PUBLIC VERSION
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`UNITED STATES INTERNATIONAL TRADE COMMISSION
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`Washington, D.C.
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`In the Matter of
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`CERTAIN TOBACCO HEATING ARTICLES
`AND COMPONENTS THEREOF
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`INV. NO. 337-TA-1199
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`ORDER NO. 19: DENYING RESPONDENTS’ MOTION FOR LEAVE TO AMEND
`THEIR RESPONSE TO THE COMPLAINT
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`(October 22, 2020)
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`On August 14, 2020, respondents Altria Client Services LLC, Altria Group, Inc., Philip
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`Morris USA, Inc., Philip Morris International Inc., and Philip Morris Products S.A. (collectively,
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`“Respondents”) filed a motion (“Mot.”) and supporting memorandum (“Memo”) seeking leave
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`to amend their response to the amended complaint in this investigation to add an affirmative
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`defense of inequitable conduct with
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`respect
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`to U.S. Patent No. 9,901,123
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`(the “’123
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`patent”) asserted by complainants RAI Strategic Holdings, Inc., R.J. Reynolds Vapor Company,
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`and R.J. Reynolds Tobacco Company (collectively, “Reynolds”). Motion Docket No.
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`1199-008. Respondents’ proposed inequitable conduct defense (“Proposed Defense”) is attached
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`as Appendix A to the pending motion. Reynolds filed an opposition (“Opp’n”) to the motion
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`on August 26, 2020, and the Commission Investigative Staff filed a response opposing the
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`requested relief on August 26, 2020.1
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`1 Respondents subsequently filed a motion seeking leave to reply to Reynolds’s opposition and the
`Staff’s response. Motion Docket No. 1199-009. Respondents attached a proposed reply brief as
`Exhibit A to the motion for leave. Motion No. 1199-009 for leave is denied.
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`Ex. 2006-0001
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`Respondents have failed to show good cause to amend their response because, inter alia,
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`they delayed seeking leave to amend their response to the complaint while they were in possession
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`of the information that supposedly forms the basis of alleged inequitable conduct defense. The
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`proposed amendment asserts that the inventors listed on the patents at issue deliberately withheld
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`from the Patent Office certain information about e-cigarettes and e-cigars sold in China under the
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`Ruyan brand name (“Ruyan Information”). See Proposed Defense ¶ 6. Respondents’ Proposed
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`Defense focuses on an internal Reynolds report about the Ruyan product (the “Ruyan Report”)
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`that was produced in discovery on June 1, 2020.2 See Mot. at 2. Within days of receiving the
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`Ruyan Report, Respondents were aware of its alleged significance. See Memo at 7–8.
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`Respondents nevertheless waited until August 14, 2020, to file their motion for leave to amend
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`their response.
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`Respondents argue their motion is timely because it is based on “newly-obtained facts”
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`gathered in discovery, but this argument is not persuasive. See Memo at 1. Although Respondents
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`conducted third-party discovery after receiving the Ruyan Report, Respondents have made no
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`showing that the later third-party discovery formed the basis for any allegation in the Proposed
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`Defense. Indeed, the Proposed Defense is based nearly entirely on the Ruyan Report produced in
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`discovery on June 1.
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`With only a handful of months available for discovery in this investigation, Respondents
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`should have moved promptly for any amendment to the pleadings. The fact discovery period in
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`this investigation has now ended and the period for expert discovery is drawing to a close. See
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`Order No. 5 (June 11, 2020). Re-opening discovery to explore the Proposed Defense would unduly
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`delay the completion of this investigation to no good end (as discussed further below). For at least
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`2 Reynolds produced another version of the Ruyan Report on June 12, 2020. See Opp’n at 16.
`2
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`Ex. 2006-0002
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`these reasons, there is no good cause to amend Respondents’ response to add the proposed
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`inequitable conduct defense.
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`Even if Respondents’ motion to amend were timely, it would fail because it is futile. An
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`amendment to add an inequitable conduct defense is futile unless the respondent proffers
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`“sufficient facts supporting the amended pleading that the claim could survive a dispositive pretrial
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`motion.” See Kemin Foods, L.C. v. Pigmentos Vegetales Del Centro S.A. de C.V., 464 F.3d 1339,
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`1355 (Fed. Cir. 2006); see also Certain Wearable Monitoring Devices, Sys., & Components
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`Thereof (“Wearable Devices”), Inv. No. 337-TA-1190, Order No. 11, at 6–7 (May 6, 2020)
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`(“Permitting Respondents’ amended affirmative defense of inequitable conduct would be futile
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`because the amended pleading falls short of the required standards.”); Certain Wireless Commc’ns
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`Base Stations &Components Thereof, Inv. No. 337TA-871, Order No. 11, at 5 (July 5, 2013)
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`(denying motion to amend a response to a complaint because the motion did not demonstrate any
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`legal support for the proposed defense); Certain Liquid Crystal Display Devices & Prod.
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`Containing the Same, Inv. No. 337-TA-782, Order No. 8, at 7 (Oct. 4, 2011) (inequitable conduct
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`allegations lacked necessary detail to demonstrate nondisclosed information was material).
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`Inequitable conduct generally requires a showing of (1) specific intent to deceive the Patent
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`Office and (2) “but-for materiality,” meaning that the patent would not have issued but for the
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`misrepresentation or omission. Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1287
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`(Fed. Cir. 2011) (en banc). As explained below, the facts pleaded here, even if assumed to be true,
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`fail to support Respondents’ proposed defense.
