Legal area: Intellectual Property (IP)

Task:
Persona: You are an in-house attorney that works for a state-licensed cannabis manufacturing company (Company P) located in Washington state which manufactures cannabis that is federally illegal under the federal Controlled Substance Act.

Context:
Your company (Company P) is considering filing a lawsuit to assert patent infringement in federal district court against another company (Company D). Assume the patent (Patent No. 99,999,999, issued on January 1, 2025) has broad claims that are directed toward a cannabinoid extraction method. Company P uses it to extract federally illegal cannabis having a THC percentage above 0.3% THC, but which is state licensed. Thus, the potential plaintiff is violating the federal Controlled Substance Act but complying with Washington state regulations and statutes. Company D (the potential defendant) sells products it makes by the same extraction method but that extracts only hemp which is federally legal as it has a delta-9 THC content of less than 0.3%. The patent covers technology that can be used to make both federally illegal cannabis and federally legal hemp. Assume that Company D does not have any patents covering their hemp processes or products.

Company P has sent letters to Company D on July 1, 2025 and January 1, 2026 with its likely damages theory, relying exclusively on a lost profits theory. Company P asserted that the public/consumers purchased D's hemp products instead of P's cannabis products as they have the same therapeutic effects. Company P asserts and provided evidence that that demand exists for the technology. Company P has stated that there are no non-infringing alternatives as only the patented method obtains the desired products having acceptable therapeutic properties. P has also stated that they could have met the demand and had the capacity to produce the products as well as distribution.

Task: Prepare a memorandum to the board of directors of Company P that analyzes and summarizes the pros and cons of filing such a lawsuit. This memo should include a discussion of the risks of the case being dismissed as well as a discussion of the arguments that may be made by both sides regarding damages and the likely damages awards if Company P is successful in proving patent infringement. Consider and discuss at a high level the caselaw on illegal acts and defenses for companies that are sued by plaintiffs who are taking illegal actions or selling illegal products. Assume that patent infringement is highly likely to be found and that the patent is unlikely to be found invalid. Make the memo professional but able to be understood by a non-lawyer (as most of the Board are non-lawyers).

The memo should also discuss steps that Company P might want to take prior to filing suit in order to increase the likelihood of success and mitigating risk, including any changes in ownership of the patent to be asserted or restructuring of the Company P. The memo should also cite to specific cannabis patent enforcement cases.

Constraints: Do not use jargon. Use professional prose. Use the term cannabis or marijuana, do not use the term "pot" or "weed".

Output schema: Provide a memorandum with headings for the sections. The memo should be between 2,000 to 2,500 words.

Reference answer:
**_CONFIDENTIAL, PRIVILEGED, ATTORNEY WORK PRODUCT_**

**Memorandum**
To: Company P Board of Directors
From: In-House Attorney
Date: March 5, 2026

Company P is considering filing a patent infringement lawsuit against Company D for infringement of Patent 99,999,999 (the "asserted patent"), which claims methods for extraction of cannabinoids. We have been asked to provide a high-level evaluation of the likelihood of success in surviving any motions to dismiss filed by Company D and assessing the potential damages that would be awarded.

Executive Summary: For background, we are confident that Company P will likely prevail in obtaining a finding of infringement by Company D of the asserted patent and that the patent will not be found to be invalid. However, Company D is likely to file a motion to dismiss based on the illegality doctrine discussed below. Overall, we feel that Company P is likely to survive a motion to dismiss based on the illegality doctrine, however there is a reasonable chance that damages could be severely limited if Company P relies on a lost profit damages theory, which it has indicated it would like to obtain. The courts lack clear-cut guidance on this issue of federally illegal cannabis operators obtaining patent infringement damages in the area of lost profits if based on lost illegal sales. Thus, there is considerable risk that damages could be minimal unless other theories of damages (such as reasonable royalties) are presented to the jury.

