Well, Big Tobacco is at it again, trying to take over the world of vaping products by buying up a small independent company. This time, however, they’re after a company that’s too principled to cave in to their blandishments. Marlboro and Mark Ten maker Altria has offered north of a million bucks to feisty little Atlantic Vapors of King of Prussia, Pennsylvania – AND THEY’VE BEEN TURNED DOWN. The town’s namesake, Frederick the Great, would be proud.
What does little Atlantic have that the Richmond, Virginia poison merchant wants so much? It seems that it’s a “predicate product” – and that’s worth a lot in the e-cigarette world. (Come to think of it, $1 mil is a pretty paltry offer, when you remember that British American Tobacco is paying fellow cigarette maker R. J. Reynolds 7 times that for Blu, and Imperial coughed up $75 million for Ruyan’s Dragonite (and its patents). The Marlboro Man might just well hike up his bid, but I’m guessing Atlantic still won’t cave. A predicate e-cig is worth more than just money.
So what is a predicate product, and why is it so valuable? It’s all about FDA rules for getting a new tobacco product approved. Companies applying for new product approvals must establish “substantial equivalence” with an existing product, or else face costly bureaucratic hurdles. This is one reason harm reduction advocates are so wrought up about “deeming” – It seems as though the deeming regulations will stack the deck in favor of wealthy companies (guess who!) and against smaller, newer companies, meaning in this case virtually anybody who doesn’t market poison. A “predicate product”, then, is any product that was on the market before a certain date, called a “grandfather date”. In the case of electronic cigarettes, the grandfather date is February 2007. (That is why some influential congresspersons recently appealed to have the grandfather date moved, but nobody’s picked up the phone on that one yet.)
Atlantic thinks it has a predicate product, and Altria seems to agree. A company that owns the patents to a predicate e-cig can sail through FDA approval processes with ease, and dominate the market. Altria wants to be that company, and Atlantic is in their way.
Another possibility would be purchase of Atlantic by another independent, rather than a Big Tobacco giant. A statement by Atlantic’s President, Nick Kruczaj, contains the following: “Our preference is to work with electronic cigarette companies. A partnership with a non-tobacco, strictly ecig company, such as Electronic Cigarette International Group LTD., is of more interest. We want to ensure the viability of quality ecig products and responsibly produced e-liquid as well as considering the future of vape shops.” To be sure, ECIG is a growing conglomerate with big eyes, and despite recent wobbly statistics on the stock market, might be able to put together a competitive offer.
So why is everybody keeping quiet about what that predicate product is? The range of possibilities is modest – There wasn’t much going on yet in 2007. Why isn’t anybody saying? One good guess is that it has to do with behind-the-scenes strategies in the world of IP trolling by Big Tobacco companies. IP here means “intellectual property”, which refers to the practice of buying up patents for products you had no hand in creating, and then making a killing by suing everybody else for infringement. Big Tobacco is pretty good at IP trolling, and working hard at getting better.
One good guess is that there are other hidden players who think they can get Atlantic’s patents for themselves, and Atlantic’s mystifying silence about the identity of its predicate is part of a strategy to foil them. Vapers who desire a free vaping industry would be well advised to keep their guesses to themselves. Chances are that will help Atlantic win this one. Loose lips sink ships.
Meanwhile, I’m cancelling my subscriptions to Sherlock, Poirot, and Miss Fisher’s Murder Mysteries, and watching this instead. Best show around. ECCR has good coverage, and Atlantic has a Facebook page.