Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 1 of 20 PageID# 41661
`
`
`
`
`
`
`
`
`Exhibit 2
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 2 of 20 PageID# 41662
`
`UNITED STATES INTERNATIONAL TRADE COMMISSION
`Washington, D.C.
`
`
`
`
`Investigation No. 337-TA-1199
`
`
`In the Matter of
`CERTAIN TOBACCO HEATING
`ARTICLES AND COMPONENTS
`THEREOF
`
`
`
`COMMISSION OPINION DENYING RESPONDENTS’ MOTION TO STAY LIMITED
`EXCLUSION ORDER AND CEASE AND DESIST ORDERS PENDING APPEAL
`
`
`
`I.
`
`BACKGROUND
`
`On May 15, 2020, the Commission instituted this investigation based on a complaint filed
`
`by RAI Strategic Holdings, Inc., R.J. Reynolds Vapor Company, and R.J. Reynolds Tobacco
`
`Company, all of Winston-Salem, North Carolina (collectively, “Reynolds”). 85 Fed. Reg.
`
`29482-83 (May 15, 2020). The complaint, as supplemented, alleges a violation of section 337
`
`based upon the importation and sale of certain tobacco heating articles and components thereof
`
`by reason of infringement of certain claims of U.S. Patent Nos. 9,901,123 (“the ’123 patent”),
`
`9,930,915 (“the ’915 patent”), and 9,839,238 (“the ’238 patent”) (collectively, “the Asserted
`
`Patents”). Id. The complaint also alleges the existence of a domestic industry. The notice of
`
`investigation names the following respondents: Altria Client Services LLC (“ACS”), Altria
`
`Group, Inc. (“AGI”), and Philip Morris USA, Inc. (“Philip Morris USA”), all of Richmond,
`
`Virginia; Philip Morris International Inc. (“PMI”) of New York, New York; and Philip Morris
`
`Products S.A. (“PMP”) of Neuchatel, Switzerland (collectively, “Philip Morris” or
`
`“Respondents”). See id. The Office of Unfair Import Investigations (“OUII”) was also a party to
`
`the investigation. See id.
`
`1
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 3 of 20 PageID# 41663
`
`The notice of investigation instructed the presiding administrative law judge (“ALJ”) to
`
`make findings regarding the public interest. 85 Fed. Reg. at 29482-83. The Commission later
`
`added claim 3 of the ’915 patent. See Order No. 9 (July 29, 2020), unreviewed by Notice (Aug.
`
`18, 2020). The Commission also terminated respondents AGI and PMI from the investigation
`
`based on Reynolds’s partial withdrawal of the complaint. See 85 Fed. Reg. 52152 (Aug. 4,
`
`2020); Order No. 24 (Dec. 14, 2020), unreviewed by Notice (Jan. 5, 2021).
`
`On September 29, 2021, the Commission found a violation of section 337 based on
`
`infringement of the asserted claims of the ’123 and ’915 patents and issued a limited exclusion
`
`order (“LEO”) and cease and desist orders (“CDOs”) against ACS and Philip Morris USA. 86
`
`Fed. Reg. 54998-99 (Oct. 5, 2021) (issuing orders and terminating investigation); see also
`
`Comm’n Op. (Sept. 29, 2021); see also Final Initial Determination (“FID”) (May 14, 2021). The
`
`Commission found no violation with respect to the ’238 patent. Id. The Commission found that
`
`the statutory public interest factors did not preclude issuance of a remedy. See Comm’n Op. On
`
`November 29, 2021, the period of Presidential review ended without disapproval of the
`
`Commission’s action by the President, see 19 U.S.C. § 1337(j)(2).
`
`On December 1, 2021, Philip Morris filed an appeal with the U.S. Court of Appeals for
`
`the Federal Circuit, seeking review of issues the Commission decided against it in the
`
`Commission’s final determination. Philip Morris Products S.A., et al. v. Int’l Trade Comm’n,
`
`Case No. 22-1227. The appeal is currently pending before the Federal Circuit.
