The heat is on in a global patent battle over heat-not-burn technology.
The heat has turned up in a global battle over heat-not-burn technology patents between Philip Morris International (PMI) and British American Tobacco (BAT) as each side fights for market dominance in a future where heated tobacco products are expected to take over from combustible tobacco.
PMI enjoyed being a market leader in the heat-not-burn (HNB) segment since the initial launch of its IQOS device in Japan in 2014. IQOS’ popularity with consumers quickly caught on around the world and the device is now available (and a market leader) in 64 countries. This success has been a key component of PMI’s “smoke-free future” where it plans to fully abandon combustible cigarettes within the next 10 years.
BAT, however, was a pioneer in the HNB segment, going as far back as the late 1980s when RJ Reynolds introduced its Premier device. The market was not ready for a tobacco alternative then; consumers did not like Premier’s taste and smell, and the device was not a commercial success. Reynold’s next HNB product, Eclipse, which was launched in 1996, was also not well received, nor was PMI’s Accord, which was launched in 1998. HNB did not make a comeback until 2014 with the launch of BAT’s Revo device and PMI’s IQOS.
Now, the two tobacco companies battle it out over patents for BAT’s glo devices and PMI’s IQOS. It all started in 2018 when PMI sued BAT for patent infringement in Japan against the latter’s HNB products. Last year, BAT hit back by filing patent infringement claims with the US Internal Trade Commission (ITC) and the Virginia federal court. Around the same time, BAT subsidiary Nicoventures Trading sued PMI in Munich and the UK. PMI responded by filing a revocation action and an infringement counterclaim at the UK court. In March 2021, PMI scored a win when the UK High Court revoked two BAT patents, EP 3 398 460 B1 and EP 3 491 944 B1, and dismissed BAT’s claim of infringement, only to have the court invalidate four of its HNB technology patents in mid-July, handing a win to BAT.
The BAT patents were revoked for obviousness, with the court concluding they lack an “inventive step” over an existing PMI patent. The four PMI revoked patents have a metal insulator feature as the inventive concept, which the court also invalidated for obviousness. The UK Court of Appeal refused BAT permission to appeal the March 2021 decision.
Cases in Munich over EP 3 398 460 B1 and EP 3 491 944 B1 are ongoing, with a hearing scheduled for November this year. PMI also filed cases against the two patents with the European Patent Office (EPO), resulting in one getting invalidated while the case for the other one is ongoing. BAT also applied for preliminary injunctions in Bulgaria, the Czech Republic, Poland, and Romania, albeit unsuccessfully. A legal battle in Italy between the two companies is also ongoing. Both patents are also under opposition at EPO which already issued a preliminary opinion indicating that one of the patents is invalid.
In its case against PMI with the US ITC last year, BAT received a preliminary victory as the administrative law judge at the ITC issued an initial determination that PMI’s IQOS products infringe on BAT patents and recommended a ban on the importation of IQOS devices, Marlboro HeatSticks, and component parts, as well as banning the sale of such products. However, in late July 2021, the full commission chose to review the judge’s findings and recommendations and not approve it at the time. The final order is subject to review by the US Trade Representative and federal courts this September.
PM USA announced that due to this uncertainty, it would delay further expansion of IQOS and Marlboro HeatSticks in the US, saying, “We are in the middle of a long and multi-step legal process before ITC, and we are confident in the strength of our arguments. In the meantime, we will continue to rely on our exclusive US distributor, Altria, to take all necessary steps to ensure that IQOS – the only electronic nicotine product authorized by FDA as appropriate for the promotion of public health relative to continued cigarette smoking – is as successful in the US as it has been globally.”
It may seem that at the moment PMI suffered a setback by putting a hold on rolling out IQOS nationally in the US, but the fight is far from over and might take an interesting turn (or two) later this year.