Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 1 of 41 PageID# 36560
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`PHILIP MORRIS PRODUCTS S.A.,
`
`Plaintiff,
`
`
`
`v.
`
`Case No. 1:20-cv-00393-LMB-WEF
`
`R.J. REYNOLDS VAPOR COMPANY,
`
`PUBLIC VERSION
`
`Defendant.
`
`DEFENDANT’S MEMORANDUM IN OPPOSITION TO PLAINTIFF’S MOTION FOR
`A PERMANENT INJUNCTION OR, ALTERNATIVELY, AN ONGOING ROYALTY
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 2 of 41 PageID# 36561
`
`TABLE OF CONTENTS
`
`
`Page
`TABLE OF AUTHORITIES ......................................................................................................... ii
`TABLE OF EXHIBITS ................................................................................................................ vi
`TABLE OF ABBREVIATIONS ................................................................................................ viii
`INTRODUCTION ......................................................................................................................... 1
`I.
`PMP IS NOT ENTITLED TO A PERMANENT INJUNCTION ..................................... 2
`A.
`PMP Has Made No Cognizable Showing Of Irreparable Harm ............................ 2
`1.
`The asserted harms related to IQOS and
`are speculative and
`irrelevant because these products are not on the U.S. market ................... 3
`Even if IQOS or
` were sold in the U.S. market at some
`future time, there would be no irreparable harm to PMP .......................... 6
`PMP’s other alleged harms are equally speculative ................................ 10
`PMP’s own actions undercut its claims of irreparable harm ................... 11
`PMP cannot establish a causal nexus between RJRV’s
`infringement and PMP’s alleged irreparable harm .................................. 12
`PMP Has An Adequate Remedy at Law .............................................................. 14
`B.
`The Balance of Hardships Favors RJRV ............................................................. 15
`C.
`A Permanent Injunction Would Disserve The Public Interest ............................. 16
`D.
`THE COURT SHOULD AWARD PMP THE JURY’S ROYALTY RATES ................ 19
`A.
`PMP’s Royalty Rate For The ’265 Patent Should Be Rejected ........................... 20
`1.
`PMP’s proposed royalty rate for the ’265 patent improperly
`ignores the jury’s royalty rate and the legal requirements of patent
`damages.................................................................................................... 20
`Changed circumstances do not justify ignoring the jury’s rate ................ 22
`PMP cannot ignore the jury’s royalty rate by characterizing
`RJRV’s ongoing infringement as willful ................................................. 24
`The Read factors are not relevant ............................................................ 26
`4.
`The Court Should Adopt the Jury’s Royalty Rate for the ’265 Patent ................ 28
`B.
`PMP’s Enhanced Royalty for the ’911 Patent Should Be Rejected ..................... 30
`C.
`CONCLUSION ............................................................................................................................ 30
`
`
`2.
`
`3.
`4.
`5.
`
`II.
`
`2.
`3.
`
`
`
`-i-
`
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`

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`Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 3 of 41 PageID# 36562
`
`TABLE OF AUTHORITIES
`
`
`Page(s)
`
`CASES
`ABS Glob., Inc. v. Inguran, LLC,
`2020 WL 2405380 (W.D. Wis. May 12, 2020) .......................................................................25
`ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc.,
`694 F.3d 1312 (Fed. Cir. 2012)........................................................................................ passim
`ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc.,
`827 F. Supp. 2d 641 (E.D. Va. 2011) ................................................................................25, 26
`Additive Controls & Measurement Sys., Inc. v. Flowdata, Inc.,
`96 F.3d 1390 (Fed. Cir. 1996)..................................................................................................19
`Affinity Labs of Tex. LLC v. BMW N. Am., LLC,
`783 F. Supp. 2d 891 (E.D. Tex. 2011) ...............................................................................24, 26
`Aland v. U.S. Dep’t of Interior,
`2022 WL 1539522 (N.D. Cal. May 16, 2022) ...........................................................................4
`Amado v. Microsoft Corp.,
`517 F.3d 1353 (2008) .........................................................................................................24, 26
`Amoco Prod. Co. v. Vill. of Gambell,
`480 U.S. 531 (1987) ...................................................................................................................2
`Apple Inc. v. Samsung Elecs. Co. (Apple III),
`735 F.3d 1352 (Fed. Cir. 2013)................................................................................2, 12, 15, 17
`Apple Inc. v. Samsung Elecs. Co. (Apple V),
`809 F.3d 633 (Fed. Cir. 2015)..................................................................................................14
