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A Philip Morris International Inc. affiliate has earned two federal patent victories involving its heat-not-burn technology dispute with Reynolds American Inc.
A three-judge panel of the federal Patent Trial and Appeal Board said Wednesday it had determined as unpatentable all RAI Strategic Holdings Inc. claims for the “915” patent and claims 1 through 12 and 18 through 30 for the ‘542’ patent.
A Philip Morris International Inc. affiliate has earned two federal patent victories involving its heat-not-burn technology dispute with Reynolds American Inc.
A three-judge panel of the federal Patent Trial and Appeal Board said Wednesday it had determined as unpatentable all RAI Strategic Holdings Inc. claims for the “915” patent and claims 1 through 12 and 18 through 30 for the ‘542’ patent.
In both cases, the decisions are the final word from the board.
However, those decisions can be appealed for review to the U.S. Court of Appeals for the Federal Circuit, which Reynolds has indicated it will pursue.
The “915” patent “relates to smoking articles that employ an electrical heating element and an electrical power source to provide an inhalable substance in a vapor or aerosol form, without substantially burning or completely burning tobacco or other substances.”
Meanwhile, the “542” patent “is directed to articles wherein tobacco, a tobacco derived material or other material is heated, preferably without significant combustion, to provide an inhalable substance ... in a vapor or aerosol form.”
The “542” patent is designed to create improvements and alternatives to “provide the sensations associated with cigarette, cigar, or pipe smoking, without delivering considerable quantities of incomplete combustion and pyrolysis products.”
According to federal law, a claim is unpatentable if “the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.”
It’s unclear what are the next steps for the companies in terms of how the rulings affect their heat-not-burn cigarette products.
Philip Morris said in response to the ruling, “We are extremely pleased with the well-reasoned PTAB decisions, which further demonstrate the futility of RJR/BAT’s efforts to litigate this patent family.”
Reynolds said in a statement that “we disagree with the decision finding (the ‘915’ ruling) invalid partially contradicting the International Trade Commission’s ruling, which was based on a highly developed evidentiary record, including a six-day trial with live witnesses.”
Reynolds said an ITC panel and the full commission “agreed with Reynolds’ position regarding the patent.”
“Thus, we are confident that we will ultimately prevail on appeal.”
Another option for Reynolds, according to the patent board’s ruling, is for Reynolds to amend its patents in dispute or request a reexamination of the challenged patent.
The patent board’s rulings are the latest developments involving several patent-infringement lawsuits between the two tobacco manufacturers.
In November, the U.S. Trade Representative affirmed a pivotal legal victory by British American Tobacco Plc against rival Philip Morris International Inc.
On Sept. 29, the U.S. International Trade Commission issued a final determination of a violation of the Tariff Act of 1930 by Philip Morris USA Inc. and Altria Client Services LLC as it related to two BAT product patents.
Altria Group Inc., parent of PM USA, asked trade representative Katherine Tai to overturn the ban. The U.S. Trade Representative’s office confirmed no action was taken by Tai.
As a result of the ITC ruling, PM USA is barred from importing PMI’s IQOS 2.4, IQOS 3, IQOS 3 Duo heat-not-burn cigarette products.
Marlboro HeatSticks were pulled from U.S. retail shelves at that time, and the Altria companies were ordered to halt future sales of those products in the U.S.
The next legal step is a likely appeal by Altria 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.
PMI said that “our contingency plans to return IQOS to the U.S. market are under way.”
“While this decision will cause near-term disruption, we continue to see a large opportunity for IQOS and other FDA authorized smoke-free products in the U.S. over the coming years.”
PMI also took a shot at BAT and Reynolds that glossed over those manufacturers’ significant roles in developing smokefree tobacco and nicotine product options.
“This process ... delivered a victory for only one party: a tobacco company that last year contributed to increasing U.S. cigarettes sales for the first time in 20 years, while at the same time desperately launching litigation to block innovative alternatives,” PMI said.
It is likely PM USA also contributed to increase U.S. cigarette sales in 2020, particularly after the FDA further tightened regulations on e-cigarette products and banned most flavorings.
The lawsuit was filed by three Reynolds business units — R.J. Reynolds Tobacco Co., RAI Strategic Holdings Inc. and R.J. Reynolds Vapor Co.
The complaint, filed in April 2020, focuses on three heat-not-burn technology patents held by BAT.
The patents were issued by the U.S. Patent and Trademark Office between November 2012 and December 2019.
The Reynolds affiliates requested a temporary and a permanent injunction against the importation, sale and distribution of PMI’s IQOS products, as well as “enhanced damages,” alleging “defendants’ infringement has been and continues to be deliberate, willful and unlicensed.”
The international version of IQOS gained Food and Drug Administration authorization for sale in April 2019 — with the caveat that it does not mean “these products are safe or FDA approved.”
The IQOS products debuted in test markets in Atlanta in October 2019 and Richmond, Va., 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.
Gareth Cooper, BAT’s assistant general counsel, said in November that BAT and Reynolds are not trying to thwart the progress of non-combustible tobacco and nicotine products in the U.S.
“Reducing the harm from cigarettes is one of the most important public health movements globally, thus developing a wide range of consumer-acceptable choices of FDA-regulated products that may be less harmful than cigarettes requires a tremendous investment in innovation,” Cooper said.
“Innovation is laborious and cost-intensive work, and we remain confident in our patent defense strategy and the ITC’s findings.”
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