Case 1:20-cv-00393-LMB-WEF Document 1468-10 Filed 04/05/23 Page 1 of 6 PageID# 40824
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`Exhibit 19
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`Exhibit 19
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`Case 1:20-cv-00393-LMB-WEF Document 1468-10 Filed 04/05/23 Page 2 of 6 PageID# 40825
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`----------------------------x
`PHILIP MORRIS PRODUCTS S.A.,: Civil Action No.:
` : 1:20-cv-393
` Plaintiff, :
` versus : Thursday, July 21, 2022
` :
`R.J. REYNOLDS VAPOR COMPANY,:
` :
` Defendant. :
`----------------------------x
`
` The above-entitled motions hearing was heard before
`the Honorable Leonie M. Brinkema, United States District
`Judge. This proceeding commenced at 10:43 a.m.
`
`A P P E A R A N C E S:
`
`FOR THE PLAINTIFF: LAWRENCE GOTTS, ESQUIRE
` LATHAM & WATKINS, LLP (DC)
` 555 11th Street, NW
` Suite 1000
` Washington, D.C. 20004
` (202) 637-2200
`
` GREGORY SOBOLSKI, ESQUIRE
` LATHAM & WATKINS, LLP (CA)
` 505 Montgomery Street
` Suite 2000
` San Francisco, California 94111
` (415) 395-8035
`
` BRETT SANDFORD, ESQUIRE
` LATHAM & WATKINS, LLP (CA)
` 140 Scott Drive
` Menlo Park, California 94025
` (650) 328-4600
`
` CLEMENT NAPLES, ESQUIRE
` LATHAM & WATKINS, LLP (NY)
` 1271 Avenue of the Americas
` New York, New York 10020
` (212) 906-1331
`
`
`
`1
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`Stephanie Austin, RPR, CRR USDC/EDVA (571) 298-1649
`
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`Case 1:20-cv-00393-LMB-WEF Document 1468-10 Filed 04/05/23 Page 3 of 6 PageID# 40826
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`is the royalty, because I think that's one that you may have
`some issues about, although obviously there were royalty
`numbers discussed during the trial.
`MR. SANDFORD: Correct, Your Honor.
`THE COURT: All right. Let me hear from the
`Reynolds folks what your opposition to injunctive relief
`would be. And, again, I'm not forcing you to -- I just want
`to get a preview. Give me a preview of what you think is
`coming down the pike.
`MR. BURNETTE: Yes, Your Honor. Jason Burnette
`for Reynolds.
`We have been thinking about it. This is a very
`important issue for my client. The Alto product is its most
`successful product. And, again, this is -- R.J. Reynolds
`Vapor Company is the company that sells e-cigarettes. We're
`not talking about other Reynolds' entities in conventional
`cigarettes. So the products that they seek to exclude from
`the U.S. market in total would create a huge hardship for my
`client.
`
`Our argument will be that the basis that has been
`put forward so far in the interrogatory responses on the
`injunction claim relate to Philip Morris's, or PMP's IQOS
`product and the VEEV product, which you may recall from
`trial. The IQOS product has been excluded from the U.S.
`market under the ITC's ruling. And Judge O'Grady's order
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`Stephanie Austin, RPR, CRR USDC/EDVA (571) 298-1649
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`Case 1:20-cv-00393-LMB-WEF Document 1468-10 Filed 04/05/23 Page 4 of 6 PageID# 40827
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`are statutorily stayed, but they're trying to use their
`other products to prevent us from selling our products in
`the U.S. when that would create a great hardship to R.J.
`Reynolds Vapor, and there's no basis for it because there's
`not a current or imminent hardship to PMP.
`THE COURT: What if that were to change, however?
`What if the Federal Circuit reverses the ITC and now Philip
`Morris can bring those products into the United States? So
`now that there's more of an argument that they can make that
`the infringing product that you're selling does impact, to
`some degree, the ability of them to make their sales?
`MR. BURNETTE: It would not affect the other
`arguments we would make under the balance of the hardships
`and the four factors of the eBay test. But the argument I
`just articulated would be far weakened by the fact that IQOS
`could be sold in the United States.
`THE COURT: All right.
`MR. BURNETTE: But the issue is, you heard the
`evidence at trial about these companies being competitors.
`The companies are competitors, but these are not competing
`products. The IQOS product is a heat, not burn, product.
`And the Alto and the Solo are e-cigarette products, they use
`vapor and aerosol. The IQOS product takes actual tobacco,
`heats it, but doesn't burn it, so that it creates a tobacco
`vapor.
`
`17
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`Stephanie Austin, RPR, CRR USDC/EDVA (571) 298-1649
`
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`Case 1:20-cv-00393-LMB-WEF Document 1468-10 Filed 04/05/23 Page 5 of 6 PageID# 40828
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`In some ways they're similar, because they're
`designed to be alternatives to conventional cigarettes, but
`they're not competing products. So even if IQOS was sold in
`the United States, we don't think PM can show the
`competitive harm necessarily for the exceptional remedy of
`an injunction.
`THE COURT: All right. Now, of course if an
`injunction were not available to Philip Morris, then based
`on the jury verdict, they're certainly entitled to a
`royalty. Because I mean, again, they found your product
`infringes their intellectual property, and they clearly have
`a right to compensation for your use of their intellectual
`property without their permission.
`MR. BURNETTE: Yes. And one of the eBay factors
`is whether there is an adequate remedy at law in the -- with
`monetary damages.
`And PM in this case asked for a damages amount
`based on a royalty rate of .6 percent for the '265 patent,
`2 percent for the '911 patent. The jury accepted that
`wholesale. They accepted PM's request. So PM's own sense
`of what amount -- what a royalty rate would be sufficient to
`compensate it for past infringement was accepted by the
`jury. I think it will be our position that that should be
`the ongoing royalty rate because that was the rate put
`forward by Philip Morris. I understand they may say things
`18
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`Stephanie Austin, RPR, CRR USDC/EDVA (571) 298-1649
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`Case 1:20-cv-00393-LMB-WEF Document 1468-10 Filed 04/05/23 Page 6 of 6 PageID# 40829
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`change after a finding of infringement, and they may ask for
`a higher rate. But I believe our position will be that the
`rate, if the Court is going to order a rate, should be the
`rate that was accepted by the jury and put forward by Philip
`Morris.
`
`THE COURT: All right. Well, this has helped me
`only in evaluating how much -- how many pages I'm going to
`give you all. And I think the standard page limit for
`dispositive motions is more than sufficient. I mean, you've
`asked for 40, and I'm reducing it. So you'll have to comply
`with the local rules on that.
`I'm going to set a briefing schedule. And, again,
`I don't think the amount of time that you requested is
`necessary or reasonable. So what I'm going to do is I will
`grant the request to lift the stay, and I'm going to give
`the plaintiff until August 21st, which is about three weeks.
`Let me double-check my calendar. I'm sorry. I'm giving the
`plaintiff until August 12 to file -- and that's Monday, to
`file your brief for whatever damages or injunction relief
`you're requesting.
`And then I will give 21 days to Reynolds to
`respond, which I think will come out around September 5, if
`my counting is correct. And then a week for Philip Morris
`to file their reply. And we can hear this for argument
`either on the 16th or 23rd of September, whichever date will
`19
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`Stephanie Austin, RPR, CRR USDC/EDVA (571) 298-1649
`
`
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