## A. DISMISSAL UNDER THE ILLEGALITY DOCTRINE
### 1. THE PRODUCTION OF CANNABIS BY COMPANY P IS ARGUABLY VIOLATING THE FEDERAL CONTROLLED SUBSTANCE ACT
Although Company P is acting in compliance with state and local regulations and operating under the understanding that there is reduced risk of federal enforcement due to compliance with local rules and avoiding certain activities, the production of cannabis products even in a state in which cannabis is state legal is in violation of schedule 1 of the Federal Controlled Substance Act (CSA). 21 U.S.C. §802, 841(a)(1) et seq.; _Gonzales v. Raich_, 545 U.S. 1 (2005) (noting that the CSA applies in full force even in states that have decriminalized marijuana). There however have been in place various memorandum and mechanisms to limit the enforcement of federal laws against actors that had strictly complied with all state-law conditions regarding cannabis. _See, e.g.,_ _U.S. vs. Pisarski_, 965 F.3d 738 (9th Cir. 2020) (discussion regarding compliance with medical marijuana laws); _see also_ Memorandum for All United States Attorneys: Guidance Regarding Marijuana Enforcement, (August 29, 2013) (also known as the Cole Memorandum, rescinded by Attorney General Jeff Sessions on January 4, 2018). Cannabis operators in state legal states have operated in this gray area for many years. These memorandum and mechanisms however may have limited practical effect on the issue of whether a district court would proceed with a patent infringement suit in our case.

### 2. PATENT LAWS CAN STILL BE ASSERTED EVEN IF PRODUCTS FEDERALLY ILLEGAL
Patent law is controlled by the federal patent law via Title 35 of the U.S. Code, which sets forth that patents can be enforced if they are valid. 35 U.S.C. § 271. It is well established that the U.S. Patent & Trademark Office (USPTO) regularly issues patents that are directed toward cannabis and cannabis-related products, even issuing one of the first cannabis patents to a federal entity. _See_ U.S. Patent No. 6,630,507, titled "Cannabinoids as antioxidants and neuroprotectants," assigned to the U.S. Department of Health and Human Services. And notably the patent statute does not have any express requirement that the activity claimed in the patent be legal. However, there have been relatively few federal district court cases in which patent infringement has been asserted on cannabis patents. _See_, _e.g._, _[United Cannabis v. Pure Hemp Collective Inc.](https://www.courtlistener.com/docket/7561707/united-cannabis-corporation-v-pure-hemp-collective-inc/)_[, No. 18-cv-01922 (D. Col. Jul. 30, 2018)](https://www.courtlistener.com/docket/7561707/united-cannabis-corporation-v-pure-hemp-collective-inc/).

### 3. DISMISSAL IS UNLIKELY UNDER THE ILLEGALITY DOCTRINE
One of the main reasons that there are relatively few district court cases in which cannabis patents have been asserted is the concern that the case may be dismissed due to the illegality doctrine, as well as more obvious concerns about the plaintiff exposing themselves to enforcement mechanisms of the federal government. However, in many patent cases involving cannabis v. cannabis company litigation, there may be some reluctance to assert the defense if the defendant is also a cannabis company, and especially if they also have patents -- due to fear of "mutual destruction." Here however, Company D is not acting illegally as it sells products it makes by the same extraction method as Company P but that extracts only hemp which is federally legal as it has a delta-9 THC content of less than 0.3%.

We suspect that Company D may assert the common law illegality doctrine to support dismissal of the patent infringement suit. This doctrine stems originally from non-patent cases where a plaintiff goes into court but the court decides it is against the public good to assist the plaintiff in committing crimes. The common law saying is a Latin maxim - _ex turpi causa non oritur actio_ -- which translates to "From a dishonorable cause an action does not arise. The case most often cited for this is _[The Florida](https://supreme.justia.com/cases/federal/us/101/37/)_[, 101 U.S. 37, 43 (1897)](https://supreme.justia.com/cases/federal/us/101/37/), which stated that the maxim "applies with full force" and that "[n]o court will lend its aid to a party who founds his claim for redress upon an illegal act."

The illegality doctrine often comes up in the context of contract or bankruptcy cases. For example, a court may not compel performance of a contract term that requires violating the law. _See Bassidji v. Goe_, 413 F.3d 928 (9th Cir. 2005). Also, courts will often refuse to enforce a contract term that is contrary to public policy. _See_, _e.g._, _McCracken v. Progressive Direct Ins. Co._, 896 F.3d 1166 (10th Cir. 2018) (declining to enforce a negotiated release of a tort claim that while lawful, was contrary to public policy.). Nor will a federal bankruptcy court give a marijuana business the benefit of bankruptcy protections. _[In re Arenas](https://scholar.google.com/scholar_case?case=14854858687137117438&q=535+BR+845&hl=en&as_sdt=2006)_[, 535 B.R. 845, 847 n.3 & 852 n. 40 (B.A.P. 10th Cir. 2015)](https://scholar.google.com/scholar_case?case=14854858687137117438&q=535+BR+845&hl=en&as_sdt=2006). And in fact, federal courts have dismissed a range of cases previously due to the illegality doctrine. _Sensoria, LLC v. Kaweske_, 581 F. Supp. 3d 1243, 1258-1260 (D. Colo. 2022) (extensive discussion of types of cannabis related claims and cases subject to illegality doctrine). <https://www.scribd.com/document/599721890/Gene-Pool-v-Coastal-Harvest-Brief-ISO-MTD?v=0.989>

Although not dispositive, the bankruptcy context is probably the area that the court would look to as most analogous, if it is to consider the illegality doctrine seriously. In the bankruptcy context, it is relatively well-established that a court cannot aid in liquidating or restructuring any assets associated with cannabis. _[Burton v. Maney](https://scholar.google.com/scholar_case?case=3484809268659396882&q=610+BR+633&hl=en&as_sdt=2006)_[, 610 B.R. 633 (B.A.P. 9th Cir. 2020)](https://scholar.google.com/scholar_case?case=3484809268659396882&q=610+BR+633&hl=en&as_sdt=2006). While the court in _Burton_ noted that "the mere presence of marijuana near a bankruptcy case does not automatically prohibit a debtor from bankruptcy relief," it articulated long line of case law putting restrictions on the ability of cannabis companies to obtain bankruptcy relief. _Burton_, 610 B.R. at 637-38. For example, a bankruptcy case must be dismissed if the continuation of the case would require the court, trustee, or debtor in possession to administer assets that are illegal under the CSA or that constitute proceeds of activity criminalized by the CSA. _Id._ at 638 (citing _Arenas_ at 853). While the court emphasized that it disfavored bright line rules, it analyzed a variety of arguments and ultimately held that a continuation of the bankruptcy proceedings would require distribution of assets that were illegally obtained due to violation of the CSA. _Id._ at 639-41. Here, Company P can likely distinguish from the bankruptcy context since Company P's patent was legally obtained, even with underlying illegality of the practice of the claimed methods by Company P. Moreover, a federal district court dealing with a patent infringement case is more likely to find the bankruptcy line of cases to be informative and not controlling.

Another factor to consider is that since Company D does not have any patents, particularly cannabis-related ones, which it could assert as a counterclaim, it would not have the same fear about its own patents being constrained by the court. If Company D had patents that it could assert against Company P, Company P would need to take factor in the risk of several things. First, Company D could assert counterclaims that could result in damages or injunctive relief against Company P. However, if Company D's patents were all cannabis-related, Company D would likely be reluctant to assert a defense based on illegality, as it that would likely hurt any patent counterclaims it brought against Company P. Since it appears that Company D does not have any patents, and thus no cannabis-related patents, it is more likely that Company D will be willing to raise the illegality doctrine defense in some manner against Company P's patent. Most likely this will be as a Rule 12 motion to dismiss. Fed. R. Civ. P. 12.