`
`On December 3, 2021, Philip Morris filed a motion before the Commission requesting a
`
`stay of the remedial orders pending appeal to the Federal Circuit. See Respondents’ Motion to
`
`Stay Limited Exclusion Order and Cease and Desist Orders Pending Appeal (Dec. 3, 2021) (“PM
`
`Mot.”). On December 13, 2021, Reynolds filed an opposition to Philip Morris’s stay motion
`
`2
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 4 of 20 PageID# 41664
`
`before the Commission. See Complainants’ Response to Respondents’ Motion to Stay Limited
`
`Exclusion Order and Cease and Desist Orders Pending Appeal (Dec. 13, 2021) (“Reynolds
`
`Opp.”). OUII did not file a response.
`
`On December 6, 2021, Philip Morris filed an emergency motion to stay the remedial
`
`orders before the Federal Circuit. Philip Morris, Case No. 22-1227, ECF No. 6 (Dec. 6, 2021).
`
`On December 8, 2021, the Federal Circuit denied Philip Morris’s request for relief during
`
`consideration of its Federal Circuit stay motion. Id., Order, ECF No. 12 (Dec. 8, 2021). On
`
`December 16, 2021, the Commission and Reynold each filed an opposition to Philip Morris’s
`
`Federal Circuit stay motion. Id., ECF Nos. 13, 15 (Dec. 13, 2021). On December 21, 2021,
`
`Philip Morris filed a reply in support of its motion. Id., Case No. 22-1227, ECF No. 18 (Dec. 21,
`
`2021). On December 30, 2021, the Federal Circuit issued an order that Philip Morris’s Federal
`
`Circuit stay motion is held in abeyance, and requested that the parties notify the Court upon the
`
`Commission’s determination on the stay motion pending before the Commission. Id., ECF No.
`
`21 (Dec. 30, 2021).
`
`On January 12, 2022, Philip Morris filed a Notice of Supplemental Authority concerning
`
`proceedings at the Patent Trial and Appeal Board (“PTAB”). On January 13, 2022, Reynolds
`
`filed a response that the PTAB proceedings are irrelevant to the pending motion to stay.
`
`II.
`
`LEGAL STANDARD
`
`The Administrative Procedure Act provides an agency with the authority to “postpone the
`
`effective date of action taken by it, pending judicial review” if the “agency finds that justice so
`
`requires.” 5 U.S.C. § 705. The Federal Circuit has set forth the following four-part test to assess
`
`whether to stay a lower court’s remedy pending appeal:
`
`(1) whether the stay applicant has made a strong showing that he is likely to
`succeed on the merits; (2) whether the applicant will be irreparably injured absent
`
`3
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 5 of 20 PageID# 41665
`
`a stay; (3) whether the issuance of the stay will substantially injure the other
`parties interested in the proceeding; and (4) where the public interest lies.
`
`Standard Havens Prods, Inc. v. Gencor Indus, Inc., 897 F.2d 511, 512 (Fed. Cir. 1990)
`
`(quotation omitted).
`
`The Commission evaluates motions for stay under the Standard Havens test with one
`
`exception. At the agency level the movant need not demonstrate a likelihood of success on
`
`appeal. The Commission has recognized the futility of establishing a likelihood-of-success in
`
`this context given that it would be difficult to ask an agency to find that its own decision is likely
`
`to be overturned on appeal. Certain Agricultural Tractors Under 50 Power Take-Off
`
`Horsepower, Inv. No. 337-TA-380 (“Agricultural Tractors”), Comm’n Op. Denying Resp’ts’
`
`Pet. for Reconsideration and Mot. for Relief Pending Appeal at 10 (Apr. 25, 1997); see also
`
`Washington Metro. Area Transit Comm. v. Holiday Tours, Inc., 559 F.2d 841, 844 (D.C. Cir.