`Apple, Inc. v. Samsung Elecs. Co. (Apple VI),
`2014 WL 6687122 (N.D. Cal. Nov. 25, 2014) ..................................................................19, 28
`Arctic Cat Inc. v. Bombardier Rec. Prods. Inc.,
`876 F.3d 1350 (Fed. Cir. 2017)................................................................................................26
`Bianco v. Globus Med., Inc.,
`2014 WL 1049067 (E.D. Tex. Mar. 17, 2014) (Bryson, J.) .....................................................11
`Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd.,
`2014 WL 1320154 (W.D. Pa. Mar. 31, 2014) .........................................................................29
`Celgard, LLC v. LG Chem, Ltd.,
`624 F. App’x 748 (Fed. Cir. 2015) ..........................................................................................10
`Centripetal Networks, Inc. v. Cisco Sys., Inc.,
`492 F. Supp. 3d 495 (E.D. Va. 2020) ......................................................................................28
`
`
`
`-ii-
`
`
`
`

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`Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 4 of 41 PageID# 36563
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Cioffi v. Google, Inc.,
`2017 WL 4011143 (E.D. Tex. Sept. 12, 2017) ......................................................19, 22, 25, 28
`City of L.A. v. Lyons,
`461 U.S. 95 (1983) .................................................................................................................3, 6
`Cordis Corp. v. Bos. Sci. Corp.,
`99 F. App’x 928 (Fed. Cir. 2004) ............................................................................................16
`Douglas Dynamics, LLC v. Buyers Prods. Co.,
`717 F.3d 1336 (Fed. Cir. 2013)..........................................................................................14, 26
`eBay Inc. v. MercExchange, L.L.C.,
`547 U.S. 388 (2006) .............................................................................................................2, 11
`EMC Corp. v. Zerto, Inc.,
`2016 WL 1291757 (D. Del. Mar. 31, 2016) ..............................................................................9
`EMC Corp. v. Zerto, Inc.,
`2017 WL 3434212 (D. Del. Aug. 10, 2017) ................................................................22, 25, 28
`Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co.,
`2017 WL 3034655 (E.D. Tex. July 18, 2017) .......................................................19, 22, 26, 28
`Ericsson, Inc. v. D-Link Sys., Inc.,
`773 F.3d 1201 (Fed. Cir. 2014)................................................................................................21
`Genband US LLC v. Metaswitch Networks Corp.,
`2018 WL 11357619 (E.D. Tex. Mar. 22, 2018) ......................................................................26
`Genband US LLC v. Metaswitch Networks Corp.,
`861 F.3d 1378 (Fed. Cir. 2017)..........................................................................................11, 12
`Halo Elecs., Inc. v. Pulse Elecs., Inc.,
`579 U.S. 93 (2016) ...................................................................................................................25
`High Tech Med. Instrumentation, Inc. v. New Image Indus., Inc.,
`49 F.3d 1551 (Fed. Cir. 1995)..................................................................................................10
`Humanscale Corp. v. CompX Int’l Inc.,
`2010 WL 1779963 (E.D. Va. Apr. 29, 2010) ............................................................................9
`Hynix Semiconductor Inc. v. Rambus Inc.,
`609 F. Supp. 2d 951 (N.D. Cal. 2009) .....................................................................................11
`I/P Engine, Inc. v. AOL Inc.,
`2014 WL 309245 (E.D. Va. Jan. 28, 2014) ...........................................................22, 24, 25, 26
`i4i Ltd. v. Microsoft Corp.,
`598 F.3d 831 (Fed. Cir. 2010)..................................................................................................15
`
`
`
`-iii-
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`

`

`Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 5 of 41 PageID# 36564
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Integra Lifesciences Corp. v. Hyperbranch Med. Tech., Inc.,
`2016 WL 4770244 (D. Del. Aug. 12, 2016) ............................................................................13
`Jiaxing Super Lighting Elec. Appliance Co. v. CH Lighting Tech. Co.,
`2022 WL 3371630 (W.D. Tex. Aug. 16, 2022) .........................................................................4
`Joyal Prods, Inc. v. Johnson Elec. N. Am., Inc.,
`2009 WL 512156 (D.N.J. Feb. 27, 2009) ..........................................................................24, 26
`Juno Therapeutics, Inc. v. Kite Pharma, Inc.,
`2020 WL 2844410 (C.D. Cal. Apr. 2, 2020) ...........................................................................28
`Juul Labs, Inc. v. FDA,
`No. 22-1123 (D.C. Cir.) ...........................................................................................................17
`Koninklijke Philips N.V. v. Thales DIS AIS USA LLC,
`39 F.4th 1377 (Fed. Cir. 2022) ..............................................................................................3, 6
`LG Elecs. U.S.A., Inc. v. Whirlpool Corp.,
`798 F. Supp. 2d 541 (D. Del. 2011) .........................................................................................13
`Macom Tech. Sols. Holdings, Inc. v. Infineon Techs. AG,
`881 F.3d 1323 (Fed. Cir. 2018)................................................................................................18
`Mass Engineered Design, Inc. v. Planar Sys., Inc.,
`2018 WL 6059375 (D. Or. Nov. 19, 2018) ..............................................................................26
`MercExchange, L.L.C. v. eBay, Inc.,
`500 F. Supp. 2d 556 (E.D. Va. 2007) ......................................................................................11
`Micro Chem., Inc. v. Lextron, Inc.,
`318 F.3d 1119 (Fed. Cir. 2003)..................................................................................................8
`MLC Intell. Prop., LLC v. Micron Tech., Inc.,
`10 F.4th 1358 (Fed. Cir. 2021) ................................................................................................21
`Monsanto Co. v. Geertson Seed Farms,
`561 U.S. 139 (2010) ...................................................................................................................2
`Nichia Corp. v. Everlight Ams., Inc.,
`855 F.3d 1328 (Fed. Cir. 2017)..................................................................................................2
`Read Corp. v. Portec, Inc.,
`970 F.2d 816 (Fed. Cir. 1992)............................................................................................26, 27
`ResQNet.com, Inc. v. Lansa, Inc.,
`594 F.3d 860 (Fed. Cir. 2010)..................................................................................................21
`Riverbed Tech., Inc. v. Silver Peak Sys., Inc.,
`2014 WL 4695765 (D. Del. Sept. 12, 2014) ............................................................................13
`
`
`
`-iv-
`
`
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 6 of 41 PageID# 36565
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Spansion, Inc. v. ITC,
`629 F.3d 1331 (Fed. Cir 2010).............................................................................................3, 18
`SRI Int’l, Inc. v. Cisco Sys., Inc.,
`930 F.3d 1295 (Fed. Cir. 2019)................................................................................................28
`State Farm Mut. Auto. Ins. Co. v. Campbell,
`538 U.S. 408 (2007) .................................................................................................................25
`Takeda Pharms. U.S.A., Inc. v. Mylan Pharms. Inc.,
`967 F.3d 1339 (Fed. Cir. 2020)..............................................................................................2, 5
`Thomas v. FTS USA, LLC,
`193 F. Supp. 3d 623 (E.D. Va. 2016) ......................................................................................18
`TransPerfect Glob., Inc. v. MotionPoint Corp.,
`2014 WL 6068384 (N.D. Cal. Nov. 13, 2014) ........................................................................28
`Vectura Ltd. v. GlaxoSmithKline LLC,
`2019 WL 4346502 (D. Del. Sept. 12, 2019) ..........................................................22, 26, 28, 29
`Verinata Health, Inc. v. Ariosa Diagnostics, Inc.,
`809 F. App’x 965 (Fed. Cir. 2020) ............................................................................................8
`Virnetx Inc. v. Apple Inc.,
`324 F. Supp. 3d 836 (E.D. Tex. 2017) .....................................................................................26
`Virnetx, Inc. v. Cisco Systems, Inc.,
`767 F.3d 1308 (Fed. Cir. 2014)................................................................................................22
`Voda v. Cordis Corp.,
`536 F.3d 1311 (Fed. Cir. 2008)..................................................................................................7
`Weinberger v. Romero-Barcelo,
`456 U.S. 305 (1982) .................................................................................................................16
`XY, LLC v. Trans Ova Genetics, L.C.,
`890 F.3d 1282 (Fed. Cir. 2018)................................................................................................20
`STATUTES
`35 U.S.C. § 283 ..............................................................................................................................18
`35 U.S.C. § 284 ..............................................................................................................................25
`OTHER AUTHORITIES
`Fed. R. Civ. P. 65 .....................................................................................................................18, 19
`Mark A. Lemley, The Ongoing Confusion Over Ongoing Royalties,
`76 Mo. L. Rev. 695 (2011) ......................................................................................................22
`Matthews Annotated Patent Digest § 30:90.100 ......................................................................26, 28
`
`
`
`-v-
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`

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`
`TABLEOF EXHIBITS
`
`Exhibit No.
