Oregon Psilocybin Business Issues, Part 5

Welcome to the fifth installment in this series surveying business and regulatory issues in the Oregon psilocybin program. Today I will cover intellectual property considerations for Oregon psilocybin businesses.

My law firm has written and presented many hundreds of times on intellectual property and controlled substances over the years. Mostly, this material focused on the cannabis industry, and mostly, the same analysis holds for state-legal psilocybin. Today, I’ll give a brief rundown of intellectual property available by category for Oregon psilocybin businesses.

Please note this analysis does not apply to psilocybin drugs in the FDA approvals (pharma) pipeline. Also, please understand this is a very high level overview. There is significant nuance to all of this, and the recommended approach is to confer with a psilocybin intellectual property lawyer, or at least an Oregon business lawyer who understands intellectual property and controlled substances.

Psilocybin trademarks

Psilocybin is a schedule I controlled substance, like cannabis at the federal level. Because of this, psilocybin business should expect the U.S. Patent and Trademark Office (USPTO) to take the position that psilocybin trademarks for “trafficking” activities are ineligible for federal registration. The basis for USPTO’s position will be that psilocybin goods and services, like cannabis goods and services, are not “lawful” under the Controlled Substances Act and other federal laws. (See relevant USPTO guidance here.)

Psilocybin companies may have compelling arguments that the USPTO’s “lawful use” denial basis is simply wrong. Those arguments haven’t been vindicated by any court to date, however. Thus, psilocybin companies licensed by the Oregon Health Authority (OHA) will likely be eligible only for ancillary trademark registrations for psilocybin goods and services at the federal level (see one example here). This has been the game with cannabis companies for many years.

At the state level, I fully expect all Oregon psilocybin trademarks to be registrable. The Oregon Secretary of State does not conduct substantive trademark review, and Measure 109 did not contain any provisions directly relevant to trademark. This means that Oregon psilocybin businesses should be entitled to state-level registrations which carry the standard presumptions of ownership, validity and exclusivity with respect to other, local businesses.

Note that the biggest pre-requisite to trademark registration in Oregon is actual “use.” There is no “intent to use” filing basis as with the federal regime. Another pre-requisite to a viable Oregon registration is distinctiveness. This simply means the trademark must be capable of identifying a particular source (the psilocybin business).

It’s also important for trademark owners to understand that Oregon is different from many states in that trademark protections do not cover the entire state. Instead, rights are limited to the market areas where a business draws its customers. In theory you could have two or more identically named Oregon psilocybin service centers using the same name or logo, in different regions of the state.

Branding advice related to all of this would be to avoid selecting a “psi-” name for your business. I expect lots of overlapping, non-compelling branding with that prefix, and I expect fights. Same deal with the imminent crush of cubensis logos. It will be difficult for consumers to distinguish many businesses with those signifiers.

Psilocybin patents

Patents are a world unto themselves. There are no state-level registrations. Patents (and copyrights) also differ from trademarks in that they are embedded into the text of the U.S. Constitution.

Patents do fall under USPTO administration and purview, but the USPTO does not require “lawful use in commerce” as a condition to registration of a controlled substances patent. Thus, psilocybin patents already have been acquired at the federal level. A lot of ink has been spilled on this controversial topic.

Unlike with Measure 91 (cannabis), Oregon’s Measure 109 does not contemplate any form of “research” licensee. For this and other reasons, I expect psilocybin R&D efforts to be incidental to the Oregon program. What we may see are advances in cultivation technology and media arising from a proliferation of commercial growing efforts. In that case, those novel inventions would be eligible for patent protection, just like inventions in any other industry.

Psilocybin copyright

A long time ago we wrote a blog post titled: “Can’t Trademark that Cannabis Logo? Try Copyright.” As with patents, copyright law does not prohibit the registration of works that concern illegal subject matter. For this reason, psilocybin-related works, including logos, should be eligible for registration. To benefit from copyright protection, a psilocybin logo must:

  1. Be original to the author, which means the author must have created the work independently (i.e., the work must not be copied);
  2. Possess a “minimal degree of creativity;” and
  3. Be fixed in a tangible form that is sufficiently permanent to be reproduced.

Psilocybin logos that are adequately original (not just mushroom drawings!) and adequately ornate have a good chance of acquiring copyright protection— even without registration. Still, it is in a business’s best interest to register its logo with the U.S. Copyright Office. Registration gives the business the right to sue and to be awarded statutory damages and attorney’s fees should it prevail on an infringement claim. In addition, copyright registration is relatively straightforward and inexpensive.

For a fuller analysis on how copyright works in this context, including enforcement, click over to the old cannabis copyright blog post linked above.

Psilocybin trade secrets

A trade secret is virtually any form of information, formula, device, method, etc. that is kept secret, and that derives an independent economic value from being kept secret.

One example might be a psilocybin manufacturer that invents a new process to grow mushrooms more quickly— and keeps that process under wraps. The process is valuable not only intrinsically (i.e., because the manufacturer can now work faster), but also because it’s secret (because competitors will still be producing mushrooms more slowly without the new process).

Trade secrets are not limited to technical inventions. They can also include confidential information such as customer lists, preferred vendor pricing lists, and so on. The key is secrecy. As we’ve explained:

Trade secret protection can often be more valuable than patent protection, as trade secrets are kept secret for so long as their owners choose to keep them secret (or until they get released to the public through other means). Patented inventions, on the other hand, are immediately disclosed to the government and anyone with a computer. To boot, a patent owner loses protections after a fixed period of time.

I expect to see heavy reliance on trade secrets in the early days of the Oregon psilocybin industry, just as happened with cannabis. And please remember: the best way to keep a trade secret a secret is simply not to tell anyone. Option B is non-disclosure agreements and airtight employer policies, but only where disclosure is lucrative or truly unavoidable.

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I think I’ve got one more post left to write in this series, or maybe two as we ramp up final rulemaking and OHA psilocybin business licensing here in Oregon. To catch up on everything that came before, check out the following: