Judge Lowers Royalty Payments in Alto Case

A U.S. federal judge in North Carolina lowered the rate of ongoing royalties R.J. Reynolds Vapor Co. will have to pay to Altria Client Services in an intellectual property dispute involving RJR’s Vuse Alto e-cigarette, reports Law360.

In September 2022, the U.S. District Court for the Middle District of North Carolina awarded Altria Client Services more than $95 million after finding that Reynolds Vapor Co.’s Vuse Alto e-vapor product infringed three Altria patents.

In his Jan. 27 opinion, U.S. District Judge N. Carlton Tilley Jr. ruled that continuing royalties on Vuse Alto are justified but not at double the rate decided by the jury.

The opinion lowers Altria’s requested rate for ongoing royalties from 10.5 percent to 5.25 percent, which Reynolds will have to pay quarterly until the last of Altria’s patents expire on April 22, 2035.

“Altria has not shown that the pod patents’ contribution to the Alto’s performance since May 2019 justifies increasing the jury’s royalty rate of 5.25 percent,” Judge Tilley wrote.

Earlier this month, Judge Tilley denied Reynolds a new trial in the Vuse Alto dispute.

Reynolds Vapor Co. has requested a new trial, stating that “Altria’s improper injection of inflammatory evidence regarding patent infringement allegations against Reynolds in other cases denied Reynolds a fair trial.”