`1
`2
`3
`4
`
`
`
`
`Declaration of Christy Canary-Garner (Aug. 31, 2022
`
`Declaration of Dr. Jeffrey C. Suhling (Sept. 1, 2022
`
`(Sept. 1, 2022
`Declaration of Ryan Sullivan, Ph.D.
`Excerpts of Commission Opinion, Certain Tobacco Heating Articles,
`
`Inv. No. 337-TA-1199 (Sept. 29, 2021
`Limited Exclusion Order, Certain Tobacco Heating Articles,
`
`Inv. No. 337-TA-1199 (Sept. 29, 2021
`Order Denying Stay, Philip Morris Prods. S_A. v. ITC, No. 22-1227 (Fed. Cir.
`Jan. 25, 2022
`Excerpts of Commission Opinion Denying Stay, Certain Tobacco Heating
`Articles, Inv. No. 337-TA-1199 (Jan. 20, 2022
`Excerpts of Transcript from Philip Morris International Q3 2021 Earnings Call
`
`
`Oct. 19, 2021
`
`Excerpts of PMP’s Supplemental Response to RJRV’s 6th Set ofE.D. Va.
`Interrogatories
`(No. 23)
`(June 8, 2021
`
`
`
`10 __|Excerpts of Deposition of Martin King (June 25, 2021
`
`|
`_|
`
`
`||
`12
`|
`
`13
`Excerpts of Deposition of Dr. Moira Gilchrist
`(June 18, 2021
`
`Excerpts ofAltria/PM USA’s 8th Supplemental Responses to RIRV’s ITC
`14
`
`(Sept. 25, 2020
`Interrogatories
`(Nos. 1-19)
`
`
`Excerpts of PMP’s Post-Hearing Initial ITC Br. (Mar. 31, 2021) (Public
`Version
`
`
`Excerpts of Deposition of Michael Manson
`(Nov. 18, 2020
`
`Excerpts of PMP’s Nonconfidential Opening Br., Philip Morris Prods. S.A. v.
`
`
`
`ITC, No. 22-1227 (Fed. Cir.
`ar. 21, 2022
`(Oct. 23, 2020
`Excerpts of Dr. Stacey M. Benson ITC Expert Rebuttal Report
`
`
`
`Excerpts of Dr. Jonathan Arnold ITC Expert Rebuttal Report
`(Oct. 23,2020
`
`
`(Oct. 23, 2020
`Excerpts of Stacy Ehrlich ITC Expert Rebuttal Report
`Excerpts of Brad Rodu ITC Expert Report
`(Oct. 5, 2020
`
`
`
`(Dec. 3, 2020
`Excerpts of Deposition of Nicholas Gilley
`
`
`Excerpts of PMP’s 3rd Supplemental Responses to RJRV's 2nd Set ofE.D. Va.
