Case 6:20-cv-01180-ADA Document 1 Filed 12/22/20 Page 1 of 15

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS
WACO DIVISION

Canopy Growth Corporation, )

)
Plaintiff, )
v. ) Civil Action No. 6:20-cv-1180
)
GW Pharmaceuticals PLC, )
) JURY TRIAL DEMANDED
Defendant. )
)

COMPLAINT FOR PATENT INFRINGEMENT

Plaintiff Canopy Growth Corporation (“Canopy”) files this complaint for patent

infringement against Defendant GW Pharmaceuticals PLC (“GW”) and in support thereof alleges

and avers as follows:

NATURE OF THE ACTION

1. This is an action for patent infringement arising under the patent laws of the

United States, 35 U.S.C. § 1 et seq., specifically including 35 U.S.C. § 271.

THE PARTIES

2. Canopy is a publicly traded corporation, incorporated in Canada, with its

head office located at 1 Hershey Drive, Smiths Falls, Ontario, Canada, K7A 0A8.

3. On information and belief, GW is a public limited company organized under

the laws of the United Kingdom, with a principal place of business at Sovereign House, Vision

Park, Chivers Way, Histon, Cambridge, CB24 9BZ United Kingdom.

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JURISDICTION AND VENUE

4. Canopy asserts claims for patent infringement against GW arising under the

patent laws of the United States, Title 35 of the United States Code. Accordingly, this Court has

subject matter jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 and 1338(a).

5. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(c).

GW is a foreign entity and may be sued in any judicial district pursuant to 28 U.S.C. § 1391(c)(3).

6. This Court has personal jurisdiction over GW consistent with the

requirements of the Due Process Clause of the United States Constitution and the Texas Long Arm

Statute, due at least to its substantial business in Texas and this judicial district, including: (1)

regularly doing or soliciting business, engaging in other persistent conduct, and/or deriving

substantial revenue from goods sold and/or services provided to Texas residents; and (2) at least

part of its infringing activities alleged herein. On information and belief, GW’s flagship product,

Epidiolex, which is produced using Canopy’s patented extraction process, has been prescribed to

patients in this district and across the state of Texas. Additionally, on information and belief, GW

enlisted residents of Austin, TX, which is within this district, to participate in a study conducted

as part of obtaining Food and Drug Administration (FDA) approval of Epidiolex. See Exhibit F.

7. This Court has personal jurisdiction over GW, directly or through

intermediaries, including GW’s U.S.-based sales team, because it has committed acts within Texas

giving rise to this action and/or has established minimum contacts with Texas such that personal

jurisdiction over GW would not offend traditional notions of fair play and substantial justice. On

information and belief, GW, without authority, imports Epidiolex, which is made by Canopy’s

patented extraction process, into the United States (including the state of Texas and within this

district) and/or offers to sell, sells, and/or uses Epidiolex within the United States (including the

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state of Texas and within this district). On information and belief, GW markets Epidiolex

throughout the United States, including in the state of Texas, through a commercial organization

consisting of sales, medical affairs, marketing, and market access/payer teams.

8. On information and belief, Defendant has placed and continues to place

products produced using Canopy’s patented process, including at least Epidiolex, into the stream

of commerce via an established distribution channel with the knowledge and/or intent that

Epidiolex was sold and continues to be sold in the United States, including in the state of Texas

and this district.

9. Accordingly, this Court may properly exercise personal jurisdiction over

GW.

THE PATENT-IN-SUIT

10. U.S. Patent No. 10,870,632 (the “’632 Patent”), titled “Process For

Producing An Extract Containing Tetrahydrocannabinol And Cannabidiol From Cannabis Plant

Material, And Cannabis Extracts,” was duly and legally issued by the United States Patent and

Trademark Office (USPTO) on December 22, 2020. Canopy is the owner by assignment of the

entire right, title, and interest in and to the ’632 Patent, including the sole and undivided right to

sue for infringement. A true and correct copy of the ’632 Patent is attached hereto as Exhibit A.

