Patents Wars

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Patent Wars, archetypal to the technology and software sphere, is a legal fight between corporations or individuals to secure patents for litigation, whether offensively or defensively. Technology-driven transformation to the Reduced-Risk Products has ignited the Patent Wars in the Tobacco Industry, especially since 2018 – with no clear winner so far.

“Only lawyers win in patent wars: companies would be better off allocating their time and money on R&D instead of fighting patent wars”. Is this the ugly truth? We don’t know. But, here is a chronology of most recent events:  

Feburary 2024

BAT vs. PMI: BAT and PMI reached a global settlement that resolves all ongoing patent infringement litigation between the parties related to heated tobacco and vapour products. The settlement agreement is valid for a term of eight years from 1 Feburary 2024 and

– includes non-monetary provisions between the two companies

– encompasses all related injunctions and exclusion orders

– prevents future claims against current heated tobacco and vapour products

– allows each party to innovate and introduce product iterations.

With this settlement, PMI secures the launch of IQOS3 in the US in May 2024. For further details, visit the “IQOS USA” section. On the other side, BAT’s CEO [at the FY23 Results Release] explained the benefit of the settlement as: “…this reflects to the case against Vuse Alto in Virginia, USA and to a number of ongoing disputes (e.g. glo in Europe and Vuse in Germany)”. BAT also underlined the importance of the “freedom to innovate”and “peace of mind” offered by the settlement to focus on developing and accelerating the tobacco harm reduction agenda.

November 2023

NJOY (Altria) vs. Juul: Juul requested the US Patent and Trademark Office to cancel two NJOY e-cigarette patents1 at the center of an ongoing US International Trade Commission investigation that could block US imports of Juul devices. Juul challenges the validity of US Patent No.11,497,864 and US Patent No. 10,334,881 on the basis that most of their claims about the vaporizer modification were well-known & obvious and the prior art (three Chinese inventions) render these patents invalid.

PMI vs. R.J. Reynolds (BAT): More details are now available on PMI’s defeat (against RJ Reynolds) in federal appeals court2 – in another attempt to lift the US IQOS importation ban (See the September 2023 update below for the original note).

PMI argued that certain claims of the Reynolds patent were obvious in light of prior art (Hon [a Chinese patent] and Whittemore [a US patent]) and thus not patentable. Patent Trial and Appeal Board (PTAB) concluded that replacing Hon’s heating element with Whittemore’s wick and heating wire is not an obvious, simple substitution for a skilled artisan. PMI appealed (to the Federal Circuit), arguing that the PTAB’s decision was arbitrary and capricious. The Federal Circuit decided that substantial evidence supported the PTAB’s decision because PTAB reasonably relied on expert testimony and its own analysis of the Reynolds tear-down report on a product that implemented the Hon prior art.

Product tear-down (or, Bill of Materials) is a list of components, parts, modules, raw materials and their quantities required to build a product and is often used in patent infringement analysis.

PMI vs. BAT: Philip Morris International invalidates BAT’s European patent EP3367830 “Article for use with apparatus for heating smokable material” for obviousness over the prior art3. This patent discloses an induction heating source providing an alternating electromagnetic field which inductively heats a susceptor in thermal proximity with tobacco flavor medium to generate aerosols. The UK High Court also rejected BAT’s amendments to the patent claims and BAT’s counterclaims for infringement (of its patented innovation by IQOS ILUMA). However, the Court also dismissed PMI’s request for an Arrow declaration against several BAT patent applications, from the same patent family as EP 830 (currently pending review at the European Patent Office) – stating that PMI’s commercial interest in seeking an Arrow declaration is unclear. Arrow declaration is judgement that a product would have been obvious at the priority or filing date of a patent, and so could not be held to infringe a said patent.

September 2023

NJOY (Altria) vs. Juul: NJOY (Altria)’s effort to block US imports of Juul products advances4. The US International Trade Commission (ITC) launched an investigation based on NJOY’s patent-infringement complaint. NJOY alleges that Juul infringes US Patent No. 10,334,881 and US Patent No. 11,497,864. ITC investigations typically take 15-18 months, faster than district court cases.

PMI vs. R.J. Reynolds (BAT): PMI’s challenge to BAT Reynolds’ tobacco-containing smoking article patent (US Patent No. 9,901,123) is defeated in a federal appeals court5. US ITC’s IQOS importation ban is based on the infringement of the aforementioned patent.

August 2023

“The Empire Strikes Back”: Altria/NJOY filed a complaint against Juul Labs with the US ITC to to block the importation & sale of certain Juul device/pods6, claiming that these products infringe NJOY’s US Patent No. 11,497,864 and US Patent No. 10,334,881. NJOY acquired the aforementioned patents from Fuma during a patent infringement settlement.

NJOY also filed a complaint against Juul Labs in the US District Court for Delaware.

June 2023

Juul Labs requested the US International Trade Commission (ITC) to block the importation & sale of NJOY Ace (Altria)7, claiming that NJOY Ace infringes several Juul patents and noting that they have succeeded [with the ITC] in all three prior cases of counterfeit and unauthorized products.

Juul Labs also filed a complaint against NJOY in the US District Court for Arizona.

April 2023

A federal judge orders BAT to pay patent royalty to PMI8: 1.8% and 2.2% of net sales for infringing on a patent used in Vuse Alto and Solo G2, respectively. PMI’s request for a permanent injunction and significantly higher royalty (33.5% on Alto cartridges and 3.75% on Solo G2) were denied. The royalties will be enforced for the remaining life of the patents and are on top of jury awards in 2022 that totaled $10.9Mn for the Alto infringement and $3.2Mn for the Solo G2 infringement.