`
`Interrogatories
`(Apr. 6, 2021
`(No. 14)
`
`Intentionally Left Blank
`
`Excerpts of Deposition of Edward Kiernan (Apr. 16, 2021
`Excerpts of E.D. Va. Trial Transcript
`
`
`
`U.S. Patent No. 9,814,265
`Excerpts of ITC Trial Exhibit: CX-0183C
`
`Excerpts of ITC Trial Exhibit: CX-0190C
`
`Excerpts of ITC Trial Exhibit: CX-0614C
`
`
`
`
`
`
`
`5
`-
`
`6
`
`7
`
`8
`
`9
`
`15
`
`16
`7
`
`18
`19
`20
`21
`22
`3
`
`
`
`27
`28
`29
`30
`
`-Vi-
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`
`TABLE OF EXHIBITS
`(continued)
`
`Excerpts of RJRV’s Opening Post-Hearing ITC Br. (Mar. 31, 2021)
`Confidential Version
`Excerpts of Deposition of Dr. James Figlar (June 3, 2022
`Excerpts of Deposition of Dr. James Figlar (June 24, 2021
`Excerpts of ITC Trial Exhibit: CX-0528
`Excerpts of ITC Hearing Transcript
`Excerpts ofAmicus Brief ofNational Association of Convenience Stores, Juz/
`Labs, Inc. v. U.S. FDA, No. 22-1123 (D.C. Cir.)
`(June 30, 2022
`Excerpts of PMP’s Emergency Motion to Stay Enforcement of ITC’s Orders
`Pending Review and Motion to Expedite, Philip Morris Prods. S.A. v. ITC,
`No. 22-1227 (Fed. Cir.)
`(Dec. 7, 2021)
`(Public
`Excerpts of PMP Expert Paul K. Meyer Direct Examination E.D. Va. Trial
`Demonstratives (PDX 5
`
`38
`39
`40
`CompanyNews, Tobacco JournalInternational (Aug. 26, 2022
`
`41
`Intentionally Left Blank
`2
`Excerpts of PMP’s 8th Supplemental Responses to RJRV’s Ist Set of ITC
`Interrogatories
`(Nos. 1-19)
`(Sept. 25, 2020
`Intentionally Left Blank
`
`|
`||
`
`Exhibit No.
`3]
`
`32
`33
`34
`35
`36
`
`37
`
`43
`44
`
`
`
`
`
`-Vii-
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`
`TABLE OF ABBREVIATIONS
`
`The following abbreviations are usedin this brief.
`
`Parties
`
`|PMP
`
`—_| Philip Morris ProductsS.A. R.J. Reynolds Vapor Compa
`
`Citations
`
`
`
`Brief in Support of PMP’s Motion for a Permanent Injunctionor,
`:
`:
`Alternatively, an On
`
`PMP B
`
`r.
`
`
`
`Terms
`
`°265 patent
`911 patent
`Alto
`
`U.S. Patent No. 9,814,265
`U.S. Patent No. 10,104,911
`VUSEAlto
`
`cc
`
`combustible cigarette
`
`Term
`
`VUSECiro
`Ciro
`ENDS
`electronic nicotine delivery
`system
`
`FDA
`U.S. Food and Drug Administration
`HNB
`heat not burn
`
`IQOS
`
`ITC
`LEO
`
`PMTA
`PRRP
`Solo G2
`
`IQOS HNB
`
`U.S. International Trade Commission
`ITC Limited Exclusion Order
`
`FDA Premarket Tobacco Product Application
`potentially reduced risk product
`VUSESolo G2
`
`Vibe
`
`VUSEVibe
`
`All emphasis added unless otherwise noted.
`
`
`
`-Vill-
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 10 of 41 PageID# 36569
`
`
`
`INTRODUCTION
`
`PMP asks the Court to permanently enjoin sales of two RJRV products: VUSE Solo G2
`
`and VUSE Alto, which is the market-leading e-cigarette, used by more than
`
` U.S. adults
`
`as an alternative to CCs. PMP bears a high burden to justify such relief, including showing that,
`
`absent an injunction, it will suffer irreparable harm that is both concrete and either actual or
`
`imminent. PMP does not come close. It asserts that continued sales of RJRV’s products will
`
`undermine acceptance of IQOS and
`
`, but neither product is sold in the U.S. IQOS is banned
`
`from the U.S. market because the ITC found it infringes two Reynolds patents.