However, we feel that it is relatively unlikely that a district court would apply the illegality doctrine to completely dismiss a patent infringement case filed by Company P against Company D. This has been an issue of considerable debate and discussion -- whether the illegality doctrine will be used to successfully bar the assertion of cannabis-related patents in federal district court -- largely due to the lack of actually litigated cases in the patent context on cannabis patents. We note that there is certainly no uniform rule that illegality bars patent infringement actions. In fact, in one relatively recent case, a California district court refused to dismiss a patent infringement suit directed to cannabis-related claims on the basis of illegality. _Gene Pool Technologies, Inc. v. Coastal Harvest, LLC._, No. 5:21-cv-01328-JWH (C.D. Cal. Nov. 23, 2022). (Briefs and orders publicly available for viewing and downloading at https://www.courtlistener.com/docket/60116172/gene-pool-technologies-inc-v-coastal-harvest-llc/) If a motion to dismiss for illegality is filed in our case, we would likely urge the federal district court to look to the _Gene Pool_ case as being informative, although we should at least internally recognize that the court there did not establish any kind of broad across-the board rule that illegality cannot be a basis to dismiss a cannabis-related patent suit. Instead, a court is likely to look at the specific facts in the case and factors such as the scope of the claims, the extent of illegal activity, policy arguments, and specific damages and remedy related issues such as availability of non-infringing alternatives and other available remedies.

In the _Gene Pool_ case, for example, the plaintiff alleged infringement directed to patents to methods for extracting oil. The judge issued his decision at oral hearing noting the lack of any controlling authority, and that there was a lack of caselaw addressing where a defendant seeks to use its own illegal conduct as a shield to allege tortious conduct. In the _Gene Pool_ case, the plaintiff asserted that it was an intellectual property holding company, without any ties to illegal cannabis production. This of course is arguably different than our situation here, but we do not believe it will be dispositive. The court also noted that damages were not based on lost profits of sales of illegal products, noting that "Gene Pool does not seek damages based on its own cultivation or sales of marijuana," but was only a patent holder. [Illegality Doctrine Rejected in Legal Cannabis Patent Case, Confirming Patent Enforceability, Feb. 13, 2023 (discussing Judge Holcomb's November 22, 2022 oral ruling at footnote 20).](https://www.jdsupra.com/legalnews/illegality-doctrine-rejected-in-legal-7225045/) Thus, the damages theory was important too -- we will discuss this below as Company P is planning to assert lost profits damages as its primary liability theory. Lastly, the district court there looked at the fact that the patent claims are not expressly limited to cannabis -- so it would be helpful if we could take that position -- and believe we can since the claims cover methods of extracting cannabinoids that result in hemp at a federally legal delta 9 THC percentage of below 0.3%.

Other than the _Gene Pool_ case, there have been relatively few cases decided before the _Gene Pool_ case on this issue, except for a Colorado case where the court allowed the case to go forward, denying summary judgment motions that the patents were directed to unpatentable subject matter, but the parties did not raise the issue of illegality. _United Cannabis Corp. v. Pure Hemp Collective, Inc._, No. 18-cv-1922 (D. Col. 2019). The issue of illegality had been raised in a design patent case but denied. _[Lifted Limited, LLC v. Novelty, Inc.](https://docs.justia.com/cases/federal/district-courts/colorado/codce/1:2016cv03135/167700/275)_[, No. 1:16-cv-03135-PAB-GPG (D. Colo. Sept. 30, 2021)](https://docs.justia.com/cases/federal/district-courts/colorado/codce/1:2016cv03135/167700/275).

Thus, we think it unlikely that the court would completely dismiss the case under the illegality doctrine (if brought) for the reasons we discussed above.

## B. THERE IS A REASONABLE CHANCE THAT LOST PROFITS DAMAGES WILL BE LIMITED DUE TO ILLEGALITY
Another area of uncertainty is whether the amount of damages that Company P seeks would be limited due to the underlying federal illegality of Company P's products. Under U.S. patent law, a plaintiff will typically seek damages under a theory of reasonable royalties or for lost profits. 35 U.S.C. § 284 ("in no event less than a reasonable royalty"). Here, Company P would like to assert that it is entitled to lost profits on the sales it would have made of cannabis products using the patented process.

