Category: Intellectual Property

  • Judge Lowers Royalty Payments in Alto Case

    Judge Lowers Royalty Payments in Alto Case

    Photo: RJRVC

    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.”

  • Pouch Trade Secrets Dispute Settled

    Pouch Trade Secrets Dispute Settled

    Photo: Andrii

    Kretek International, Modoral and Swedish Match have settled a legal dispute relating to nicotine pouch trade secrets, reports Law360.

    In 2020, Swedish Match alleged that Kretek and its subsidiary Dryft Sciences, as well as Modoral, misappropriated six trade secrets concerning the manufacturing and formulation of nicotine pouches.

    The defendants all denied Swedish Match’s claims and said they don’t owe the company any damages.

    Swedish Match sells nicotine pouch products under the name Zyn based on U.S. Patent No. 9,161,908 and trade secrets that it bought from Swedish nicotine company TillCe. According to Swedish Match, one of TillCe’s affiliates in 2016 breached its agreements with Swedish Match by selling the trade secrets to Kretek, which formed Dryft Sciences to sell products in competition with Swedish Match.

    Kretek then formed Dryft Sciences to sell products that misappropriated Swedish Match’s trade secrets, the complaint states.

    In November 2020, BAT—which owns Modoral’s parent company Reynolds American—bought Dryft Sciences’ nicotine pouch business and its product line.

    After Swedish Match informed BAT that it owned the U.S. patent and other trade secret information, Modoral filed a declaratory judgment action for noninfringement and also sought invalidity of the patent as well as for no misappropriation of Swedish Match’s trade secrets, the complaint states.

    On Jan. 19, U.S. District Judge Stanley Blumenfeld Jr. entered partial judgment in favor of Modoral, finding that Swedish Match couldn’t establish that Modoral’s accused product infringed any of the asserted claims of the patent.

    In their trial briefs filed earlier this month, Modoral and Kretek both argued that Swedish Match can’t sustain its trade secret misappropriation claims because its alleged trade secrets aren’t actually secret.

  • Reynolds Vapor Denied New Trial in Vuse Case

    Reynolds Vapor Denied New Trial in Vuse Case

    Photo: md3d

    R.J. Reynolds Vapor Co. was denied a new trial in its Vuse Alto intellectual property dispute with Altria Group, according to Bloomberg Law.

    In September, a jury in 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.

    Following its loss, Reynolds Vapor Co. 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.”

    Judge N. Carlton Tilley Jr. disagreed. “That the jury did not agree with” Reynolds “does not mean the trial was unfair,” he wrote in an opinion issued Jan. 12 in the U.S. District Court for the Middle District of North Carolina. 

    Tilley also denied Reynolds’ motion to reduce the damages jurors awarded to Altria Client Services in their Sept. 7 verdict.

    “This was a fair trial,” Altria said in a statement. “There is no basis for another trial, and we are pleased that the jury correctly found that Reynolds Vapor has infringed a number of our patents.”

    At issue in this case were three patents awarded to Altria Client Services by the U.S. Patent and Trademark Office based on filings dating back to April 2015. The jury found that Reynolds Vapor violated Altria’s patents covering the pod assembly used in Vuse Alto.

  • Tobacco Among Fastest Growing Technologies

    Tobacco Among Fastest Growing Technologies

    Photo: Imperial Brands

    Tobacco-related products were among the 10 fastest-growing technologies in 2022 when measured by the number of U.S. patents issued, according to IFI Claims Patent Services.

    Philip Morris International, which is in the process of replacing its combustible cigarette business with less harmful smoking alternatives, was the most prolific claimant in the tobacco business, filing 1,364 cigarette patent applications in 2022.

    South Korean electronics titan Samsung took the top spot from longtime leader IBM. Following Samsung and IBM, the top 10 patent earners were Taiwan Semiconductor, Huawei Technologies, Canon, LG Electronics, Qualcomm, Intel, Apple and Toyota Motor.

    Technology related to autonomous vehicles ascended to the No. 1 spot among IFI’s Fastest-Growing Technologies list last year. While “Computing Based on Biological Models” dropped to No. 4 from its perch at No. 1 last year, artificial intelligence research has pervaded multiple patent categories, including earth drilling, quantum computers and machine learning.

    Rounding out the top fastest-growing technologies were “Electrical Digital Data Processing,” with a compound annual growth rate (CAGR) of 33.9 percent; “Special Features Related to Earth Drilling Including AI and Simulation Models” (CAGR of 32.5 percent); “Computing Based on Biological Models” (CAGR of 32.1 percent); and “Electrically Operated Smoking Devices” (CAGR of 31.3 percent).