September 2022

BAT accuses PMI of infringing its patent for induction heating tech (IQOS Iluma vs. glo Hyper) used to heat up tobacco9. The IP dispute trial is opened in London.

BAT/Reynolds will pay Altria $95Mn in past damages for infringing three Altria patents in their Vuse Alto pod assembly design10. A royalty rate of 5.25% is used in calculating the past damages.

BAT/Reynolds gains legal victory in e-cigarette patent dispute against PMI11. The US Patent Office ruled that the 13 challenged claims (in PMI’s “556” patent) are not patentable. The “556” patent is related to cartridge design for an aerosol-generating system. BAT/Reynolds’ allegations were based on “obviousness”. This patent claim dispute is one of the several lawsuits involving BAT and either Altria or PMI.

August 2022

Altria claims that BAT/Reynolds stole its e-cigarette design12. BAT is said to:

– Copy three Altria patents for a pod-style vape without paying a royalty

– Buy the vape concept from a Chinese company and re-brand the device as its own.

PMI to receive $14Mn from BAT as e-vapor patent-infringement award13:

– Judge increased the award to include prejudgment interest and supplemental damages

– Vuse Solo G2 and Alto face possible injunction or ongoing royalty

July 2022

PMI knocks out parts of BAT/Reynolds patent14: PMI convinced an administrative tribunal to invalidate the two claims in a BAT patent for “a tobacco-containing, electrical smoking article” designed to burn a minimal amount of tobacco.

June 2022

The UK High Court rejected PMI’s request for a stay in patent proceedings concerning BAT15. Earlier, in March 2021, the High Court revoked 2 BAT e-cigarette patents for obviousness; that is to say, no inventive step over an existing PMI patent.

·BAT/Reynolds faces $14Mn in damages for infringing PMI patents16. The infringed patents: (1) a compact heater designed to increase vaporization efficiency; (2) a leakage preventing mechanism for the e-cigarette liquid.

May 2022

Judge compromises in twin IP lawsuits17

– Ruled in favor of PMI in one case and allowed PMI to apply for declaratory relief

– Ruled in favor of BAT in the other case and granted BAT an early trial date.

November 2021

IQOS imports are barred from the US after the 60-day deadline passed without any action by the Biden Administration18 to overturn the ITC’s order (banning the IQOS imports due to patent infringement).

September 2021

The US International Trade Commission (ITC) barred PM and Altria from importing and selling IQOS in the US19. The decision is the result of a patent case filed by BAT/Reynolds. The trade agency found that IQOS infringed on two of Reynolds’ patents. The import and sales ban will take effect in two months after an administrative review.

References:

  1. Juul Moves to Axe Two NJoy E-Cigarette Patents Amid ITC Probes (bloomberglaw.com) ↩︎
  2. https://www.lexology.com/library/detail.aspx?g=059cbcd8-9a75-416c-b9ca-377dab0dd89d ↩︎
  3. https://www.juve-patent.com/cases/philip-morris-invalidates-bat-patent-but-uk-court-denies-arrow-declaration/ ↩︎
  4. Altria Unit NJoy’s Case Over Juul’s E-Cigarettes Gets ITC Probe (bloomberglaw.com) ↩︎
  5. https://news.bloomberglaw.com/ip-law/philip-morris-challenge-to-vape-patent-extinguished-on-appeal ↩︎
  6. https://investor.altria.com/press-releases/news-details/2023/Altria-Seeks-Importation-Ban-of-JUUL-E-Vapor-Products-Files-Patent-Infringement-Actions-Against-JUUL-Labs/default.aspx ↩︎
  7. https://www.juullabs.com/itc-az ↩︎
  8. https://journalnow.com/business/local/federal-judge-orders-reynolds-vapor-to-pay-e-cigarette-patent-penalties-to-rival-pmi/article_9e0b1132-d567-11ed-8e51-874c0af1fdcf.html ↩︎
  9. https://law360.com/articles/1532590/bat-accuses-philip-morris-of-infringing-e-cig-ip-at-trial ↩︎
  10. https://investor.altria.com/press-releases/news-details/2022/Jury-Finds-that-Reynolds-Vapor-Companys-Vuse-Alto-Infringes-Altria-Patents/default.aspx ↩︎
  11. https://journalnow.com/business/local/reynolds-gains-legal-victory-in-e-cigarette-patent-dispute/article_471c821a-337e-11ed-962b-1f1607b31d2b.html ↩︎
  12. https://law360.com/articles/1525547/rj-reynolds-stole-design-for-blockbuster-vape-jury-hears ↩︎
  13. https://news.bloomberglaw.com/ip-law/philip-morris-gets-14-million-from-reynolds-on-e-vapor-patents ↩︎
  14. https://news.bloomberglaw.com/ip-law/philip-morris-knocks-out-parts-of-vape-patent-at-board ↩︎
  15. https://worldipreview.com/news/court-refuses-philip-morris-bid-to-stay-british-american-tobacco-dispute-22419 ↩︎
  16. https://journalnow.com/business/local/reynolds-vapor-faces-10-7-million-in-patent-infringement-damages/article_62aab6f6-ecec-11ec-a48b-cf5cf2f28b7f.html ↩︎
  17. https://law360.com/articles/1497827/judge-compromises-with-philip-morris-bat-in-twin-ip-suits ↩︎
  18. https://bloomberg.com/news/articles/2021-11-29/philip-morris-iqos-imports-barred-from-u-s-as-deadline-passes ↩︎
  19. https://www.cnbc.com/2021/09/30/philip-morris-altria-banned-from-selling-iqos-tobacco-device-in-the-us.html ↩︎

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