`
`
`
`years, and as Judge O’Grady recognized, “[t]here is no basis to differentiate the potential outcome
`
`beyond speculation.” Dkt. 1184-1 at 42 (excluding expert testimony on the likelihood of PMTA
`
`approval). And no PMP product—including
`
`—
`
`
`
`. That process will take
`
`
`
`PMP’s own conduct also is incompatible with a claim of irreparable harm. PMP sat idly
`
`for years while Alto and Solo G2 were on the market without asserting its patents, much less
`
`seeking an injunction. PMP asserted these patents only after RJRV sued PMP for infringement,
`
`and even then waited more than 8 months to include a request for injunctive relief. Given this
`
`delay, PMP’s bid for a permanent injunction is not about irreparable harm; it is about leverage.
`
`Indeed, PMP’s infringement claims here are among many being asserted in various tribunals
`
`around the globe by the parties or their affiliates. E.g., Ex. 40; Ex. 26. But leverage in a business
`
`dispute is not an appropriate reason to invoke the equitable authority of this Court. That is
`
`especially true here, where PMP has an adequate remedy at law in the form of an ongoing royalty.
`
`Absent irreparable harm, the Court should deny PMP’s motion for an injunction, and
`
`instead order an ongoing royalty, at the rates set by the jury, 0.6% for Alto cartridges and 2% for
`
`
`
`
`
`
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 11 of 41 PageID# 36570
`
`
`Solo G2 cartridges, which will yield payments to PMP presently valued in excess of
`
`
`
`over the life of its patents. The Court should reject PMP’s requested rates—56 times the jury’s for
`
`Alto—because they are punitive, untethered to the value of the technology, and contrary to law.
`
`I.
`
`PMP IS NOT ENTITLED TO A PERMANENT INJUNCTION
`
`PMP acts as though injunctive relief inexorably follows a finding of patent infringement.
`
`See PMP Br. at 1-2. Not so. “The Supreme Court has cautioned that ‘[a]n injunction is a drastic
`
`and extraordinary remedy, which should not be granted as a matter of course.’” Apple Inc. v.
`
`Samsung Elecs. Co. (Apple III), 735 F.3d 1352, 1359 (Fed. Cir. 2013) (quoting Monsanto Co. v.
`
`Geertson Seed Farms, 561 U.S. 139, 165 (2010)). To justify injunctive relief, PMP must
`
`demonstrate: “(1) that it has suffered an irreparable injury; (2) that remedies available at law, such
`
`as monetary damages, are inadequate to compensate for that injury; (3) that, considering the
`
`balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
`
`(4) that the public interest would not be disserved by a permanent injunction.” eBay Inc. v.
`
`MercExchange, L.L.C., 547 U.S. 388, 391 (2006). PMP “must prove that it meets all four equitable
`
`factors.” Nichia Corp. v. Everlight Ams., Inc., 855 F.3d 1328, 1341 (Fed. Cir. 2017).
`
`A.
`
`PMP Has Made No Cognizable Showing Of Irreparable Harm
`
`PMP’s claim of irreparable harm is based on (i) alleged competitive harm in the U.S. to
`
`IQOS and
`
`, which are not even sold here; and (ii) undefined future injury to PMP’s
`
`reputation and goodwill. PMP Br. at 6-10. Neither basis supports a finding of irreparable harm
`
`that is “actual or imminent,” which PMP must establish “to sustain its substantial burden,” Takeda
`
`Pharms. U.S.A., Inc. v. Mylan Pharms. Inc., 967 F.3d 1339, 1349 (Fed. Cir. 2020).1 PMP’s
`
`
`1 The Federal Circuit “treat[s] the irreparable harm factor the same in both the preliminary and
`permanent injunction contexts.” Apple III, 735 F.3d at 1361; see also Amoco Prod. Co. v. Vill. of
`Gambell, 480 U.S. 531, 546 n.12 (1987) (“The standard for a preliminary injunction is essentially
`the same as for a permanent injunction[.]”).
`
`
`
`-2-
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`Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 12 of 41 PageID# 36571
`
`
`argument instead, relates exclusively to speculative harm dependent on potential and future acts
`
`outside of PMP’s control. But “[t]he mere possibility or speculation of harm is insufficient.”
