Protecting Trade Secrets in the Marijuana Industry

Trade secrets are the last best hope of a business that wants to retain a monopoly over its own creations. When an invention falls outside the realm of defined intellectual property like patents, trademarks, and copyrights, trade secrets can work to provide legal protections that allow a company to maintain its limited monopoly rights. I like to think of trade secrets as the opposite of patents. Patents exist as a way of encouraging inventors to disclose the ins and outs of their inventions. The idea is that the inventor submits drawings, diagrams, and descriptions of an invention, and in exchange the patent office grants the inventor a limited time where he/she is the only party that can exploit the invention for money. We as a society get the short term benefit of the invention, and in the long term we can develop innovations for the invention that help us progress as a people.

Trade secrets, on the other hand, have value only so long as they are secret. As soon as Duke the disloyal dog successfully tells us all the family recipe, the Bush’s guy won’t be able to do anything to stop me from copying their product and selling it to the masses.

He lacks other means of securing a monopoly right to the recipe. It is not a patentable subject matter, and it lacks sufficient creativity to be protected by copyright. Trademark law may keep me from using the name Bush’s, but it will not stop me from copying the substance of what they create.

That is the world in which marijuana cultivators find themselves they experiment. Somewhere out there is a combination of growing medium, nutrients, light mixture, heat, moisture, air content, etc. that will lead to the highest achievable quality of marijuana product. For the business and grower that find that mixture, high profits are a natural outcome, so long as it is the only business that knows how to do what it does. That is the value of a trade secret, and that is where non-disclosure agreements come into play. The only way to get protection for secrets is to show that you actually think of them as secret. You do this by making sure that every single person that comes into contact with information that should be confidential is contractually bound to keep it confidential.

Those are the basics of protecting trade secrets, but what do you do once there has been a leak or a possibility of a leak? This is where quick negotiation and a quick litigation trigger finger become necessary. Once you think that a trade secret has or will be misappropriated, it is imperative that you do everything to stop it. This includes asking state or federal courts for an injunction to stop its disclosure. And it really is often necessary to take things that far. Generally, a plaintiff in a trade secrets case can go after the party that stole or leaked the secret, and the plaintiff can also go after parties that know the information was originally misappropriated. On the other hand, there really is no way to stop “innocent” receivers of the information from obtaining the information and using it, thus diminishing the value of the secret. They aren not proper defendants under the Uniform Trade Secrets Act, which most states have passed.

So, you, the creator/holder of a trade secret that has been misappropriated or is soon to be misappropriated probably need to turn into the kind of litigious parasite that you never thought you would be when you entered the marijuana industry. Such is life. On the bright side, your business will be all the more likely to mature and succeed if you are successful, and you may well be granted a significant amount of damages against the person or entity that misappropriated your trade secret. For those of you that are interested in the data of trade secret litigation, take a look at this article from a few years ago; it’s fascinating stuff.

2 responses to “Protecting Trade Secrets in the Marijuana Industry”

  1. Anything that has to do with how to grow it will not be protected by trade secret laws and it is a fools errant to even think it will. Most of the growing techniques have been tried before. the vast majority are even documented. I would refer you to the decades of veggie growing experience out there.
    The interesting thing here is how to manipulate the expression of certain chemical traits in some cultivars, which may be the only thing specific to Cannabis.
    Trying to enforce trade secrets will not even slow down your competitors. Again I would refer you with the decades of growing experience in other sectors of the Horticultural industry. Cannabis is nothing special.

  2. Everyone who works in a facility should be required to sign an agreement that all information about the facility is confidential, proprietary and/or trade secret information, and that they agree not to disclose it to anyone. Whether it is technically a “trade secret” is something that could be litigated, but even if it is not, it could be confidential and proprietary, so a fiduciary duty exists to keep it secret. Of course this only works if the “information” in question is maintained in a manner that is obviously designed to keep it confidential from outsiders.

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