Legal disputes between Reynolds American Inc. and Altria Group Inc. over next-generation tobacco technology have been escalated by a second federal patent-infringement lawsuit.

Altria filed a lawsuit in U.S. District Court for the Middle District of North Carolina on Thursday that alleges R.J. Reynolds Vapor Co. is infringing on nine patents with its Vuse electronic cigarette and Velo nicotine smokeless products.

“Reynolds Vapor’s infringement ... has been and continues to be deliberate, willful and unlicensed,” according to the lawsuit.

Altria is requesting an unspecified monetary damages award.

The lawsuit comes six weeks after three Reynolds business units filed a patent-infringement lawsuit April 9. That lawsuit is focused on the technology involved in making heat-not-burn traditional cigarettes.

The groups are R.J. Reynolds Tobacco Co., RAI Strategic Holdings Inc. and R.J. Reynolds Vapor Co. Those being sued are Philip Morris International Inc., Altria and Philip Morris USA Inc., Altria’s U.S. subsidiary.

Altria Client Services and its U.S. Smokeless Tobacco Co. subsidiary say the e-cigarette and smokeless patents in dispute fit into three groups.

  • Four patents involving e-vapor devices that have a battery, heater and associated liquid-filled pods.
  • Two patents involving e-vapor devices with specific heating and mouthpiece designs. Those patents target Reynolds Vapor’s Alto and Vibe styles of Vuse.
  • Three patents involving a container for a smokeless pouch product having a non-hermetic seal for freshness. Those patents target Velo.

“The Vuse Alto is a flagship e-vapor product of RJR Vapor that (British American Tobacco) has repeatedly touted to investors as critical to the Reynolds e-vapor business,” Altria said.

In April, Reynolds submitted a premarket tobacco application for Vibe to the U.S. Food and Drug Administration.

The premarket standard requires the FDA to consider products’ existing risks and benefits to the population as a whole, including users and nonusers, particularly as those factors compare with traditional cigarettes.

“BAT has stated that its plan is to transition all of its ‘modern oral’ products to the Velo brand,” according to Altria’s lawsuit.

Reynolds said in a statement that it believes the lawsuit was filed in retaliation for the patent infringement complaints filed by Reynolds in April for infringement by IQOS of six Reynolds patents.

“While we are still reviewing the complaint, we believe it is without merit and will vigorously defend the case and our innovative next-generation products,” the company said.

Reynolds has been known as the industry’s leader in innovative tobacco and nicotine products for more than 20 years, particularly with e-cigarettes.

“We remain confident in our patent strategy to protect our innovative products and robust intellectual property portfolio,” Reynolds said.

On May 12, the U.S. International Trade Commission voted to conduct an investigation into the heat-not-burn legal dispute involving BAT and rival Philip Morris International.

An administrative law judge of the commission will hold an evidentiary hearing.

The Reynolds affiliates are requesting 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.”

BAT has filed a similar complaint against PMI with the International Trade Commission, citing plans to sell glo, BAT’s version of heat-not-burn, in Germany this year.

Heat-not-burn cigarettes work this way: Smokers light a carbon tip that heats air that, as it is inhaled, passes over tobacco in a cylinder identical to a standard cigarette. The flavors of tobacco and nicotine are inhaled and then exhaled by smokers.

The complaint focuses on five heat-not-burn technology patents held by the company. The patents were issued by the U.S. Patent and Trademark office between November 2012 and December 2019. PMI is being accused of infringing on those patents with IQOS products that are branded as Marlboro HeatSticks.

The international version of IQOS gained FDA 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 and Richmond in November.

The IQOS components cited by the Reynolds affiliates are the product’s holder (a rechargeable and reusable power unit), disposable tobacco stick, and charger.

Philip Morris USA said in a statement April 10 that “we will review the allegations and vigorously defend this lawsuit.”

“IQOS is the only heated tobacco product authorized by the FDA for commercialization in the U.S.”

rcraver@wsjournal.com

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