Category: Litigation

Smoore Secures Judgment Against Counterfeiters

Photo: Shenzhen Smoore Technology
A New York federal judge recently granted Shenzhen Smoore Technology a $5.4 million default judgment and permanent injunction against more than 100 defendants accused of selling Vaporesso and Smoore’s self-branded counterfeit goods.
The default judgment is for $50,000 dollars per defendant and transfers to Smoore the frozen assets of the defaulting defendants. Smoore filed the complaint in October alleging trademark counterfeiting and infringement against defendants located in China but conducting business in the U.S. and other countries by means of their merchant storefronts on some online marketplace platforms. In the same lawsuits, Smoore settled with a significant number of defendant sellers who paid compensation for infringement and cooperated to identify their sources of supply of counterfeit products.
According to Smoore the ruling demonstrates the company’s determination to protect its intellectual property rights in the United States. “It is meaningful for protecting the development of the whole industry toward a healthy direction and providing safe and reliable vaping products for individual customers,” Smoore wrote in a statement.
Smoore has undertaken the lawsuits as part of an overall anti-counterfeiting program in the United States and elsewhere that includes cooperation with customs to seize counterfeit products and local police to arrest owners of and shut down counterfeit operations.
In the United States, Smoore is represented by the law firm Epstein Drangel, which has considerable experience in implementing and overseeing such anti-counterfeiting programs. Smoore says it plans to enforce the default judgment to collect compensation.
September 16, 2020
Fita Drops Appeal in Tobacco Ban Dispute

Photo: David Carillet – Dreamstime.com
The Fair-Trade Independent Tobacco Association (Fita) has dropped its bid to appeal an earlier court ruling that upheld South Africa’s temporary ban on tobacco sales.
In a statement issued on Wednesday, Fita chairman Sinenhlanhla Mnguni said the association will withdraw its pending appeal before the Supreme Court of Appeal in Bloemfontein.
The move comes after Minister of Co-operative Governance and Traditional Affairs Nkosazana Dlamini-Zuma promised to consult the public should she at any stage seek to reinstate a temporary prohibition of the sale of tobacco and related products.
Fita had criticized the government for not seeking public input when it banned tobacco sales on March 27 as part of its coronavirus lockdown. South Africa lifted its ban mid-August, but the legal action was not immediately halted.
Both parties agreed to pay their own legal expenses incurred during the tobacco ban litigation.
August 27, 2020
Juul Campaigns Against Counterfeit Products

Photo: Juul
Over the coming weeks, Juul Labs will be filing trademark infringement lawsuits against approximately 20 retailers that the company has identified as some of the worst offenders in the United States.
According to Juul Labs, the defendants targeted in these cases are retail outlets that refused to stop selling counterfeit Juul products even after Juul Labs verified their illicit activities, demanded they stop, and served them with cease and desist notices.
Juul Labs has already filed six trademark infringement actions in several states across the U.S. as part of its global enforcement program directed at disrupting the illicit trade of black-market vapor products.
According to Juul, such products circumvent federal and state laws, can present additional health and safety risks to adult consumers, and undercut underage-prevention measures.
“Through robust enforcement, Juul Labs aims to help create a more responsible marketplace for current adult users while addressing underage use,” the company wrote in a statement.

August 19, 2020
PMI Pays Fine in Anti-Competition Case

Photo: Taco Tuinstra
Philip Morris International (PMI) has paid a UAH1.18 billion ($66.07 million) fine imposed by the Antimonopoly Committee of Ukraine (AMCU), reports Interfax-Ukraine.
In October 2019, the AMCU imposed a UAH6.5 billion fine on four international tobacco companies and their local distributor, Tedis Ukraine, for alleged anti-competitive behavior. The agency said the country’s leading tobacco companies and their common distributor, TEDIS, had conspired to keep new businesses from entering the market. However, critics said the AMCU helped bring about the current situation by permitting Tedis Ukraine to acquire several key distribution companies.
The companies appealed the decision at the Economic Court in Kiev but lost. Last week, the American Chamber of Commerce (ACC) in Ukraine expressed concern about the fairness of the trial, saying the defendants had not been given full access to the evidence on which the AMCU based its allegations.
The ACC cautioned that the international publicity associated with the case could negatively impact Ukraine’s image among foreign investors.
Since 1994, PMI has invested more than $370 million in the production and distribution of cigarettes and commercialization of reduced-risk products in Ukraine.
In 2016, Ukraine became the seventh market where PMI launched sales of IQOS tobacco-heating systems. The company employs more than 1,300 people in Ukraine.
August 18, 2020
South Africa Lifts Tobacco Ban

Photo: David Carillet – Dreamstime.com
Consumers will be able to legally purchase tobacco products in South Africa again this week, President Cyril Ramaphosa announced on Saturday.