To prove lost profits a court will typically apply the _Panduit_ test and require the patent holder to show: (1) demand for the patented product; (2) absence of acceptable non-infringing alternatives; (2) manufacturing and marketing capability to exploit the demand; and (4) the amount of profit it would have made. _Panduit Corp. v. Stahlin Bros Fibre Works., Inc._, 575 F.2d 1152, 1156 (6th Cir. 1978). Thus, Company P would need to establish that but for the infringement, Company P would have sold their marijuana products instead of Company D selling their hemp products; that there was market demand for the patented extraction process; no acceptable non-infringing alternatives; and capacity to meet the demand, along with of course the amount of profit it would have made. Here, however, the theory of damages is quite vulnerable as Company P could need to calculate its loss of profits based on sales of its illegal cannabis products. A court may be very reluctant to allow a plaintiff to put into evidence its loss of sales of federally illegal products. _Sensoria, LLC v. Kaweske_, 581 F. Supp. 3d 1243, 1258-1260 (D. Colo. 2022). Moreover, Company P will need to show that it could have supplied products that met the demand and had the capacity to grow and produce the products, as well as the distribution. This would require additional evidence of federally illegal activities as Company P would likely have to create a hypothetical but-for-world where it showed additional sales and profits from additional cannabis growth and sales. A court might not allow the damage theory to be predicated on such hypothetical illegal sales. Company P also may need to show that the markets for the market demand step are comparable -- but Company D will likely argue that the market for federally legal hemp products where the products can be legally sold and shipped to all 50 states is very different. It is difficult to predict where a district court would come out on these novel questions of law, but we believe there is considerable risk that the court would limit the ability of Company P to present a lost profits theory.

In that case, Company P would likely need to assert the other main basis for damages for patent infringement -- reasonable royalties as set forth in 35 U.S.C. § 284. This is normally calculated through a "hypothetical negotiation" using the 15 so-called _Georgia-Pacific_ factors. _Georgia-Pacific Corp., v. United States Plywood Corp._, 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970). Here, we have not gone through this analysis in great detail but will do so upon the Board's request.

In short, although there are 15 _Georgia-Pacific_ factors, courts often rely on the fifteenth factor, the amount that a licensor and licensee would have agreed upon at the time the infringement began if both had been reasonably and voluntarily trying to reach an agreement as the primary consideration. A district court will thus often focus on this hypothetical negotiation between the parties to a patent infringement dispute. The factors for experts' consideration include the royalties received by the patent owner for the licensing of the patent in the lawsuit, and the royalty rates paid by licensee in comparable licenses. In most cases, the analysis comes down to a determination of the comparability of the asserted patent to the patents in the license agreements. From these comparable licenses, a court will try to establish a reasonable royalty rate. This rate will then be multiplied by the royalty base, which is the revenue or units subject to the royalty, to calculate a reasonable royalty. Here, we have not been provided with any information on whether Company P has licensed out the patent or whether Company D has any licenses to similar technology as the patent-in-suit. Inquiry and further investigation should be made to determine this information so that a more thorough assessment can be done of potential reasonable royalty damages in case the lost profits theory is unsuccessful.

Generally, however, a lost profit award is more lucrative than a reasonable royalty award, which has been referred to as a minimum or floor to the damages available under the patent statute. 35 U.S.C. 284; _Aro Mfg. Co. v. Convertible Top Replacement Co._, 377 U.S. 476 (1964).

## C. RISK-MITIGATION STEPS TO BE CONSIDERED
Company P may want to consider taking some steps prior to asserting the patent, although many of them may be perceived as too late if done immediately prior to filing suit and only done to avoid obtaining a dismissal of the eventual patent infringement suit.