BACKGROUND OF THE DISPUTE

11. This dispute relates to GW’s continued, unauthorized use of Canopy’s

patented processes for extracting cannabidiol from cannabis plant material. Cannabidiol, or CBD,

is one ingredient found in plants of the cannabis family that includes what are commonly known

as hemp and marijuana. Unlike Δ9-tetrahydrocannabinol, or THC—another of the active

ingredients in cannabis—CBD does not cause noticeable intoxicating, euphoric effects. Current

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research is ongoing, but indicates that CBD offers significant therapeutic benefits, including anti-

inflammatory, analgesic, antiemetic, and anti-seizure effects.

12. Canopy is a Canadian corporation that focuses on legal development of

hemp and marijuana-based compounds and resulting products, with operations in countries across

the world. Canopy produces, distributes, and sells a diverse range of cannabis and hemp-based

products and other consumer products for both recreational and medical purposes under a portfolio

of distinct brands in Canada pursuant to the Cannabis Act, and globally pursuant to applicable

international and Canadian legislation, regulations, and permits. Subsequent to the passage of the

U.S. Agricultural Improvement Act of 2018 in December 2018, Canopy began building its hemp

supply chain in the United States through its investment in hemp growing capability and in

processing, extraction and finished goods manufacturing facilities. Canopy sells a line of hemp-

derived CBD isolate products under the First & Free Brand, including oils, softgels and topical

creams, and in September 2020, Canopy launched Martha Stewart CBD, a new line of premium

quality, hemp-derived wellness gummies, oils and softgels.

13. Canopy acquired all right, title, and interest in the ’632 Patent in connection

with its acquisition of Germany’s C3 Cannabinoid Compound Company, founded by top global

herbal medicine manufacturer Bionorica SE. The ’632 Patent is part of a patent family dating back

more than twenty years to October 17, 2000, with the filing by named inventor Adam Mueller of

German Patent Application No. 100 51 427, to which the ’632 Patent claims priority. The ’632

Patent family relates to pioneering processes for producing an extract from cannabis plant matter

containing CBD using carbon dioxide (CO2). See Ex. A at Abstract. The potential therapeutic

applications of CBD and other cannabis active principles were a motivating factor in developing

the processes described and claimed in the ’632 Patent. Indeed, the ’632 Patent identifies a variety

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of anticipated medical applications, notably including the use of CBD as an anti-epileptic. See,

e.g., id. at 3:53-4:3.

14. GW is a biopharmaceutical company involved in the development and

commercialization of cannabinoid therapeutics. On information and belief, GW’s leading

cannabinoid product is Epidiolex, an anti-epileptic medication consisting of a pharmaceutical

formulation of highly purified CBD. As detailed below, on information and belief, GW

manufactures the active pharmaceutical ingredient in Epidiolex—CBD—using the CO2-based

extraction process described and claimed in the ’632 Patent. On information and belief, Epidiolex

was approved by the FDA on June 25, 2018 for the treatment of seizures associated with certain

diseases. On information and belief, Epidiolex became commercially available in the United

States on November 1, 2018. On information and belief, GW has set a list price for Epidiolex of

$1,235 per 100mL bottle, with a weighted average gross price of approximately $32,500 per

patient per annum. GW reported approximately $366 million in net product sales of Epidiolex in

the United States in the first nine months of 2020. On information and belief, the success of GW’s

Epidiolex is based, at least in part, on GW’s use, without authority, of the CO2 extraction process

described and claimed in the ’632 Patent, which enables the production of a CBD-rich extract from

cannabis material.

15. On information and belief, GW is aware, or should be aware, that the

extraction process it uses to manufacture Epidiolex infringes the claims of the ’632 Patent.