    “Cigars, Cigarettes” registered a CAGR of 28.3 percent.

  • Cabbacis Patents Low-Nicotine Pods in Canada

    Cabbacis Patents Low-Nicotine Pods in Canada

    A U.S. federally licensed tobacco product manufacturer focused on harm reduction products announced today that the Canadian Intellectual Property Office (CIPO) has issued patents for its pods comprising blends of very low-nicotine tobacco and hemp for use with electronic nicotine-delivery systems (ENDS).

    Canadian Patent No. 3,151,047 was issued to Cabbacis and includes 27 claims which will expire on September 10, 2040. Earlier in 2022, CIPO also issued Patent No. 3,107,796 to Cabbacis for cigarettes comprising blends of very-low-nicotine tobacco and hemp.

    “I am pleased that both types of our products are now patented in Canada, which is one of our early target countries for commercialization,” said Joseph Pandolfino, founder and president of Cabbacis.

    Credit: Feng Yu

    Primary applications of the company’s very low-nicotine cigarettes and vaping pods in development comprising blends of very low-nicotine tobacco and hemp are to assist smokers of conventional cigarettes to smoke less, transition to less harmful tobacco or nicotine products or quit nicotine use altogether, according to a press release.

    Cabbacis’ patent portfolio includes 25 issued patents and various pending patent applications across the United States, Europe, China, Japan, South Korea, Canada, Australia, New Zealand, Mexico, Brazil and other countries. The company holds six U.S. patents.

  • Reynolds Requests Retrial of Vuse IP Case

    Reynolds Requests Retrial of Vuse IP Case

    Image: inimalGraphic

    R.J. Reynolds Vapor Co. has asked for a new trial after a U.S. District Court awarded rival Altria Client Services $95.23 million in damages related to an e-cigarette intellectual property dispute, reports the Winston-Salem Journal.

    In early September, a federal jury determined that Reynolds Vapor’s Vuse Alto product infringes on three Altria patents.

    In its retrial request, Reynolds Vapor stated that “Altria’s improper injection of inflammatory evidence regarding patent infringement allegations against Reynolds in other cases denied Reynolds a fair trial. Erroneous evidentiary rulings also prejudiced Reynolds’ ability to present its defense. Those errors independently, and under the cumulative error doctrine, affected the verdict such that a complete new trial is required.”

    Altria said in a statement that “this was a fair trial. There is no basis for another trial, and we are pleased that the jury correctly found that Reynolds Vapor has infringed a number of our patents.”

    The complaint concerns three patents awarded to Altria Client Services by the U.S. Patent and Trademark Office based on filings in April 2015.

    Altria alleged Reynolds Vapor violated Altria’s patents covering the pod assembly used in Vuse Alto.

    Reynolds believes the lawsuit was filed in retaliation for patent infringement complaints filed by Reynolds in April 2020 for infringement by Philip Morris International’s IQOS tobacco-heating device of six Reynolds patents.

    Until recently, Altria was the exclusive U.S. distributor for IQOS in the United States.

    On Sept. 29, 2021, the U.S. International Trade Commission upheld an initial determination from May 2021 that Philip Morris International’s IQOS device infringes on two patents owned by Reynolds. The ruling barred Altria Group from importing IQOS products into the U.S.

  • PMI Acquires U.S. IQOS Rights From Altria

    PMI Acquires U.S. IQOS Rights From Altria

    Photo: kalinichenkod

    Philip Morris International will pay Altria Group approximately $2.7 billion for the exclusive U.S. commercialization rights to the IQOS tobacco-heating system effective April 20, 2024.

    “We remain committed to creating long-term value through our vision,” said Altria CEO Billy Gifford in a statement. “We believe that this agreement provides us with fair compensation and greater flexibility to allocate resources toward ‘moving beyond smoking.’”

    In 2013, Altria entered into a series of agreements with PMI related to innovative tobacco products, which included exclusive U.S. commercialization rights of Altria subsidiary Philip Morris USA to the IQOS system. PM USA’s commercialization rights were subject to an initial five-year term, which began when the system received authorization from the U.S. Food and Drug Administration in April 2019 and continued through April 2024.

    As part of the 2013 agreement, PM USA had the right to maintain exclusive U.S. commercialization rights upon achieving an initial milestone by April 2022. Upon achieving additional milestones, PM USA had the option to renew for an additional five-year term through April 2029.

    While Altria believed it achieved the required milestones, PMI disagreed. The parties were unable to reach a long-term agreement and decided to enter into the agreement to transition and ultimately conclude their relationship.