One option the company P should consider is whether to place the patent assets in a patent holding company -- a non-practicing entity. This could permit the lawsuit to be brought in the name of a separate entity that is not directly involved in violation of the CSA. The patent holding company would be a separate legal entity, typically a wholly owned subsidiary of Company P. We could provide for a robust license back of the patent rights and clear enforcement rights. The advantages of a patent holding company are numerous, including potential tax savings and shielding the patent holding company assets from product-related lawsuits. The separate entity can also make licensing easier, with less risk to IP assets. The patent holding company should consider attempting to license the patent to hemp producers before filing suit, which could establish a royalty rate baseline for damages and demonstrate good-faith licensing efforts, potentially strengthening the damages case (particularly if unable to obtain lost profits and need to resort to a reasonable royalty theory) and reducing public policy objections.

However, there are often negative implications to having patents in a patent holding company, including the inability to obtain lost profits (since the patentee can't show that they would have made sales but for the infringement) and inability to obtain injunctive relief (as the patentee is not practicing the invention). For example, since the decision in _eBay Inc. v. MercExchange, LLC_, 547 U.S. 388 (2006), it has been very difficult for a non-practicing entity to show that it would suffer irreparable harm since it does not even make or sell the products. Since the leadership of Company P has repeatedly stated that it would like to obtain lost profits, setting up a patent holding company would likely diminish the likelihood of achieving this objective.

Company P should also likely do their best to draft the complaint so that the focus on the complained-about activities and sales are not on products illegal under the Controlled Substances Act. However, since Company P is publicly known to extract cannabis that is federally illegal, this likely would have little effect on the ultimate outcome of the case.
## D. OTHER ISSUES
Injunctive relief is at the core of many patent infringement cases -- which is a matter of discretion in a court of equity. Courts may bar equitable relief such as injunctions under the unclean hands or illegality doctrine -- particularly if asserted by a party engaging in federally illegal conduct against a party that is not violating federal law. _Precision Instruments Mfg. Co. v. Automotive Maintenance Machinery Co._, 324 U.S. 806, 814 (1945). Here, these unclean hands or illegality doctrines may make it difficult for Company P to obtain the equitable relief of an injunction.

## E. CONCLUSION
There are considerable risks in moving forward with this patent infringement suit, even assuming that we have a high likelihood of success on the merits regarding patent infringement and validity. However, we feel that we are likely to survive a motion to dismiss even if there is a decent chance that Company P will not be able to obtain lost profit damages. We look forward to any questions you may have.

Author's notes on the task:
I worked in the cannabis space where this was an often-debated topic for lawyers in the space. There are many factors to consider and there were no cases directly on point. It is particularly interesting because party needs to go to federal court to enforce rights to protect a product that is federally illegal.

Why this scenario is realistic: 5/5: This task closely mirror the type of questions that the board of a company would ask in in-house positions in a cannabis company, although this is a bit more detailed than they would typically want.

What makes it difficult: 3/5: This is moderately difficult because there has not been clear caselaw guidance other than a recent case that I hadn't been aware of when started this prompt. There are many factors that go into the analysis of whether the doctrines would apply, particularly with respect to damages.

Reference materials: See citations in Golden Answer.