Although the ’632 Patent recently issued, on information and belief, GW has been monitoring the

’632 Patent family for over fourteen years. In May 2006, for instance, GW proactively challenged

the issuance of a European counterpart application (European Patent No. EP 1 326 598) by filing

an opposition before the European Patent Office. By the time GW filed its opposition, the parent

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application of the ’632 Patent—U.S. Patent Application No. 10/399,362, which issued as U.S.

Patent No. 8,895,078 (the “’078 Patent”)—had already been filed. In light of its monitoring and

proactive steps to invalidate a European counterpart, GW knew, or should have known, of the

existence of the U.S. counterpart applications in the ’632 Patent family.

16. Notably, on information and belief, GW in 2016 considered using Canopy’s

predecessor in interest, Bionorica—an early pioneer of CO2 extraction techniques—as its

processor for extracting CBD. By this time, the ’078 Patent had already issued and the application

that ultimately issued as the ’632 Patent had been filed. Although that deal did not materialize,

these negotiations further evidence that GW has been aware of the patented processes described

and claimed in the ’078 and ’632 Patents for many years. Indeed, in 2017, GW declined a license

to the ’078 Patent. This case is not about restricting patient access to Epidiolex. Rather, Canopy

brings this action to put a stop to GW’s knowing and unauthorized use of Canopy’s intellectual

property.

PATENT INFRINGEMENT CLAIMS

Count I: Infringement of U.S. Patent No. 10,870,632

17. Canopy re-alleges and incorporates herein by reference the allegations

contained in Paragraphs 1-16 above.

18. The ’632 Patent generally relates to a process for producing an extract

containing tetrahydrocannabinol (THC), CBD, and optionally the carboxylic acids thereof from

cannabis plant material. See Ex. A at 1:23-26. The patent describes that one “object of the present

invention [is] to provide Δ9-tetrahydrocannabinol, Δ8-tetrahydro-cannabinol and cannabidiol in

pure form and as an extract in the form of preparations for medical applications,” and to obtain

these active principles from hemp varieties having low cannabinoid contents (e.g., fiber-type

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hemp) because of their better availability. Id. at 4:59-67. When hemp of the fiber-type is used as

a starting material, cannabidiol (and/or the carboxylic acids thereof) are found as the main

constituents in the primary extract. Id. at 6:45-48. The patent explains that “[a]s cannabidiol taken

for itself has interesting pharmacological properties while further lacking the psychotropic

hallucinogenic effect of Δ9-THC, cannabidiol itself is also of interest for practical application

because it may be used, e.g., as an anti-epileptic.” Id. at 9:29-33.

19. The processes described in the ’632 Patent significantly improved upon

other approaches to enriching, isolating, and/or synthesizing cannabinoids, and in particular those

that relied on hexane and ethanol extracts. The extract produced from the patented processes can

be used as an active principle for the production of a medication (e.g., for the indications described

above, including as an anti-epileptic). Id. at 3:53-4:3, 14:22-27.

20. On information and belief, GW infringes one or more claims of the ’632

Patent, either literally or under the doctrine of equivalents. Non-limiting examples of such

infringement are provided below, based on the limited information currently available to Canopy.

Claim 1 of the ’632 Patent recites as follows:

A process for producing an extract containing Tetrahydrocannabinol

(THC) and/or cannabidiol (CBD), and optionally the carboxylic acids
thereof, from a cannabis plant material or a primary extract thereof, said
process comprising:
(1) subjecting the cannabis plant material or primary extract thereof
to CO2 in liquefied form under subcritical pressure and temperature
conditions to extract cannabinoid components; and
(2) reducing the pressure and/or temperature to separate
tetrahydrocannabinol and/or cannabidiol, and optionally the carboxylic
acids thereof, from the CO2.