    Altria received $1 billion from PMI upon entry into the agreement. Under the terms of the deal, PMI is obligated to make an additional payment of $1.7 billion (plus interest) by July 2023 for a total cash payment of approximately $2.7 billion (pre-tax). Altria expects to use the cash proceeds for several items, which may include investments in pursuit of its vision, debt repayment, share repurchases and general corporate purposes. Share repurchases, Altria said, depend on marketplace conditions and other factors and remain subject to the discretion of its board of directors.

    Altria expects to record the $2.7 billion pre-tax transaction amount as a deferred gain on its consolidated balance sheet in the fourth quarter of 2022. This gain will be recognized in earnings when the company assigns its rights to the IQOS system.

    IQOS and Marlboro HeatSticks are currently unavailable for sale in the U.S. due to orders imposed by the U.S. International Trade Commission that prohibit importation of IQOS and Marlboro HeatSticks into the U.S. relating to a patent dispute. PMI remains responsible for manufacturing the IQOS system and Marlboro HeatSticks and targets resumption of product supply in the first half of 2023. If supply of FDA-authorized product is available to Altria before May 2024, PM USA has the option to reintroduce the IQOS system and Marlboro HeatSticks for sale in the U.S. On April 30, 2024, U.S. commercialization rights to the IQOS system will transition to PMI. PMI will not have access to the Marlboro brand name or other brand assets, as PM USA owns the Marlboro trademark in the U.S.

    In a press note announcing the IQOS transition, Altria said it remains committed to its vision to responsibly lead the transition of adult smokers to a smoke-free future. “We believe in a portfolio approach to tobacco harm reduction and expect to compete in the major smoke-free categories. We have reinvested into our internal product development system, and we expect to finalize designs for two smoke-free products, including a heated-tobacco product, by the end of 2022,” the company wrote.

    “We are ready to invest behind IQOS to bring it to market at scale across the U.S., leveraging the proven capabilities of our outstanding commercial engine.”

    Jacek Olczak, CEO, PMI

    PMI, meanwhile, hailed the deal as a historic milestone in its journey toward a smoke-free future. “This agreement gives PMI full U.S. commercialization rights to IQOS within approximately 18 months and provides a clear path to fulfilling the product’s full potential in the world’s largest smoke-free market, leveraging PMI’s full strategic and financial commitment to IQOS’ success,” said PMI CEO Jacek Olczak in a statement. “The agreement also avoids what could have been an uncertain and protracted legal process that would have severely hindered the fast deployment of IQOS in the U.S.”

    PMI views IQOS as a substantial growth opportunity in the U.S. smoke-free market, whose retail value represents around 60 percent of that for the rest of the world, excluding China. “The U.S. opportunity for IQOS is particularly significant given the clear demand from American adult smokers for credible smoke-free alternatives to cigarettes and the limited success to date of current offerings to fully switch adult smokers away from cigarettes. Furthermore, in the U.S., there are ample opportunities to build adult smoker awareness and understanding of smoke-free products, something that is particularly true for IQOS given its modified-risk tobacco product (MRTP) authorizations,” the company wrote in a press note.

    “We are ready to invest behind IQOS to bring it to market at scale across the U.S., leveraging the proven capabilities of our outstanding commercial engine, which we will deploy domestically during the transition period to April 30, 2024,” said Olczak. “The route to market is clear given the well-established distribution and retail channels in the U.S., and we are well prepared to proceed autonomously to develop IQOS and the rest of our smoke-free portfolio should the offer for Swedish Match fail.”

    PMI says it is already well advanced in its plans for the commercialization of IQOS in the U.S., as it prepares for domestic manufacturing, important regulatory submissions—including premarket tobacco product applications (PMTAs) for ILUMA in the second half of 2023—as well as the development of U.S. sales, distribution, retail, consumer engagement and support capabilities over the next 18 months.

    “Our commercial plans include full-scale launches in key cities and regions with rapid progression to a national presence, and we believe that IQOS heat-not-burn products could account for around 10 percent of total U.S. cigarette and heated-tobacco unit volume by 2030,” said Olczak. “We estimate the industry profit pool for the U.S. at over $20 billion in 2021, underpinned by superior per-unit margin compared to PMI’s international market average. We see an accelerated path to profitability with an attractive payback period enhanced by the absence of a PMI domestic combustible tobacco business.”