Scoring rubric:
rubric_category: Structure & Style Rubric
criterion: There at least 3 sentences under each heading.
justification: To ensure sufficient substance for each heading
rubric_category: Structure & Style Rubric
criterion: Response includes a Conclusion section.
justification: Important so reader can quickly see where the conclusion is being made.
rubric_category: Structure & Style Rubric
criterion: Includes heading that addressed to Board of Directors
justification: To make clear the audience
rubric_category: Structure & Style Rubric
criterion: Includes heading that states "Memorandum" or "Memo"
justification: To make clear that this is a memo
rubric_category: Structure & Style Rubric
criterion: Does the response fall within the 2,000-2,500 word range?
justification: The Board will not want a particularly lengthy memo
rubric_category: Structure & Style Rubric
criterion: Response includes at least three headings.
justification: Standard for memo to have at least three headings
rubric_category: Structure & Style Rubric
criterion: Responses uses transitions that explicitly connect analysis between issues (e.g., thus, however).
justification: Transitions make logic easier to follow
rubric_category: Substance Rubric - Explicit requirements
criterion: Response recognizes that cannabis is illegal under federal law
justification: Fundamental to issue presented here
rubric_category: Substance Rubric - Explicit requirements
criterion: Response recognizes that even if in state where marijuana is decriminalized, still illegal under federal law
justification: Fundament to issue presented here
rubric_category: Substance Rubric - Explicit requirements
criterion: Response dicusses illegality doctrine
justification: This is essence of this legal issue
rubric_category: Substance Rubric - Explicit requirements
criterion: Response recognizes that hemp with delta-9 THC content of less than 0.3% is legal.
justification: Fundamental to issue presented here
rubric_category: Substance Rubric - Implicit requirements
criterion: Response recognizes that courts often refuse to enforce plaintiffs claims in contract cases involving cannabis.
justification: Important examples on how to apply the illegality doctrine can be gleaned from these cases.
rubric_category: Sources and References Rubric
criterion: Response cites Controlled Substances Act aka 21 USC 802 et seq.
justification: Entire analysis is predicted on recognition that cannabis is federally illegal under this act
rubric_category: Sources and References Rubric
criterion: Response cites Gene Pool Technologies, Inc. v. Coastal Harvest, LLC., No. 5:21-01328-JWH (C.D. Cal.)
justification: Most important recent case on this issue
rubric_category: Sources and References Rubric
criterion: Response cites 35 USC 284
justification: Basis for damages under federal law
rubric_category: Sources and References Rubric
criterion: Response cites Panduit case -- Panduit Corp. v. Stahlin Bros Fibre Works., Inc., 575 F.2d 1152, 1156 (6th Cir. 1978)
justification: Essential case for lost profits in patent infringement
rubric_category: Sources and References Rubric
criterion: Response cites to The Florida, 101 US 37, 43 (1879)
justification: Important case for illegality doctrine
rubric_category: Substance Rubric - Implicit requirements
criterion: Response recognizes that courts often refuse to enforce plaintiffs claims in bankruptcy cases involving cannabis.
justification: Important examples on how to apply the illegality doctrine can be gleaned from these cases.
rubric_category: Substance Rubric - Legal correctness
criterion: Response recognizes that it is not a clear cut case as to whether can obtain lost profits damages.
justification: Recognizes that this is difficult part of the project
rubric_category: Negative Rubric
criterion: Response encourages shipment of cannabis products over state lines.
justification: This behavior is likely to lead to federal enforcement and put company at high risk
rubric_category: Negative Rubric
criterion: Response encourages lying or making untrue statements in banking documents
justification: This behavior is likely to lead to federal enforcement and put company at high risk
rubric_category: Substance Rubric - Reasoning quality
criterion: Response distinguishes or compares legality of hemp by Company D with illegality of cannabis by Company P
justification: Recognizes that Company D may be more willing to take illegality stance than a cannabis company
rubric_category: Sources and References Rubric
criterion: Response cites to Federal Rule of Civil Procedure 12 regarding dismissal.
justification: Likely basis for a motion to dismiss in Federal Court
rubric_category: Sources and References Rubric
criterion: Response cites United Cannabis Corp. v. Pure Hemp Collective, Inc., No. 18-cv-1922 (D. Col.)
justification: Relatively important background case -- one of first dealing with assertion of cannabis patents.
rubric_category: Substance Rubric - Implicit requirements
criterion: Response considers the step of placing patents in patent holding company to minimize risks or increase probability of success of Company P.
justification: Board will like to have some advice on how to reduce risk
rubric_category: Sources and References Rubric
