Tag: international trade comission

  • PMI Argues Against IQOS Import Ban

    PMI Argues Against IQOS Import Ban

    Photo: librakv

    The U.S. International Trade Commission (ITC) should have consulted more with the Food and Drug Administration before banning IQOS imports, lawyers for Philip Morris International argued before an appeals court panel on Oct. 3, according to Reuters.

    In September 2021, the ITC upheld an initial determination from May 2021 that PMI’s IQOS device infringes on two patents owned by BAT subsidiary Reynolds American Inc. (RAI). The agency then instituted an import ban and a cease-and-desist order preventing IQOS consumables and devices from being sold in the U.S.

    PMI has challenged the import ban in court, arguing among other things that the ban deprives American smokers of nicotine products that are less unhealthy than cigarettes.

    The case is part of a global patent dispute between RAI’s parent company BAT and tobacco giant Altria Group, which separated from PMI in 2008 and is the exclusive distributor of IQOS in the United States.

    A North Carolina jury awarded Altria $95 million last month on claims that RAI’s Vuse e-cigarettes infringed its patents. In a separate case over RAI’s Vuse line, PMI won more than $10 million from a Virginia jury.

    RAI sued Philip Morris at the ITC in 2020. Its related patent case against PMI in Virginia is on hold.

    In July 2020, the FDA granted IQOS modified-risk orders, allowing Altria and PMI to tell consumers that the product generates lower levels of harmful chemicals than traditional cigarettes, among other claims.

  • ITC Bars Unauthorized Juul-Compatible Pods

    ITC Bars Unauthorized Juul-Compatible Pods

    Photo: JHVEPhoto

    The U.S. International Trade Commission (ITC) has issued a general exclusion order barring the importation of any unauthorized cartridges compatible with the Juul System that infringe Juul Labs patented product designs, including compatible flavored pods and refillable pods.

    This ruling follows a filing by Juul Labs submitted to the ITC on July 10, 2020, that sought a general exclusion order directed at all importers of unauthorized cartridges that copy Juul Labs’ patented pod designs without authorization.

    “Today’s ITC ruling represents a major victory against manufacturers of illicit vapor products who seek to bypass regulations and undermine efforts to create a more responsible marketplace for the category,” said Wayne Sobon, vice president, intellectual property at Juul Labs, in a statement.

    “In addition to targeting the importation of all infringing products, regardless of the brand, this sweeping action will provide the additional public benefit of helping rid the market of unauthorized Juul-compatible products that can be modified by the user, such as empty and refillable pods.”

  • Spanner in the Works

    Spanner in the Works

    Photo: Mariakray

    A patent dispute derails the U.S. rollout of IQOS.

    TR Staff Report

    The deadline of Tobacco Reporter’s December print edition coincided with one for the U.S. Trade Representative to overturn a ruling preventing Altria Group subsidiary Philip Morris USA from importing Philip Morris International’s IQOS tobacco-heating device following a patent dispute.

    On Sept. 30, the International Trade Commission upheld an initial determination that PMI’s IQOS device infringes patents owned by BAT. As a result of the ITC ruling, Philip Morris USA has been barred from importing PMI’s IQOS 2.4, IQOS 3 and IQOS 3 Duo heat-not-burn traditional cigarette products. It was also ordered to halt future sales of those products—marketed as Marlboro HeatSticks—already in the U.S.

    Altria Group asked trade representative Katherine Tai to overturn the ban. Tai had 60 days to do so. By Nov. 30, however, the U.S. Trade Representative’s office confirmed to Bloomberg that no action had been taken by Tai, meaning the IQOS import ban stands.

    BAT welcomed the development. “Today’s announcement provides a measure of success for our enforcement of intellectual property rights to ensure we can continue to innovate, as is common practice among innovation-based industries,” Gareth Cooper, BAT’s assistant general counsel, said in a statement. “As we have strenuously noted, there was no reason to overturn the policy.”

    Altria expressed disappointment with the decision. “We continue to believe that the plaintiff’s patents are invalid and that IQOS does not infringe on those patents,” the company said in a statement.

    “The ITC’s importation ban makes the product unavailable for all consumers who have switched to IQOS, reduces the options for the over 20 million smokers looking for alternatives to cigarettes and ultimately is detrimental to the public health.”

    This sentiment was echoed by Gregory Conley, president of the American Vaping Association, at the time of the ITC’s Sept. 30 decision.

    “By potentially denying them the opportunity to switch to a harm reduction production IQOS, the real losers of this protracted court battle could end up being American adult smokers,” Conley said.

    “While some may use vaping, snus or pouches in the absence of IQOS, far too many American adults will choose to just smoke cigarettes instead.”

    The U.S. Food and Drug Administration authorized IQOS for sale in April 2019. The products debuted in test markets in Atlanta in October 2019 and Richmond, Virginia, in November 2019. During the second quarter, Philip Morris USA expanded retail distribution of Marlboro HeatSticks into the Triad and other metro areas of North Carolina as well as northern Virginia and Georgia.

    In immediate financial terms, the import ban has limited impact on PMI and Altria. IQOS in the U.S. is currently not a meaningful contributor to the companies’ earnings, according to Morgan Stanley. Nonetheless, IQOS is a key element in Altria’s shift away from traditional tobacco products, which have seen falling demand. To achieve its mission “to responsibly lead the transition of smokers to a smoke-free future,” Altria will need a viable alternative to combustible cigarettes in its portfolio.