Sales of tobacco products and alcohol have been banned since March 27 as part of a nationwide lockdown to stem spread of the coronavirus. Alcohol sales were prohibited to ease pressure on hospitals, allowing doctors in emergency wards to focus on Covid-19 rather than road accidents and other alcohol-related injuries. Tobacco products were restricted because of the health impacts of smoking as well as the risk of contamination between people sharing cigarettes.

Despite the announcement, the Fair-Trade Independent Tobacco Association (Fita), which represents seven local cigarette makers, said it would continue its legal challenge of the ban. The organization wants to prevent the government from being able to reinstate the tobacco product ban should cases of Covid-19 spike again.

Another reason for Fita to continue the case is cost. The organization’s legal challenge was initially dismissed by the High Court, but on Saturday the Supreme Court of Appeal (SCA) granted Fita permission to appeal that ruling. In its decision, the SCA temporarily set aside the costs order currently against Fita. Should Fita discontinue the case, the costs order would be reinstated, leaving the association liable for millions in legal fees.

South Africa’s tobacco sales ban has been controversial. Tobacco product manufacturers have questioned the science behind the measure, arguing that a short-term ban on a product whose health risks become evident only in the long run makes no sense. They also questioned the rationale of the argument around cigarette sharing. Tobacco shortages and high prices of black market cigarettes would only increase the likelihood of smokers sharing their “stompies,” the tobacco companies said.

A separate challenge mounted by British American Tobacco’s (BATSA) hinges on the ban’s unconstitutionality. Lawyers for the company told the Western Cape High Court that the harm caused by the ban far outweighs the benefits to the public health system. BATSA advocate Alfred Cockrell argued that the ban violates the rights of consumers and the right to free trade. He also questioned the argument that smoking could result in a severe form of Covid-19.

Fita says the ban has devastated South Africa’s tobacco sector. The association is reportedly considering seeking reparations for the millions of rand of income lost by tobacco traders during the lockdown.

Cooperative Governance and Traditional Affairs Minister Nkosazana Dlamini-Zuma accused the cigarette industry players of being motivated purely by its financial interests.
August 17, 2020
U.S. Speaks up for Tobacco Investors

Photo: Taco Tuinstra
The American Chamber of Commerce (ACC) in Ukraine is concerned about the treatment of foreign investors in Ukraine in a dispute involving tobacco companies.
Recently, the Antimonopoly Committee of Ukraine (AMCU) fined British American Tobacco Ukraine, JTI Ukraine, Imperial Tobacco Ukraine, Philip Morris Ukraine and their distributors for alleged anticompetitive behavior.
The tobacco firms are currently appealing the decision in court but have expressed concern about the trial because they did not have full access to the evidence on which the AMCU based its allegations.
Two international tobacco companies have already submitted notifications to Ukraine to defend their rights as foreign investors in arbitration. Another two companies are considering submitting such notifications soon.
In the absence of a prompt solution to this issue through negotiations with Ukraine’s state authorities, these disputes will be considered by international bodies for resolving investment disputes, and the party to the dispute will no longer be the AMCU, but Ukraine, according to the ACC.
The ACC has cautioned that such disputes usually gain international publicity and can have a negative impact on Ukraine’s image among foreign investors.
“The American Chamber of Commerce in Ukraine urges Ukraine’s government to respond appropriately to the notice of the investment dispute with the state of Ukraine initiated by international investors from the USA, Great Britain, Switzerland and the Netherlands regarding the AMCU decision and to impartially consider the issue in compliance with Ukrainian legislation and international agreements,” the ACC wrote in a statement.
“A quick, transparent, and fair resolution of the situation will help to maintain business relations between strategic investors and the state, not to damage Ukraine’s image and investment climate, and avoid losses to the state budget.”
August 14, 2020
Eonsmoke Censured for Illegal Sales

Image: Eonsmoke
The Arizona Attorney General’s Office (AGO) obtained a $22.5 million judgment and a permanent injunction against vapor product manufacturer Eonsmoke.