`
`Koninklijke Philips N.V. v. Thales DIS AIS USA LLC, 39 F.4th 1377, 1380 (Fed. Cir. 2022). And
`
`irreparable harm “cannot be met where there is no showing of any real or immediate threat” of
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`harm. City of L.A. v. Lyons, 461 U.S. 95, 111 (1983). Merely asserting “speculative . . . future
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`injury requires a finding that this prerequisite of equitable relief has not been fulfilled.” Id.
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`1.
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` are speculative and
`The asserted harms related to IQOS and
`irrelevant because these products are not on the U.S. market
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`There is no dispute that neither IQOS nor
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` is currently sold in the U.S. Thus, there
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`is not and cannot be “actual or imminent harm” to those products posed by Alto or Solo G2.
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`IQOS. IQOS was previously sold in three U.S. cities (totaling only around
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`)
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`but it has since been barred after the ITC determined that IQOS infringes 2 patents commercialized
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`by RJRV. Ex. 4 at 80; Ex. 5 at 2-3.2 That remains IQOS’s status to this day. Any current, actual
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`harm to IQOS was therefore self-inflicted by PMP’s own infringing acts, not sales of Alto or Solo
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`G2. Faced with this fact, PMP asks the Court to ignore the present and speculate as to what may
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`happen in the future. As Judge O’Grady observed, the ITC decision “undercuts the irreparable
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`harm undergirding PMP’s claim for injunctive relief.” Dkt. 702.
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`First, PMP argues that it “presented compelling grounds for reversal” in its Federal Circuit
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`appeal of the ITC LEO, and that it will be able to import IQOS after that court’s decision. See
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`PMP Br. at 10. This Court should not be drawn into making an irreparable-harm finding based on
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`2 PMP argues that, because Reynolds obtained an LEO at the ITC to redress PMP’s infringing acts,
`a permanent injunction here “is the equitable and just result.” PMP Br. at 1. That argument elides
`the critical difference between an LEO, which by statute follows a finding of infringement without
`regard to irreparable harm, and a permanent injunction, which requires a finding of infringement
`and a showing of irreparable harm. Spansion, Inc. v. ITC, 629 F.3d 1331, 1358-59 (Fed. Cir 2010).
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`Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 13 of 41 PageID# 36572
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`a prediction that the ITC’s ruling—which was rendered after a 6-day hearing in which 19
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`witnesses, including 12 experts, testified—will be overturned. See, e.g., Aland v. U.S. Dep’t of
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`Interior, 2022 WL 1539522, at *2 (N.D. Cal. May 16, 2022) (argument that “presuppose[d] that
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`the outcome of [an] appeal” was “speculative”; “it is impossible to say what might happen on
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`appeal”). In any event, PMP moved for a stay of the exclusion order at the ITC and the Federal
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`Circuit, and was rebuked in both places. The Federal Circuit concluded that a stay was “not
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`warranted,” in part because PMP had not established a “strong showing of a likelihood of success
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`on the merits.” Ex. 6 at 2. The ITC found that PMP’s stay request did not even meet the lesser
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`standard of “Rais[ing] Any Admittedly Difficult Legal Questions.” Ex. 7 at 5-14.
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`Second, PMP says it intends to avoid the ITC LEO by “
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`
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`to no actual or concrete proof that this effort is imminent; in fact, it provides no details at all. PMP,
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`.” PMP Br. at 10. Yet PMP points
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`for example, does not identify
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`. Rather, PMP
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`points to a declaration from Dr. Moira Gilchrist, PMP’s VP of Strategic and Scientific
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`Communications, who simply states, without support, that PMP “
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`” and “
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`
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`
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`.” Dkt. 1411, Ex. 5 ¶ 17. But courts have declined to
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`rely on this type of “self-serving” testimony from corporate officers to make a finding of
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`irreparable harm, explaining that it has “dubious” reliability—especially when “unsupported by
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`other admitted evidence.” Jiaxing Super Lighting Elec. Appliance Co. v. CH Lighting Tech. Co.,
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`2022 WL 3371630, at *19 (W.D. Tex. Aug. 16, 2022). PMP also cites to an online news article
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`Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 14 of 41 PageID# 36573
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`from February 2022 that reports that PMP “revealed its plans to get [IQOS] back on store shelves
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`by 2023” by “shifting manufacturing of IQOS to the U.S.” Dkt. 1406, Ex. 29 at 1. This “support”
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`in no way establishes that PMP has concrete or imminent plans to shift manufacturing here. Dr.