    Olczak said PMI looks forward to replicating its international success in switching adults who would otherwise continue to smoke to better alternatives. “According to 2022 U.S. Centers for Disease Control and Prevention (CDC) data, the U.S. is home to around 31 million adult smokers, and I believe that IQOS—the only inhalable smoke-free nicotine product to have received an MRTP authorization from the U.S. Food and Drug Administration and thus be recognized as appropriate for the [protection] of public health—can play a meaningful role in further reducing smoking rates,” he said.

  • Reynolds Hit with $95 Million Verdict in Vapor Patent Dispute

    Reynolds Hit with $95 Million Verdict in Vapor Patent Dispute

    Photo: New Africa

    A jury in 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.

    The jury awarded $95.23 million in past damages through June 30, 2022. Post-trial proceedings will address ongoing damages through the expiration of Altria’s patents in 2035. At trial, Altria urged the jury to find a royalty rate of 5.25 percent, which the jury accepted in returning its award of past damages.

    “Patents are at the core of innovation, and we take very seriously protecting our intellectual property,” said Murray Garnick, executive vice president and general counsel of Altria, in a statement. “We are pleased that the jury recognized the importance of Altria’s innovation and the value of its patent rights.”

    At issue in this case were three patents awarded to Altria Client Services by the U.S. Patent and Trademark Office based on filings dating back to April 2015. The jury found that Reynolds Vapor violated Altria’s patents covering the pod assembly used in Vuse Alto.

    The case is Altria Client Services vs. Reynolds Vapor Company et al.

  • Judge Boosts PM’s Infringement Award

    Judge Boosts PM’s Infringement Award

    Photo: New Africa

    R.J. Reynolds Vapor Co. owes Philip Morris Products more than $14 million after a federal judge on Aug. 17 increased a jury’s June patent-infringement award over vapor products to include prejudgment interest and supplemental damages, reports Bloomberg Law.

    Judge Leonie M. Brinkema amended the judgment entered June 15 in the U.S. District Court for the Eastern District of Virginia to reflect a total judgment amount of $10.9 million for infringement of one patent and $3.16 million for infringement of another.

    In its June 15 judgement, the jury found that RJR’s Vuse Solo and Alto devices infringe two Philip Morris patents covering parts of a vaping device for heating substances and preventing leaks. At the same time, the jury cleared Vuse Alto of infringing one of the patents.

    The verdict concerned counterclaims in RJR’s ongoing patent lawsuit over PMI’s IQOS heated-tobacco device. RJR won an order blocking IQOS imports at the U.S. International Trade Commission last November.

    Philip Morris succeeded earlier this year in invalidating parts of some patents RJR accused it of infringing at a U.S. Patent Office tribunal.

    RJR parent company BAT has also sued Philip Morris over IQOS in the United Kingdom, Germany and elsewhere. A PMI filing with the U.S. Securities and Exchange Commission earlier this year said IQOS patent lawsuits and challenges outside of the U.S. have “repeatedly and universally failed.”

    Altria has separately sued Reynolds for patent infringement in North Carolina over the Vuse line.

  • Patent for Biodegradable Filter

    Patent for Biodegradable Filter

    Image: Greenbutts

    Greenbutts has received a Canadian patent for its biodegradable filter tow technology.

    The patent adds to Greenbutts’ proprietary technology stack, offering an all-natural, biodegradable and water dispersing cigarette filter. Previously, Greenbutts obtained patent recognition in the United Kingdom and the United States.

    “Greenbutts’ mission started 12 years ago, at a time when the phrase ‘single-use plastic’ was not used as often as it is today,” said Greenbutts CEO Tadas Lisauskas in a statement. “Our dedication through extensive R&D with our world-class scientific team is now being recognized on a global scale as governments, industry and consumers are all in alignment with a green, clean future.”

    According to Lisauskas, Greenbutts’ biodegradable cigarette filter is compatible not only with traditional combustible smoking products but also with heat-not-burn products. In August 2021, Greenbutts signed an agreement to supply its biodegradable filters to Poda Lifestyle and Wellness.  

    “This patent has strategic importance to our organization as it comes in full alignment with the Canadian government’s decision to ban the manufacture and importation of harmful single-use plastics, a historic move for North America,” he said. “Our technology is a viable and sustainable alternative to cellulose acetate filters while maintaining the sensory experience, delivering the high-performance filtration capability of a traditional filter.”

    “The granting of this new IP by the Canadian Intellectual Property Office is another demonstration that the company is advancing in becoming the most strategic partner to catalyze the tobacco industry to, once and for all, migrate from single-use plastic to a planet friendly, consumer-aligned and government-supported solution,” said Greenbutts’ chief strategy officer, Luis Sanches.