    Altria will likely appeal to the U.S. Court of Appeals for the Federal Circuit, which handles patent lawsuits. That process could take up to a year to reach a decision, with the likelihood of a successful appeal not favorable, according to industry analysts.

    In the worst-case scenario for Altria and Philip Morris, the two companies would have to go back to the drawing board, moving production to the U.S. or changing up the design enough to avoid patent infringement claims.

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  • Altria Banned From Importing IQOS Into U.S.

    Altria Banned From Importing IQOS Into U.S.

    Photo: Kuznietsov Dmitriy

    The U.S. Trade Representative has upheld the International Trade Commission’s (ITC) finding that Philip Morris International’s IQOS tobacco heating device infringes on patents held by British American Tobacco, reports The Winston-Salem Journal.

    As a result of the ITC ruling, Philip Morris USA is barred from importing PMI’s IQOS 2.4, IQOS 3, IQOS 3 Duo heat-not-burn traditional cigarette products. It also was ordered to halt future sales of those products—marketed as Marlboro HeatSticks—already in the U.S.

    Some retailers of the Marlboro HeatSticks, including convenience stores, already had displayed notifications to customers that those products could no longer be sold as of Monday.

    “Today’s announcement provides a measure of success for our enforcement of intellectual property rights to ensure we can continue to innovate, as is common practice among innovation-based industries,” Gareth Cooper, BAT’s assistant general counsel, said in a statement. “As we have strenuously noted, there was no reason to overturn the policy.”

    Altria said expressed disappointment with the decision. “We continue to believe that the plaintiff’s patents are invalid and that IQOS does not infringe on those patents,” the company said in a statement.

    “The ITC’s importation ban makes the product unavailable for all consumers who have switched to IQOS, reduces the options for the over 20 million smokers looking for alternatives to cigarettes, and ultimately is detrimental to the public health.”

    This sentiment was echoed by Gregory Conley, president of American Vaping Association, at the time of the ITC’s Sept. 30 decision.

    “By potentially denying them the opportunity to switch to a harm reduction production IQOS, the real losers of this protracted court battle could end up being American adult smokers,” Conley said.

    “While some may use vaping, snus, or pouches in the absence of IQOS, far too many American adults will choose to just smoke cigarettes instead.”

    The U.S. Food and Drug Administration authorized IQOS for sale in April 2019. The products debuted in test markets in Atlanta in October 2019 and Richmond, Virginia, in November 2019. During the second quarter, PM USA expanded retail distribution of Marlboro HeatSticks into the Triad and other metro areas of North Carolina, as well as northern Virginia and Georgia.

    Altria will likely appeal to the U.S. Court of Appeals for the Federal Circuit, which handles patent lawsuits. That process could take up to a year to reach a decision, with the likelihood of a successful appeal not favorable, according to industry analysts.

    In the worst-case scenario for Altria and Philip Morris, the two companies would have to go back to the drawing board, moving production to the U.S. or changing up the design enough to avoid patent infringement claims.

    PMI has successfully defended similar cases in the U.K. and elsewhere. BAT has already pursued litigation over IQOS in Poland, the Czech Republic, Bulgaria, Romania and Greece and through the European Patent Office.

  • ITC: IQOS Infringes on Vuse Patents

    ITC: IQOS Infringes on Vuse Patents

    Photo: JHVEPhoto

    Philip Morris International’s IQOS device infringes two patents owned by British American Tobacco subsidiary Reynolds American Inc., reports Bloomberg, citing a note posted by Judge Clark Cheney on the U.S. International Trade Commission’s website.

    The next step is a likely review by the full commission, which has the power to halt products at the U.S. border and is scheduled to complete the investigation by Sept. 15.

    IQOS is the only heat-not-burn product authorized for sale in the U.S., where it’s sold by Altria. Last year, the U.S. Food and Drug Administration allowed the company to market IQOS as reducing consumers’ exposure to harmful chemicals found in cigarettes.

    Reynolds claims PMI and Altria copied patented technology that it had developed for its Vuse Vibe and Vuse Solo vaping products, for which it’s filed for FDA approval. The company complained to the ITC in April 2020.

    Altria responded with its own patent infringement claims and a separate suit against Reynolds in May. Altria also lodged petitions with the U.S. Patent and Trademark Office challenging the validity of a half-dozen Reynolds’ patents.

    The judge has to make a determination on whether even temporarily removing such products is appropriate for public health and what alternatives there are for consumers.

    Andre Calantzopoulos, executive chairman, PMI

    Reynolds said it expects the judge will recommend an import ban, adding that the unauthorized use of its inventions “undermines our ability to invest and innovate and thereby reduce the health impact of our business.”

    Philip Morris called the judge’s findings “one step in a long process that does not have an immediate effect” and it will present its position to the commission.

    “BAT’s litigation in the U.S. is part of a worldwide attempt—which has been entirely unsuccessful to date—that is meant to undermine the heated-tobacco segment, where they lag far behind,” the company said.

    PMI has also argued that, even if a patent violation is found, it’s not in the public’s interest to keep IQOS out of the U.S.

    “The judge has to make a determination on whether even temporarily removing such products is appropriate for public health and what alternatives there are for consumers,” said PMI Executive Chairman Andre Calantzopoulos. “If we remove a product that exists, and the only alternative that people have are cigarettes, it’s a consideration of public health interest, and that has to be taken into account.”