANN's claims are not restatements of "the handiwork of nature," Funk Brothers, 333 U.S. at 131, "but [UCANN's] own [handiwork]," Chakrabarty, 447 U.S. at 310.

While noting that "the Court sees reason to question whether the 911 Patent claims anything novel, useful, or nonobvious," with respect to the Alice inquiry, the Court determined that "the 911 Patent is not 'directed to' an unpatentable law of nature, a natural phenomenon, or an abstract idea," but "is instead 'directed to' a non-naturally occurring delivery method of naturally occurring chemicals in (as far as the record reveals) non-naturally occurring proportions and concentrations."  Finding that the asserted claims did not fail at step one of the Alice inquiry, the Court determined that it did not need to address step two.

As for claim 31, Pure Hemp argued that this claim was invalid for depending from a multiple dependent claim when claim 31 is itself a multiple dependent claim (i.e., claim 31 depends from "any preceding claim" -- following UCANN's correction of the claim -- and claim 9 depends from claim 1 or 5, and claim 24 depends from claim 16 or 20).  Judge Martinez noted, however, that UCANN had disclaimed claim 9 and 24, and cited Guinn v. Kopf, 96 F.3d 1419, 1422 (Fed. Cir. 1996), for the proposition that "[a] statutory disclaimer under 35 U.S.C. § 253 has the effect of canceling the claims from the patent and the patent is viewed as though the disclaimed claims had never existed in the patent."  While noting that "[o]ne would expect that this would end the argument as to Claim 31," the Order points out that Pure Hemp insisted in its reply brief that the Court could still declare claim 31 to be invalid for depending from multiple dependent claims, even though those multiple dependent claims are now deemed to be nonexistent.  To support its argument, Pure Hemp relied on Rembrandt Wireless Technologies, LP v. Samsung Electronics Co., 853 F.3d 1370 (sFed. Cir. 2017), in which the patentee had disclaimed one of two claims in order to seek damages that would have been otherwise prohibited by a failure to mark its products.  Pure Hemp argued that the same public notice concerns raised in Rembrandt Wireless undergird the requirements of 35 U.S.C. § 112(e) with respect to multiple dependencies, and therefore contended that there must be "clear public notice" of invalidity.  Judge Martinez, however, noted that Pure Hemp's argument was circular, since "Claim 31 is not invalid anymore, at least not on account of the multiple dependency problem that existed before UCANN's disclaimer," finding that "there is neither a good reason nor a statutory basis to declare Claim 31 invalid, even though it previously depended on multiple dependent claims."

Rejecting both of Pure Hemp's invalidity arguments, the District Court denied Pure Hemp's Early Motion for Partial Summary Judgment.

United Cannabis Corp. v. Pure Hemp Collective Inc. (D. Colo. 2019)
Order Denying Defendant's Early Motion for Partial Summary Judgment by District Judge Martinez

Comments

[Greg DeLassus]

I am totally on board with the idea that the 1952 Act abrogated the holding of Funk Bros, but I take it that the SCotUS does not see it that way. Claim 10 seems to have some Funk and/or Myriad problems, to my eye, insofar as the distinction between the claim and the natural product appears to be merely one of purification and concentration.

[Paul Cole]

@ Greg

Having spent many happy hours trying to figure out the true rule or rules of law that were applied by the Supreme Court in Funk Bros., I agree that the decision was problematic.

If you dig into the factual background in Funk, you will find that the main claim in issue covered ALL non-interfering mixtures of bacteria without the disclosure having made available to the skilled reader ANY non-interfering mixture. Nor, if my recollection is correct, did the specification contain any useful pointers towards finding any such mixture. All that the specification disclosed was the IDEA THAT SUCH NON-INTERFERING BACTERIA EXISTED and the practical ADVANTAGE of such a mixture, leaving it entirely to the skilled reader to research from first principles to find such mixtures as he or she could.

It is very unfortunate that the opinion of Justice Frankfurter is not more closely studied. However, the background needs to be widely known and appreciated in our profession so that the quoted dictum of Justice Douglas can be evaluated against the factual background of that case and appreciated as less far-reaching than currently supposed.

The holding in Mryiad was MERELY that isolation does not suffice, as explained both at the beginning and in the concluding paragraphs of Justice Thomas' opinion. The rule of law in Myriad was NOT intended to cover purification and concentration and to over-rule the ruling of Judge Learned Hand in Parke-Davis v. Mulford (1911; adrenalin).

We should note and appreciate the present opinion.

[Skeptical]

"[T]he proper application of the Supreme Court's Alice standard is an evolving and sometimes hazy area of law."

This SCREAMS Void for Vagueness and ultra vires Common Law law writing in a sphere of law Constitutionally delegated to one specific branch of the government (and that branch NOT sharing its authority to write that law).