criterion: Response cites to Georgia-Pacific Corp., v. United States Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970).
justification: This is foundational case regarding reasonable royalty damages.
rubric_category: Substance Rubric - Explicit requirements
criterion: Response applies the Panduit factors for determining if lost profits are available to a plaintiff in a patent case.
justification: Panduit is fundamental case for lost profits
rubric_category: Structure & Style Rubric
criterion: Response expresses conclusions using measured modal verbs or qualifiers (e.g., "likely", "appears to," "suggests that") instead of uncertain or absolute terms (e.g., "maybe," "could be anything," "definitely,").
rubric_category: Substance Rubric - Reasoning quality
criterion: Response section about lost profits discusses that court might not be willing to create a hypothetical market that includes illegal cannabis products.
rubric_category: Substance Rubric - Implicit requirements
criterion: Response discusses equitable relief and potential inability to obtain it due to illegality.
justification: Equitable relief is often the most important remedy in a patent case.
rubric_category: Substance Rubric - Explicit requirements
criterion: Response recognizes and analyzes that Company D is more likely to be file motions to dismiss or to limit damages based on illegality doctrine because they don't have any cannabis patents.
justification: Since this increases likelihood of D bringing these motions, we should recognize this.
rubric_category: Sources and References Rubric
criterion: Response cites to Lifted Limited, LLC v. Novelty, Inc., Civ. No. 16-cv-03135-PAB-GPG (D. Colo. Sept. 30, 2021)
justification: Important example of defense of illegality (for cannabis) being raised in design case but being denied.
rubric_category: Substance Rubric - Implicit requirements
criterion: Response provide suggestions on step of drafting complaint to de-emphasize products illegal under Controlled Substance Act to minimize risks or increase probability of success of Company
justification: Board will like to have some advice on how to reduce risk.
rubric_category: Substance Rubric - Explicit requirements
criterion: Response recognizes and analyzes the tension between federal government issuing cannabis-related inventions while simultaneously classifying cannabis as illegal under the Controlled Substances Act.
justification: This tension is important to recognize in a sophisticated discussion of cannabis illegality and patents.
rubric_category: Substance Rubric - Legal correctness
criterion: Recognizes that will be difficult to get lost profits damages.
rubric_category: Structure & Style Rubric
criterion: Response includes a summary (also sometimes called Executive Summary) at the beginning.
justification: Helpful tool for a reader of memo
rubric_category: Substance Rubric - Reasoning quality
criterion: Conclusions are supported by application of facts to the law.
rubric_category: Sources and References Rubric
criterion: Cites to Sensoria, LLC v. Kaweske, 581 F. Supp. 3d 1243, 1258-1260 (D. Colo. 2022)
justification: Leading recent federal case on illegality doctrine.
rubric_category: Negative Rubric
criterion: Response uses trademark law analysis.
justification: Trademark situation is completely different as trademarks are not issued on cannabis products.
rubric_category: Substance Rubric - Explicit requirements
criterion: Response recommends that P place patents in a patent holding company through corporate restructuring to reduce risk of illegality defense succeeding.
justification: Executives will want suggestions on how to reduce risk and this is one of the best ones.
rubric_category: Substance Rubric - Explicit requirements
criterion: Response recognizes and analyzes how federal bankruptcy courts have treated cannabis related-claims by, for example, refusing to administer cannabis assets, as an analogous illustration of a federal court's reluctance to aid federally illegal enterprises.
justification: Courts look to cannabis-related bankruptcy cases for analogies on how to handle patent cases dealing with cannabis-related patents.
rubric_category: Sources and References Rubric
criterion: Response cites to Burton v. Maney, 610 B.R. 633 (9th Cir. BAP 2020)
justification: Important case for bankruptcy proceedings relating to cannabis companies
rubric_category: Sources and References Rubric
criterion: Response cites to eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006)
justification: Leading case for injunctive relief

Peer review 1:
Overall quality: 4 - Above Standards
The statute citations are not in Bluebook format, and other citations do not include the year or have formatting errors; one quote from a case is not verbatim.
Representativeness: 3 - Somewhat Typical
Difficulty: 4 - Hard
It does not require senior-level expertise--it does require complex reasoning and review of several statutes and cases.
Task specification: Well-Specified

Peer review 2:
Overall quality: 4 - Above Standards
This is a realistic scenario with competing laws.
Representativeness: 5 - Core Activity
Difficulty: 4 - Hard
Requires familiarity with federal, state and patent laws as well as judgement to analyze a murky situation.
Task specification: Well-Specified