Case 1:20-cv-00393-LMB-WEF Document 1462-1 Filed 04/05/23 Page 1 of 7 PageID# 39458
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`Exhibit 1
`Public Rellactell Version
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`Exhibit 1
`Public Rellactell Version
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`Case 1:20-cv-00393-LMB-WEF Document 1462-1 Filed 04/05/23 Page 2 of 7 PageID# 39459
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
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`PHILIP MORRIS PRODUCTS S.A.,
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`Plaintiff,
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`v.
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`R.J. REYNOLDS VAPOR COMPANY,
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`Defendant.
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`Case No. I :20-cv-00393-LMB-TCB
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`DECLARATION OF CHRISTY CANARY-GARNER
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`I, Christy Canary-Garner, declare:
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`I.
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`I am the Vice President of Consumer Marketing for Defendant R.J. Reynolds Vapor
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`Company's ("RJRV") VUSE Vapor Brand. In that role, I am responsible for the commercial
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`business management of the VUSE brand, including portfolio design; promotion strategy; volume
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`and share; and financial P&L delivery.
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`2.
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`I make this declaration in support of RJRV's Opposition to Philip Morris Product
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`S.A.'s ("PMP's") Motion for a Permanent Injunction or, Alternatively, an Ongoing Royalty.
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`3.
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`RJRV is a North Carolina corporation, headquartered in Winston-Salem, North
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`Carolina.
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`4.
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`RJRV does not make, market, or sell combustible cigarettes. Instead, RJRV's
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`business is directed exclusively to the development and introduction of reduced risk tobacco
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`products that present an alternative for adult smokers of combustible cigarettes.
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`
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`Case 1:20-cv-00393-LMB-WEF Document 1462-1 Filed 04/05/23 Page 3 of 7 PageID# 39460
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`5.
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`RJRV's product line currently consists of four e-cigarette products, which are
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`marketed under the trade name VlJSE. The VlJSE products are the cornerstone of RJRV's future
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`and a key embodiment of Reynolds' s comm itment to its guiding principles regarding tobacco harm
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`reduction. (https:/fa ww.revnt1ldsamcrican.corn/abo11t-us/gui<ling-principles.)
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`6.
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`The VUSE lineup includes Alto, Solo, Ciro, and Vibe, shown in the below pictures:
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`(https://vusevapo r.com/blog/find-your-favoritcs-complctc-comparison-of-vusc-vapes)
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`7.
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`Solo (Generation 1) was RJRV's first e-c igarette product in the United States. It
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`was launched in 2013, a time when e-cigarettes were relatively new in this country. At that time,
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`it was our belief that the best way to encourage smokers to try this this new reduced risk technology
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`was to desig n the product to have a physical form that resembled a combustible cigarette, and was
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`thus fami liar to the customers in terms of physical feel. Consistent with this design goal, the Solo
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`product is long and cy lindrical, and mimics the dimensions and shape of a cigarette.
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`8.
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`Solo was successful in the early years after its launch, and RJRV fo llowed with the
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`launch of the Solo (Generation 2) product in 2015, and the Ciro and Vibe products in 20 16. Like
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`the Solo devices, those products a lso offered a form that approx imates a combustible c igarette in
`
`2
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`
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`Case 1:20-cv-00393-LMB-WEF Document 1462-1 Filed 04/05/23 Page 4 of 7 PageID# 39461
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`shape and physical feel.
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`9.
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`These products were initially popular with U.S. consumers, and RJRV became the
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`market leader fore-cigarettes by 2016, with a market share of approximately 37.0%. The Solo
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`devices were our best-selling products at that time.
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`10.
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`Over the years, as adult smokers became more comfortable with vaping as an
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`alternative to smoking combustible cigarettes - which was RJRV's goal - we noticed that their
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`preferences were shifting. More e-cigarette users no longer wanted their products to resemble
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`combustible cigarettes. To the contrary, as they moved away from smoking to RJRV's reduced
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`risk products, customers affirmatively did not want to be reminded of, or perceived by others to
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`be using, cigarettes.
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`11.
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`This shift in consumer preference gave rise to a new category of e-cigarette devices,
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`referred to as "pod-mod," that have a completely different look, style, and feel from the cylindrical,
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`cigarette-shape and design used in Solo, Ciro, and Vibe. One such device is the JUUL, shown
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`below with the associated JUUL pods:
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`3
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`
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`Case 1:20-cv-00393-LMB-WEF Document 1462-1 Filed 04/05/23 Page 5 of 7 PageID# 39462
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`( https://\\ ,1.,1, .juul.com/shop)
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`12.
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`The pod-mod design and style resonated with U.S. consumers who wanted to
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`distance themselves from combustible cigarettes. JUUL launched in 2015, and by 20 17, it held
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`23.8% of thee-cigarette market, while RJRV 's market share had dropped to 3 1.0%. Just one year
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`later, JUUL overtook RJRV as thee-cigarette market leader, with a market share of 68.0%, while
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`RJRV's market share decreased to just 12.5%.
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`13.
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`Partly to respond to that market shift in consumer preferences, RJRV acquired the
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`Alto product, which it began selling in August 2018. A lto does not mimic the experience and form
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`factor of a c igarette. To the contrary, Alto has a different, non-cyl indrical form factor and a
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`different mouthpiece than So lo, Vibe, and Ciro, and Alto uses a "pod-based" system that is
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`different from the ''cartridge-based" system of Solo and C iro and the "closed-tank" system of Vibe:
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`4
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`Case 1:20-cv-00393-LMB-WEF Document 1462-1 Filed 04/05/23 Page 6 of 7 PageID# 39463
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`(https:/ /vusc, apor.com/b log/thc- vusc-gu idc-tu-vaping)
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`14.
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`Alto's features have proven to be very popular with consumers. Following RJRV's
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`nationwide launch of Alto in 2018, its market share has steadily increased, and in the first half of
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`2022, RJRV replaced JUU L as the four-week market leader for the first time since 2018.
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`(https://vapnn llice.nd/:!0:!:!/06/02/, usc-continucs-to-cxpanJ-LH,-marl-cL-:.harc-over-juul .)
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`15.
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`In 2021, total VUSE sales (for all four products combined) were approximately
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`Of that, -
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`was attributable to Alto sales.
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`In the first half of 2022, Alto
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`accounted fo r -
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`of al I VUSE product sales.
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`16.
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`Alto is the single most popular vaping product among U.S . consumers, recently
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`surpassing JUU L. A lto is currently used by more than 4.5 million U.S. consumers.
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`17.
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`If the Court were to enter an injunction barring U.S. sa les of the Alto product, a
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`substantial portion of RJRV's e-cigarette business would be devastated,
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`18.
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`RJRV will not be able to avoid or even m itigate the losses that will follow from the
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`exclusion of the A lto product. A lthough no injunct ion is being sought against Solo (Generation
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`I), Ciro, or Vibe, there is no reason to believe that Alto users w ill switch to one of these other
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`5
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`Case 1:20-cv-00393-LMB-WEF Document 1462-1 Filed 04/05/23 Page 7 of 7 PageID# 39464
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`products if Alto is barred from the market. As I described in paragraphs 7-13 above, consumer
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`preferences have moved away from the shape and design of products I ike Solo, Ciro, and Vibe.
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`19.
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`Beyond the potential consequences to existing Alto users, removal of Alto would
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`20.
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`21.
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`I declare under penalty of perjury that the foregoing is true and correct.
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`~
`Executed this~ day of August, 2022.
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`~h~~~
`
`Christy Cary-Garn
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`6
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