Claim 14 of the ’632 Patent recites as follows:

A process for producing an extract containing Tetrahydrocannabinol

(THC) and/or cannabidiol (CBD) from a cannabis plant material or a
primary extract thereof, said process comprising:

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(1) decarboxylating cannabinoid carboxylic acids in the cannabis

plant material or primary extract thereof;
(2) subjecting the decarboxylated cannabis plant material or primary
extract thereof to CO2 in liquefied form under subcritical pressure and
temperature conditions to extract cannabinoid components; and
(3) reducing the pressure and/or temperature to separate
tetrahydrocannabinol and/or cannabidiol from the CO2.

21. On information and belief, GW performs each and every limitation of

Claims 1 and 14, as well as many of the dependent claims of the ’632 Patent. On information and

belief, GW performs a process for producing an extract containing Tetrahydrocannabinol (THC)

and/or cannabidiol (CBD). See generally Ex. B (“Our Cannabidiol Manufacturing Process”). The

extract is produced from a cannabis plant material or a primary extract thereof. For example:

Ex. B at 1.

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Id. Additionally, on information and belief, GW uses “plants of Cannabis sativa L, with defined

chemical profiles and containing consistent levels of CBD as the major cannabinoid and a low

level of delta-9-tetrahydrocannabinol (THC).” Ex. C at 12; see also Ex. D at 15:15-19 (“High

CBD chemovars were grown, harvested and dried and stored in a dry room until required. The

botanical raw material (BRM) was finely chopped using an Apex mill fitted with a 1 mm screen.

The milled BRM was stored in a freezer for up to 3 months prior to extraction.”).

22. On information and belief, GW’s process includes decarboxylating

cannabinoid carboxylic acids in the cannabis plant material or primary extract thereof. For

example, GW achieves “active CBD via decarboxylation”:

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Ex. B at 1. See also Ex. E at 5:33-40 (“In a first aspect the invention provides a method of

extracting cannabinoids from plant material comprising a decarboxylation step[.]”).

23. On information and belief, GW’s process includes subjecting the

decarboxylated cannabis plant material or primary extract thereof to CO2 in liquefied form under

subcritical pressure and temperature conditions to extract cannabinoid components. For example,

“[a]fter decarboxylation is complete, the raw material is loaded into an extraction column and CO2

is passed through at a pre-specified temperature until the extraction process is complete”:

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Ex. B at 1. See also Ex. D at 15:29-30 (“Extraction No 1 was performed using liquid CO2 at 60

bar/10° C. to produce botanical drug substance (BDS).”); Ex. E at 5:33-40 (“In a first aspect the

invention provides a method of extracting cannabinoids from plant material comprising a

decarboxylation step, an extraction with liquid carbon dioxide (CO2), and a step to reduce the

proportion of non-target materials in the extract, characterised in that the extraction with liquid

CO2 is conducted under sub-critical conditions at a temperature of between 5-15° C and a pressure

of between 50-70 bar.”).

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24. On information and belief, GW’s process includes reducing the pressure

and/or temperature to separate tetrahydrocannabinol and/or cannabidiol from the CO2. For

example:

In a preferred embodiment liquid CO2 is removed by depressurisation and

the recovered extract held at a temperature in the range from -15°C to -

20°C.

Id. at 7:21-23.

25. In view of the foregoing, GW infringes at least Claims 1 and 14 of the ’632

Patent in violation of 35 U.S.C. § 271. Canopy’s investigation of GW’s operations and

manufacturing process is ongoing. To the extent it is determined that GW uses Canopy’s patented

processes to produce CBD (the active pharmaceutical ingredient in Epidiolex) in the United States,

GW directly infringes the ’632 Patent in violation of 35 U.S.C. § 271(a).

26. To the extent that GW, and/or third-party contractors under the direction of

GW, use the patented processes to produce the CBD in Epidiolex outside the United States, GW

infringes the ’632 Patent in violation of 35 U.S.C. § 271(g). On information and belief, GW,

without authority, imports or has Epidiolex imported into the United States and/or offers to sell,

sells, and/or uses Epidiolex within the United States. On information and belief, the active

pharmaceutical ingredient in Epidiolex is CBD extracted using the process(es) claimed in the ’632

Patent, and the extracted CBD is not materially changed by subsequent processes and does not

become a trivial and nonessential component of another product.

