A recent Law 360 story by Diana Novak Jones, “UCANN Says It Doesn’t Owe Atty Fees After Patent Suit,” reports that United Cannabis Corp. is fighting CBD company Pure Hemp Collective's bid for $300,000 in attorney fees after United Cannabis dropped a patent infringement suit against the company, arguing it has no liability because Pure Hemp willingly dropped its claims as well. United Cannabis, or UCANN, was suing Pure Hemp for infringement on a patent covering a liquid formula for a tincture containing 95% CBD when it entered bankruptcy, but dropped the suit after its Chapter 11 petition was dismissed earlier this year. Pure Hemp dismissed its counterclaims at the same time, according to court records.
But in April, Pure Hemp asked the judge in the patent suit to award it about $300,000 in attorney fees, arguing in part that UCANN got its patent by misleading the U.S. Patent and Trademark Office, according to court filings. UCANN pushed back, arguing there's no evidence it misled anyone and Pure Hemp has already dismissed the claims it's trying to use to get the fees. "Pure Hemp's motion raises several disputed issues of fact as to materiality, knowledge, and intent," UCANN told the court. "By dismissing its inequitable conduct counterclaims, Pure Hemp waived its right to have these factual disputes adjudicated."
The dispute between UCANN and Pure Hemp, which began in 2018, was closely watched in the cannabis industry as it presented one of the earliest opportunities to see how a federal court handled cannabis patent claims. UCANN accused Pure Hemp of infringing its patent on the liquid cannabinoids, while Pure Hemp brought counterclaims accusing UCANN of suing to enforce a patent it knew was invalid. In 2019, UCANN scored a major win when U.S. District Judge William Martinez denied Pure Hemp's motion for summary judgment, holding that liquid cannabinoid formulations were UCANN's creation and did not occur in nature.
In March of last year, the parties agreed to reduce the suit to questions of the patent's validity and enforceability, with Pure Hemp agreeing to pay $4,420 in royalties if UCANN prevailed. But the next month, UCANN filed its Chapter 11 petition, halting the patent litigation. The U.S. Trustee and the bankruptcy judge had questions about whether UCANN belonged in bankruptcy court given its connections to cannabis, and ultimately the company's petition was dismissed. Not long after the dismissal, which UCANN didn't appeal, it told the judge overseeing its suit against Pure Hemp that the parties were dropping their respective claims.
But two weeks later, Pure Hemp filed its motion for fees, court records show. The motion remained sealed, but Pure Hemp's counsel James Gourley of Carstens & Cahoon LLP told Law360 his client alleges that UCANN misled the patent office by copying and pasting text from another product in the paperwork for the patent UCANN was suing over.