PHILIP Morris International Inc faces a possible import ban on its IQOS heated tobacco sticks into the United States, after losing the first round of a legal trade battle with British American Tobacco Plc.
Philip Morris and Altria Group Inc are infringing two patents owned by BAT’s subsidiary Reynolds American Inc, International Trade Commission judge Clark Cheney said in an opinion on the agency’s website.
The judge’s findings are not public to give both parties time to redact confidential information. The next step is a likely review by the full committee, which has the power to stop products at the U.S. border and is expected to complete the investigation by September 15.
Big Tobacco faces some of the biggest changes in industry history as fewer people smoke cigarettes and US regulators plan to ban menthol cigarettes altogether. Some analysts even predict that cigarettes will be extinguished in countries like the United States and the United Kingdom by 2050. Companies have spent billions of dollars to develop alternatives to cigarettes, including heated tobacco, oral vaping products and nicotine sachets to ensure future growth.
Arguably the pioneer of the alternatives market, Philip Morris’ IQOS device is the only non-combustion heated product authorized for sale in the United States, where it is sold by Altria. The device also received approval from the United States Food and Drug Administration last year to be marketed as reducing consumer exposure to harmful chemicals found in cigarettes, and Philip Morris is seeking the same. approval for its latest IQOS version, which gives it even more advantage. against competitors.
Reynolds said he expects the judge to recommend an import ban, adding that the unauthorized use of his inventions “undermines our ability to invest and innovate and thus reduce the impact of our business on health”.
Philip Morris called the judge’s findings “a step in a long process that has no immediate effect” and he will present his position to the commission.
“BAT’s litigation in the United States is part of a global attempt – which has been totally unsuccessful to date – to undermine the heated tobacco segment, where they are far behind,” the company said.
Philip Morris said the US Patent and Trademark Office is re-examining patents, with rulings in those cases due for release early next year.
“So far we have been on the right side of the decisions,” said Philip Morris chairman Andre Calantzopoulos. Bloomberg News last month. “Some of these claims are frivolous, but there are always contingency plans to work around these situations.”
Reynolds claimed Philip Morris infringed three patents – two for an electrical device with a heater to generate an aerosol and one for a regulatory body. Cheney concluded that only the two patents for the device had been infringed.
IQOS products, which heat tobacco enough to create an aerosol but not enough to burn, are made in Malaysia, Switzerland and Italy, according to Reynolds’ original complaint.
Philip Morris argued that even if a patent infringement is found, it is not in the public interest to keep IQOS out of the United States.
“The judge must determine whether even the temporary removal of these products is appropriate for public health and what alternatives there are for consumers,” Calantzopoulos said. “If we take a product that is out there, and the only alternative people have is cigarettes, that’s a public health consideration and it needs to be taken into account.”
Reynolds argued that Philip Morris overestimated both the benefits and popularity of IQOS over other so-called “potentially reduced risk products” or PRRPs, claiming that there are “literally thousands” of alternatives.
Philip Morris and Altria “predict that IQOS will be firmly adopted in the future based on their results-oriented, biased, interested consumer testing,” Reynolds said in a post-trial brief with the judge. He accused Philip Morris of bringing in third parties on his behalf by offering things like “all-expense paid trips to Europe and Formula 1 racing.”
Philip Morris’ argument is “built on hopeless speculation and unsubstantiated conjecture” and is insufficient to override patent rights, “Reynolds said. “Reynolds agrees that smokers should have a choice, but they are not entitled to every choice imaginable if any of them infringe Reynolds’ patents.”
Reynolds filed a lawsuit in April 2020, with a case in federal court in Alexandria, Va., And a complaint to the ITC. Reynolds claims that Philip Morris and Altria copied the patented technology it developed for its Vuse Vibe and Vuse Solo vaping products, for which it has been submitted for FDA approval.
Altria responded with its own patent infringement claims in the Virginia case, and a separate lawsuit against Reynolds in May. Altria has also filed petitions with the US Patent and Trademark Office challenging the validity of half a dozen of Reynolds’ patents, including the three in the ITC case.
The cases are In the Matter of Certain Tobacco Heating Articles, 337-1199, US International Trade Commission (Washington); RAI Strategic Holdings Inc v. Altria Client Services LLC, 20-393, United States District Court for the Eastern District of Virginia (Alexandria); and Altria Client Services v. RJ Reynolds Vapor Co, 20-472, US District Court for the Middle District off North Carolina (Greensboro).