27. Additionally, on information and belief, GW is liable for actively inducing

infringement of the ’632 Patent under 35 U.S.C. § 271(b) by having knowledge of the ’632 Patent

and knowingly causing or intending to cause, and continuing to knowingly cause or intend to

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cause, infringement of the ’632 Patent, with specific intent, by others. For example, on information

and belief, GW, with knowledge that the active pharmaceutical ingredient in Epidiolex, CBD, is

made outside the United States by a process patented by the ’632 Patent, has actively induced and

continues to induce third parties (e.g., physicians and/or pharmacies) and end users (e.g., patients)

to offer for sale, sell, and/or use Epidiolex in the United States in violation of 35 U.S.C. § 271(g).

On information and belief, GW, acting alone and/or through intermediaries, markets Epidiolex

throughout the United States through a commercial organization consisting of sales, medical

affairs, marketing, and market access/payer teams. On information and belief, GW’s marketing

plan includes a combination of community neurology/epilepsy meetings, patient advocacy events,

an extensive program for U.S. clinicians to share their Epidiolex experiences and a media-based

awareness program.

28. On information and belief, GW’s infringement of the ’632 Patent has been

and continues to be willful and deliberate. As detailed above, on information and belief, GW has

had actual and constructive notice of the ’632 Patent family since at least as early as May 2006,

and knowledge of the ’632 Patent as early as its U.S. filing date and no later than the date of service

of this complaint. Despite having knowledge of the ’632 Patent and its infringement, on

information and belief, GW has and continues to: (1) use Canopy’s patented processes to extract

CBD in the United States and/or outside the United States; (2) import and/or have Epidiolex

imported into the United States, with knowledge that the active pharmaceutical ingredient of

Epidiolex is CBD produced by Canopy’s patented processes; and/or (3) offer to sell, sell, and/or

use Epidiolex within the United States in violation of one or more of 35 U.S.C. §§ 271(a) and (g).

On information and belief, GW also has and continues to actively induce others to offer to sell,

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sell, and/or use Epidiolex, the active pharmaceutical ingredient of which is CBD produced by

Canopy’s patented processes, within the United States in violation of 35 U.S.C. § 271(b).

29. As a direct and proximate result of GW’s acts of infringement, Canopy has

suffered and continues to suffer damages and irreparable harm.

JURY DEMAND

Pursuant to Fed. R. Civ. P. 38(b), Canopy hereby demands a trial by jury of all

issues so triable.

PRAYER FOR RELIEF

WHEREFORE, Canopy prays for judgment in its favor granting the following

relief:

A. A finding that GW has infringed the ’632 Patent in violation of one of more

subsections of 35 U.S.C. § 271, including but not limited to subsections (a), (b), and/or (g);

B. An award of damages pursuant to 35 U.S.C. § 284 adequate to compensate

Canopy for GW’s infringement of the ’632 Patent, including both pre- and post-judgment interest

and costs as fixed by the Court;

C. A finding that GW’s infringement of the ’632 Patent has been willful and

an appropriate enhancement of damages pursuant to 35 U.S.C. § 284;

D. A declaration that this is an exceptional case within the meaning of 35

U.S.C. § 285, and a corresponding award of Canopy’s reasonable attorneys’ fees incurred in

connection with the litigation; and

E. Any additional and further relief the Court may deem just and proper under

the circumstances.

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December 22, 2020 BAKER BOTTS L.L.P.

/s/ Kurt Pankratz

Kurt Pankratz
Texas State Bar No. 24013291
BAKER BOTTS L.L.P.
2001 Ross Ave, Suite 900
Dallas, TX 75201
(214) 953-6584
[email protected]

ATTORNEYS FOR PLAINTIFF CANOPY

GROWTH CORPORATION

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