Tag: Vuse

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.”
January 30, 2023
Reynolds to Appeal Menthol MDOs

Photo: BAT
BAT will appeal the U.S. Food and Drug Administration’s marketing denial orders for its Vuse Vibe Tank Menthol 3.0 percent and Vuse Ciro Cartridge Menthol 1.5 percent, the company announced in a statement.
On Jan. 24, the FDA denied marketing applications for two menthol refills used in Vuse Vibe and Vuse Ciro vaporizers, which are sold in the U.S. by BAT subsidiary R.J. Reynolds. According to the agency, Reynolds’ applications presented insufficient evidence to show that the potential benefit to adult smokers outweighs the risks of youth initiation and use.
“Reynolds intends to seek a stay of enforcement immediately and will pursue other appropriate avenues to allow Vuse to continue offering its innovative products to adult nicotine consumers age 21-plus without interruption,” the company said.
“We believe that menthol vapor products are critical to helping adult smokers migrate away from combustible cigarettes. FDA’s decision, if allowed to go into effect, will harm, not benefit, public health.
“We remain confident in the quality of all of Reynolds’ applications, and we believe that there is ample evidence for FDA to determine that the marketing of these products is appropriate for the protection of public health.”
Anti-tobacco campaigners countered that menthol e-cigarettes appeal to underage consumers. “Existing evidence demonstrates that nontobacco-flavored e-cigarettes, including menthol flavored e-cigarettes, have a known and substantial risk with regard to youth appeal, uptake and use; in contrast, data indicate tobacco-flavored e-cigarettes do not have the same appeal to youth and therefore do not pose the same degree of risk,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, in a statement.
Morgan Stanley said it expected the rejected products to remain on the U.S. market for the duration of BAT’s appeal, with minimal impact on the company’s operations. “Longer term, should today’s denial order reflect a broader effort by the FDA to ban menthol e-cigarettes, BAT’s U.S. cigarette business could benefit given its menthol mix as it might discourage some smokers from quitting or switching to reduced-risk products,” the bank wrote in a note to investors. Reynolds’ Newport brand represents about 40 percent of BAT’s U.S. cigarette dollar sales, according to Morgan Stanley.
The Jan. 24 rejection of the Vuse refills underscores the FDA’s ongoing reluctance to approve menthol e-cigarette flavors. To date, the agency has approved only tobacco-flavored e-cigarettes.
However, the FDA has granted both a premarket tobacco product application and modified-risk tobacco product designation to IQOS’ menthol variant, which may eventually leave Philip Morris International’s heat-not-burn product as one of the few menthol reduced-risk alternatives on the market.
The FDA is targeting publishing a final rule to ban menthol cigarettes in August 2023, but considering expected industry litigation, final implementation could be five to six years away, according to Morgan Stanley.
January 25, 2023
FDA Denies Two Vuse Menthol Vapor Products

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The U.S. Food and Drug Administration issued marketing denial orders (MDOs) for R.J. Reynolds Vapor Co.’s Vuse Vibe Tank Menthol 3.0 percent and the Vuse Ciro Cartridge Menthol 1.5 percent.
“Consistent with the authorities granted by Congress, the FDA remains committed to evaluating new tobacco product applications based on a public health standard that considers the risks and benefits of the tobacco product to the population as a whole,” said Brian King, director of the FDA’s Center for Tobacco Products. “The applications for these products did not present sufficient scientific evidence to show that the potential benefit to adult smokers outweighs the risks of youth initiation and use.”
“Existing evidence demonstrates that nontobacco-flavored e-cigarettes, including menthol-flavored e-cigarettes, have a known and substantial risk with regard to youth appeal, uptake and use; in contrast, data indicate tobacco-flavored e-cigarettes do not have the same appeal to youth and therefore do not pose the same degree of risk,” the FDA wrote in a statement.
“Given these existing differences in youth risk, applicants need to provide robust evidence to demonstrate that using their menthol-flavored e-cigarette products are likely to promote a complete switch or are likely to significantly reduce combustible cigarette use in adult smokers beyond that facilitated by tobacco-flavored e-cigarette products. Data from the 2022 National Youth Tobacco Survey found that Vuse was the second most common brand youth e-cigarette users reported ‘usually’ using.”
“Today’s decision pertains to the specific application submitted for review by FDA,” said King. “It is the responsibility of the applicant to provide sufficiently robust scientific evidence to demonstrate that the necessary public health standard has been met. In this case, the presented evidence did not meet that standard.”
In assessing the implications of the most recent MDOs for RJRV’s parent company, BAT, Morgan Stanley noted that Vuse Vibe and Vuse Ciro represent only a small portion of BAT’s overall e-cigarette sales in the U.S.
“Should it choose to appeal, we would expect its products to remain on the market as the appeal is ongoing, resulting in minimal/no operating impact,” the investment bank wrote in a note to investors.
Morgan Stanley said the MDO provides another example of the FDA’s ongoing reluctance to approve menthol e-cigarette flavors. To date, the agency has approved only tobacco-flavored e-cigarettes.
The financial institution also noted that the FDA has granted both a premarket tobacco product application and modified-risk tobacco product designation to IQOS’ menthol variant, which may make it one of the few menthol reduced-risk alternatives on the market.
The FDA is targeting publishing a final rule to ban menthol cigarettes in August 2023, but considering expected industry litigation, final implementation could be five to six years away, according to Morgan Stanley.
January 24, 2023
Reynolds Vapor Denied New Trial in Vuse Case

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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.
January 17, 2023
Reynolds Requests Retrial of Vuse IP Case

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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.
November 6, 2022
Vuse Widens Lead Over Juul