In October 2019, the U.S. Food and Drug Administration (FDA) informed Eonsmoke that it was manufacturing and selling 96 products that did not receive proper FDA approval. Illegal Eonsmoke products, however, continued to be available for sale in retail locations and online to Arizona consumers, according to the AGO. What’s more, Eonsmoke engaged in marketing tactics that targeted underage consumers in Arizona, the agency said.

The AGO filed a consumer fraud lawsuit in January 2020 to stop Eonsmoke from selling illegal vapor products and targeting youth in Arizona.

In February 2020, the Superior Court granted the state’s preliminary injunction request, ordering Eonsmoke to immediately cease the sales of illegal vapor products. On July 27, 2020, the court issued its final judgment against Eonsmoke.

“Eonsmoke is being held accountable for its unlawful conduct in Arizona, including marketing flavored vaping pods to children,” said Arizona Attorney General Mark Brnovich. “If you are an Arizona retailer and have Eonsmoke products on your shelves, they are illegal. This final judgment includes comprehensive injunctive relief, and our office will continue to monitor Eonsmoke’s presence in Arizona and ensure its compliance with all state and federal laws.”

August 10, 2020
Juul Takes Legal Action Against Resellers

Photo: Juul Labs
Juul Labs and its Canadian affiliate, Juul Labs Canada, have filed litigation against a global network of entities and individuals that illegally sourced and resold authentic Juul pods and devices worldwide.
Among the main targets of its legal action are the purveyors of the PodVapes and PodMaster websites, entities based in Canada that acquired Juul products from the U.K., Canada and the U.S. to ship all over the world.
PodVapes, for example, acquired authentic Juul pods from Canada and the U.K. in nontobacco and nonmenthol flavors and shipped them into various states in the U.S. to be illegally resold, according to Juul Labs.
“Through investigations, we have confirmed that PodVapes actively sells diverted Juul pod packs into the U.S.,” Juul Labs wrote in a statement. “PodVapes also shipped Juul devices that were explicitly developed for non-U.S. markets into the U.S. in violation of FDA laws and regulations.”
Juul Labs says evidence of this illicit activity first started to emerge in February 2019. While sales of diverted products were first noticed in the markets of New Zealand and Australia by websites facing those countries, the sales quickly spread to websites facing the U.K. and U.S. and, most recently, Canada.
“As Juul Labs continues to reset the category, it is imperative that the company acts as a responsible partner to regulators and other stakeholders around the world, wherever our products are sold,” Juul Labs stated. “We are committed to aggressively going after bad actors in the vapor category and helping to ensure a responsible marketplace for adult smokers seeking legal alternatives to combustible cigarettes.”
August 6, 2020
RJR Remains Liable for Litigation Payments

A Florida state appeals court ruled that R.J. Reynolds (RJR) owes the state $100 million from a 1997 settlement.
RJR argues that it should not have to make payments for the Salem, Winston, Kool and Maverick brands as RJR sold those brands to ITG Brands in 2015.
“We find, simply put, that a contract is a contract and that Reynolds continues to be liable under the contract it signed with the state of Florida,” said the court’s decision, written by Chief Judge Spencer Levine.
“The FSA (Florida Settlement Agreement) required that Reynolds make annual payments to the state of Florida in perpetuity, with no condition of termination, in exchange for the release of liability for past and future medical costs incurred by the state of Florida,” Levine wrote.
July 30, 2020
Puff Bar Sued for Online Vape Sales

Massachusetts Attorney General Maura Healey is suing Puff Bar, alongside Cool Clouds Distribution, for allegedly selling its flavored vapor products online. The company is also being accused of failing to protect against delivery of their products to minors, in violation of state law, according to the suit.
The complaint filed in Suffolk Superior Court on Wednesday also seeks a preliminary injunction to prevent Puff Bar and its distributor from selling its products in Massachusetts while the lawsuit is ongoing. Puff Bar has already suspended all US sales of its products.
Last November, Massachusetts became the first state in the country to ban the sale of flavored vapor and tobacco products. The law also banned the sale of all menthol flavored tobacco products.
Much remains unknown about Puff Bar. For example, it is unclear who owns the company, according to FairWarning. A document filed with the California Secretary of State lists Patrick Beltran as the chief financial officer and Nick Minas as the CEO, but both men have stated that despite their titles, they are in charge only of running the company’s website.
“These products are dangerous, addictive and particularly appealing to young people, which is why Massachusetts moved quickly to regulate them. Companies that blatantly violate these laws will face legal action from my office,” Healey said in a statement.
July 17, 2020