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`While Respondents allege the inventors “intentionally withheld the Ruyan Report and their
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`knowledge of the Ruyan device from the Patent Office” (Memo at 17), no reasonable factfinder
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`could reach that conclusion based on the alleged facts. Significantly, the Proposed Defense admits
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`3
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`Ex. 2006-0003
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`that the inventors disclosed the Ruyan devices to the Patent Office. Proposed Defense at ¶ 9; see
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`also Memo at 15.
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`Additionally, the proposed pleading alleges no facts that contradict the prosecution history
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`included with the complaint. That record shows that the inventors specifically disclosed the Ruyan
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`devices during examination of the relevant applications. For example, the inventors identified the
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`Ruyan devices by name in the written description portion of the applications. See, e.g., ’123 patent
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`at 14:15–24, 19:31–36. The inventors also pointed out the housing, end cover, power source,
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`electronic control, sensing mechanism, and resistance heating element of the Ruyan devices in the
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`specification. Id. at 19:56–59, 20:8–11, 20:26–32, 20:43-47, 20:52–55, 21:45–48.
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`The inventors further identified multiple patent applications related to the Ruyan devices.
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`The ’123 patent application was accompanied by an Information Disclosure Statement (“IDS”)
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`listing at least twelve Ruyan patents directed to electronic smoking articles. Compl. App. C (’123
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`file history) at 20–33 (EDIS Doc. ID 707376). The IDS included WO 2004/095955, which is the
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`Ruyan patent cited in the Ruyan Report that forms the basis of the Proposed Defense. Id. The
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`Proposed Defense acknowledges, rather than disputes, the filing of this IDS. See Proposed
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`Defense ¶ 13.
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`Because Respondents’ theory rests on a report that is cumulative to information amply
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`presented to the examiner, the proposed amendment would not survive a dispositive motion and is
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`therefore futile. See Astrazeneca Pharm. LP v. Teva Pharm. USA, Inc., 583 F.3d 766, 776 (Fed.
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`Cir. 2009) (affirming summary judgment of no inequitable conduct where there was no showing
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`that the allegedly withheld information was material).
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`Respondents’ amendment is also futile for the additional independent reason that it does
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`not plead specific facts that would support an inference that a particular person acted with intent
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`4
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`Ex. 2006-0004
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`to deceive the Patent Office. See Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312,
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`1328-29 (Fed. Cir. 2009) (inequitable conduct pleadings “must include sufficient allegations of
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`underlying facts from which a court may reasonably infer that a specific individual (1) knew of the
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`withheld material information or of the falsity of the material misrepresentation, and (2) withheld
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`or misrepresented this information with a specific intent to deceive the PTO” (emphasis added)).
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`The pleading makes several suppositions about the inner thoughts of the inventors collectively,
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`see, e.g., Proposed Defense ¶¶ 23-24, but it contains no factual allegations that would support an
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`inference that a specific individual took action with intent to deceive the Patent Office.
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`Respondents have therefore failed to meet their burden at the pleading stage for this additional
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`reason. See Exergen, 575 F.3d at 1328–29.
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`For each of the independent reasons set forth above, Motion No. 1199-008 is denied.
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`Within two days of the date of this document, the parties shall jointly submit a single
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`proposed public version with any proposed redactions indicated in red. If the parties submit
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`excessive redactions, they may be required to provide declarations from individuals with personal
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`knowledge, justifying each proposed redaction and specifically explaining why the information
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`sought to be redacted meets the definition for confidential business information set forth in
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`19 C.F.R. § 201.6(a). To the extent possible, the proposed redactions should be made
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`electronically, in a single PDF file using the “Redact Tool” within Adobe Acrobat. The proposed
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`redactions should be submitted as “marked” but not yet “applied.” The proposed redactions should
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`be submitted via email to Cheney337@usitc.gov and not filed on EDIS.
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`SO ORDERED.
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`5
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`Ex. 2006-0005
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`CERTAIN TOBACCO HEATING ARTICLES AND
`COMPONENTS THEREOF
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`Inv. No. 337-TA-1199
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`PUBLIC CERTIFICATE OF SERVICE
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`I, Lisa R. Barton, hereby certify that the attached ORDER has been served via EDIS
`upon the Commission Investigative Attorney, Sarah Sladic, Esq., and the following parties as
`indicated, on October 23, 2020.
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`Lisa R. Barton, Secretary
`U.S. International Trade Commission
`500 E Street, SW, Room 112
`Washington, DC 20436
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`On Behalf of Complainants RAI Strategic Holdings, Inc., R.J.
`Reynolds Vapor Company, and R.J. Reynolds Tobacco
`Company:
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`David M. Maiorana, Esq.
`JONES DAY
`901 Lakeside Avenue
`Cleveland, OH 44114
`Email: dmaiorana@jonesday.com
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`On Behalf of Respondents Altria Client Services LLC, Altria
`Group, Inc., Philip Morris USA, Inc., Philip Morris
`International Inc., and Philip Morris Products S.A.:
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`Maximilian A. Grant, Esq.
`LATHAM & WATKINS LLP
`555 Eleventh Street, NW, Suite 1000
`Washington, DC 20004
`Email: max.grant@lw.com
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`☐ Via Hand Delivery
`☐ Via Express Delivery
`☐ Via First Class Mail
`☒ Other: Email Notification
`of Availability for Download
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`☐ Via Hand Delivery
`☐ Via Express Delivery
`☐ Via First Class Mail
`☒ Other: Email Notification
`of Availability for Download
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`Ex. 2006-0006
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