Photo: BAT
Vuse has widened its U.S. market share lead over Juul to double digits, reports the Winston-Salem Journal, citing the most recent Nielsen analysis of convenience store data.
The analysis, released Sept. 20, covers the four-week period ending Sept. 10.
Vuse’s market share rose from 39 percent in the previous report to 39.7 percent compared with Juul declining from 29.4 percent to 28.1 percent.
Vuse, which is made by Reynolds Vapor Co., has also now edged ahead of Juul in the year-over-year comparison at 32.9 percent to 32.7 percent, respectively. It’s the first time Vuse has led the year-over-year comparison.
According to Barclays, Nielsen largely covers the big chains. For the smaller chains, the group extrapolates trends, which is why trend changes don’t appear immediately in Nielsen. Meanwhile, No. 3 Njoy dropped from 2.9 percent to 2.8 percent while Fontem Ventures’ blu eCigs slipped from 1.6 percent to 1.4 percent.
Juul’s four-week dollar sales in the latest report have dropped from a 50.2 percent increase in the Aug. 10, 2019, report to a 17.7 percent decline in the latest report.
By comparison, Vuse was up 41.4 percent in the latest report while Njoy was down 5.6 percent and blu eCigs fell to 30.2 percent.
Experts attribute the growing gap between Vuse and Juul to the possibility that Juul Labs may have to pull its products from the U.S. market if the Food and Drug Administration’s marketing denial order (MDO) remains in place.
The FDA has suspended its MDO for the duration of Juul Labs’ appeal.
September 22, 2022
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.
September 7, 2022
Vuse Extends Lead Over Juul

Photo: BAT
The prospect of a potential on sales of Juul Labs e-cigarettes in the U.S. has helped accelerate the market share gains of R.J. Reynolds Vapor Co.’s Vuse brand, reports the Winston-Salem Journal.
According to the latest Nielsen analysis of convenience store data, which covers the four-week period ending Aug. 13, Vuse’s market share rose from 37.4 percent in the previous report to 39 percent compared with Juul declining from 30.7 percent to 29.4 percent.
Meanwhile, No. 3 Njoy dropped 3 percent to 2.9 percent while Fontem Ventures’ blu e-cigarettes slipped from 1.7 percent to 1.6 percent.
In June, the Food and Drug Administration rejected Juul Labs’ premarket tobacco product applications, saying that the company has submitted insufficient evidence that its products were appropriate for the protection of public health.
While the agency subsequently suspended its marketing denial order (MDO), citing scientific issues in the application that warrant additional review, the agency stressed that the stay does not rescind the MDO, leaving Juul in limbo.
Vuse, by contrast, has received FDA marketing approval for several product varieties, including Vuse Vibe and Vuse Ciro and Vuse Solo products.
In a note to investors, Goldman Sachs analyst Bonnie Herzog said that Juul’s market share decline occurred in part “following confusion around the FDA’s marketing denial order against Juul.”
As recently as May 2019—before the company started withdrawing flavored products in response to regulatory pressures—Juul accounted for 74.6 percent of the U.S. e-cigarette market.
August 25, 2022
Motley Fool: Juul Exit Would Crown BAT King

Photo: BAT
The removal of Juul products would hand the U.S. market to British American Tobacco, according to Motley Fool.
Juul, which is partly owned by Altria Group, had been the undisputed e-cigarette leader, with a near-80 percent share of the market at the height of its success. The latest Nielsen data puts Vuse’s share at 35.1 percent compared to 33.1 percent for Juul. Third-place NJOY has a 3.1 percent share.
Last year, the U.S. International Trade Commission ruled that Philip Morris International’s IQOS heated tobacco device infringed on BAT’s patents, and that device was prohibited from being imported and sold in the U.S. Altria had partnered with PMI to market and distribute IQOS in the U.S., but the ITC ruling disrupted those plans.
Because Altria shelved its MarkTen e-cigarette brand in favor of partnering with PMI, the ITC ruling leaves it without a vapor product. The FDA has all but wiped out the rest of its investment in Juul. In 2018, Altria paid $12.8 billion for a 35 percent in the vapor company. As of the end of the first quarter of 2022, Altria had reduced the fair value of its Juul position to just $1.6 billion.
If the FDA is successful in eliminating Juul, BAT will essentially have no roadblocks in its way to market dominance.
Vuse turned profitable in the U.S. for BAT in the second half of last year, and it’s been able to grow its share because it discounted the device and the consumables to attract users. Earlier this month, BAT said it was now ready to raise prices on both. With a major competitor removed from the market, this should provide the company with a big boost in profits.
BAT’s vapor revenue grew 59 percent last year to £927 million ($1.14 billion), while its own heated tobacco products, marketed under the Glo brand, saw a 46 percent rise in sales to £853 million.
June 27, 2022
Jury Awards PMI $10.7 Million in Patent Case

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A U.S. jury awarded Philip Morris International $10.7 million on June 15 after finding that R.J. Reynolds Vapor Co.’s Vuse e-cigarettes violate its patent rights, reports Reuters.
The federal court jury in Alexandria, Virginia, said RJR’s Vuse Solo and Alto devices infringe two PMI 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.
A Philip Morris spokesperson told Reuters the company was “grateful” for the verdict, which “rejects an attempt by BAT to free-ride on our hard work and investment.”
A spokesman for RJR indicated it may appeal the June 14 verdict.
The case is part of a multi-front patent dispute between PMI and RJR parent company British American Tobacco.
The recent 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.
PMI succeeded earlier this year in invalidating parts of some patents RJR accused it of infringing at a U.S. Patent Office tribunal.
BAT has also sued PMI 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 RJR for patent infringement in North Carolina over the Vuse line, in another case that is still pending.
June 16, 2022