US: Philip Morris and Altria Face ITC Investigations


In April, BAT announced it was suing its competitor Philip Morris International Inc (PMI) in the United States and Germany, alleging that the tobacco heating technology used in PMI’s HnB device IQOS, had infringed its patents.

BAT added that it had also filed two patent infringement claims against PMI in the US, one via the International Trade Commission (ITC) and one in the Virginia federal court. The tobacco company claims it is seeking compensation for the damages caused and an injunction on importing the product.

“If we win we may be able to get an ITC exclusion order blocking the importation of IQOS into the U.S. by Philip Morris unless they agree to take a license to our patents,.” Will Hill, BAT

Along with PMI (NYSE:PM), Altria is also facing an inquiry after three business units of BAT (NYSE:BTI) filed a complaint with the ITC regarding similar infringements. Both the lawsuits in Germany and the US are based on the fact that the heating blade technology used in IQOS is, according to BAT, an earlier version of the technology currently being used in its Glo tobacco heating devices.

“If we win we may be able to get an ITC exclusion order blocking the importation of IQOS into the U.S. by Philip Morris unless they agree to take a license to our patents,” said BAT spokesman Will Hill last April.

“We have seen media reports that BAT has filed legal actions but have not had the opportunity to evaluate its allegations. We can say, however, that we will vigorously defend ourselves,” responded Philip Morris at the time.

The ITC found grounds for further investigation

An article on the Motley Fool, by our colleague Michael McGrady, pointed out that in response to the filing by BAT, the ITC said it did find grounds to take a closer look at PMI and Altria’s import and patent activities. “Its investigation, to determine whether PMI and Altria violated section 337 of the Tariff Act of 1930, will be carried out by the commission’s Office of Unfair Import Investigations.  Section 337 prohibits imports from companies that could likely infringe upon the authority of a U.S. patent owned by another person or entity.”

PMI’s iQOS system was only recently approved for sale in a few select markets across the US, via Altria under the latter’s Marlboro brand. On the other hand, BAT wants iQOS products banned in the U.S., unless PMI and Altria agree to pay out on a license to use the patents in question.

IQOS Market Share Increases as Other HnBs Struggle



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