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`Gilchrist’s and the article’s “nonspecific and unsupported assertions” “fall[] far short of
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`establishing that irreparable harm has occurred.” Takeda, 967 F.3d at 1349-50.
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`. PMP’s claims of irreparable harm to
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` are similarly unsupported.
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` has
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`never been sold in the U.S. Any finding about whether, when, or how it might be impacted by any
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`other products on the market at some future time is pure conjecture. As PMP notes, it has sold
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`, see PMP Br. at 4;
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` PMP now says that it will
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`
`
`
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` id., but that is based only on the say-so of Dr. Gilchrist, see supra, and she points
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`to a different, later date than PMP’s CFO stated publicly. Ex. 8 (stating PMTA would be filed “in
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`the second half of 2022”). Even if the PMTA does not slip again and is filed on this new
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`
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`date,
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` would still be years from entering the U.S. market, if it ever does. As PMP has
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`explained,
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`21. The PMTA process takes “
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`,” and “
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`.” Id. at 21, 25; Ex. 15 at 77-78.
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` Ex. 9 at
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`
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`Compounding this speculative exercise, PMP itself has not operated directly in the U.S.
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`market. It instead has contracted with other entities to market, distribute, and sell its products here.
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`See infra Section I.A.2 (discussing PMP’s business practices). But PMP’s corporate designee
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`Martin King testified that PMP has no such arrangements for
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`: PMP has no
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`; PMP has not
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`-5-
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`Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 15 of 41 PageID# 36574
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`and PMP has made no
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` Ex. 10 at 178:9-21.
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`As is evident, PMP’s argument is based on a series of hypothetical events—including
`
`
`
`
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`—all of which fails to show “any real or immediate threat” of harm. Lyons, 461
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`U.S. at 111. Further, PMP’s theorizing that “continuing sales of the infringing products will
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`,” PMP
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`Br. at 9, is precisely the type of “cloud on the business” harm that the Federal Circuit has explained
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`is “speculative” and “does not justify” an injunction. Philips, 39 F.4th at 1380.
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`2.
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` were sold in the U.S. market at some future
`Even if IQOS or
`time, there would be no irreparable harm to PMP
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`Even if IQOS or
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` were actually sold on the U.S. market at some future date, PMP
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`would not suffer any irreparable harm from the simultaneous presence of VUSE Alto or Solo G2.
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`First, PMP has never directly participated in the U.S. market. PMP is a Swiss company;
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`its U.S.-related operations have been limited to contracting with other companies. PMP
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`. Ex. 11 § 6; Ex. 12 §§ 2, 9; Ex. 10 at 41:22-42:12
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`
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`at 46:14-24; see also Ex. 13 at 23:7-11, 111:4-15; Ex. 14 at 14-41, 145. PMP “
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` and
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` id.
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`
`
`
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`.” Ex. 42 at 3.
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`Rather, PMP received
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`. Id. at 3-5, 18, 20. Under the
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`, PMP “
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`-6-
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`Case 1:20-cv-00393-LMB-WEF Document 1423 Filed 09/02/22 Page 16 of 41 PageID# 36575
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`” and “
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`” PMP Br. at 8.
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`At best, then, PMP’s claims relate to speculative harms that might be suffered in the future
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`by PMP’s
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` that actually operates in the U.S. market, not PMP, which does not.
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`Notably, even when PMP’s licensee was part of this lawsuit, its licensee did not seek injunctive
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`relief against the “irreparable harm” that PMP now claims. See Dkt. 39 at 42. Regardless, PMP
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`“must show that ‘it has suffered an irreparable injury,’” Voda v. Cordis Corp., 536 F.3d 1311,
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`1329 (Fed. Cir. 2008), and given PMP’s relationship to its exclusive licensee that actually sold
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`IQOS in the U.S.—requiring
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`—those supposed
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`harms are indirect and insufficient to establish irreparable injury. E.g., id. (no irreparable harm
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`when patentee “had attempted to prove irreparable injury by alleging irreparable harm to his
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`exclusive licensee, rather than himself”); ActiveVideo Networks, Inc. v. Verizon