`
`1977) (“Prior recourse to the initial decisionmaker would hardly be required as a general matter
`
`if it could properly grant interim relief only on a prediction that it has rendered an erroneous
`
`decision”). Accordingly, in lieu of the likelihood-of-success prong, the Commission considers
`
`whether it has “ruled on an admittedly difficult legal question.” Holiday Tours, 559 F.3d at 844-
`
`45 (“What is fairly contemplated is that tribunals may properly stay their own orders when they
`
`have ruled on an admittedly difficult legal question and when the equities of the case suggest that
`
`the status quo should be maintained”); see also Agricultural Tractors, Comm’n Op. at 10. The
`
`Commission has repeatedly recited and applied this “admittedly difficult question” test in
`
`previous investigations in which stays of its remedial orders were sought pending appeal.1
`
`
`1 Certain EPROM, EEPROM, Flash Memory, and Flash Microcontroller Semiconductor
`Devices, and Products Containing Same, Inv. No. 337-TA-395, Comm’n Op., 2001 WL 242553,
`
`
`
`4
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 6 of 20 PageID# 41666
`
`III. ANALYSIS
`
`A.
`
`Philip Morris’s Motion Does Not Raise Any Admittedly Difficult Legal
`Questions
`
`Philip Morris argues that it is entitled to a stay because: 1) the Commission failed to
`
`“consult with” the Department of Health and Human Services (“HHS”) as required under section
`
`337; 2) the Commission erred in finding a domestic industry based on allegedly unlawful
`
`products; and 3) the Commission further erred in finding infringement and validity of the ’123
`
`patent and the ’915 patent. PM Mot. at 4-11. Inasmuch as Philip Morris’s stay motion did not
`
`argue error as to the Commission’s validity determination as to the asserted claims of the
`
`’915 patent, Philip Morris’s subsequent notice to the Commission concerning the PTAB’s Final
`
`Written Decision as to these claims is irrelevant to the issues actually presented in the motion to
`
`stay. Moreover, the notice fails to identify any admittedly difficult legal issue arising from the
`
`Commission’s invalidity determinations as to the ’915 patent on the Commission’s
`
`administrative record. Philip Morris’s arguments are not persuasive.
`
`
`1.
`
`Philip Morris’s New “Consult With” Argument is Abandoned
`Because It Was Neither Raised nor Preserved Before the ALJ and
`Before the Commission
`
`Philip Morris argues that the Commission legally erred in failing to “consult with” HHS
`
`under section 337, which mandates that “[d]uring the course of each investigation under this
`
`
`at *80 (July 9, 1998); Certain Baseband Processor Chips & Chipsets, Transmitter & Receiver
`(Radio) Chips, Power Control Chips &Products Containing Same, Including Cellular Telephone
`Handsets, Inv. No. 337-TA-543 (“Baseband Processors”), Comm’n Op. Denying Mots. for Stay
`at 5-6 (June 21, 2007); Certain High-Brightness Light Emitting Diodes, and Products Containing
`Same, Inv. No., 337-TA-556, Comm’n Op., 2008 WL 2556199, at *4-*5 (Sept. 11, 2007);
`Certain Semiconductor Chips with Minimized Chip Packages, Inv. No. 337-TA-605
`(“Semiconductor Chips”), Comm’n Op., 2009 WL 2350644, at *2-*4 (July 29, 2009); Certain
`Digital Television Products and Certain Products Containing Same and Methods of Using Same,
`Inv. No. 337-TA-617, Comm’n Op., 2009 WL 2598777, at *2-*3 (Aug. 21, 2009).
`
`5
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 7 of 20 PageID# 41667
`
`section, the Commission shall consult with, and seek advice and information from, the
`
`Department of Health and Human Services, . . . and such other departments and agencies as it
`
`considers appropriate.” PM Mot. at 4-8 (citing 19 U.S.C. § 1337(b)(2)). However, Philip
`
`Morris’s motion to stay is the first time that Philip Morris made such an argument before the
`
`Commission.
`
`The Commission finds that there is no admittedly difficult legal question, much less a
`
`likelihood of success as to the “consult with” argument. The Commission has rules governing
`
`when issues must be raised in Commission investigations and how they must be preserved. As
`
`set forth below, Philip Morris did not adequately raise or preserve the argument that it now seeks
`
`to raise.
`
`Philip Morris’s argument is forfeited because it was not raised and preserved before the
`
`ALJ in conformance with the ALJ’s Ground Rules for the investigation. See, e.g., Order No. 2
`
`(May 15, 2020) at Ground Rule 14.1 (“Any contentions for which a party has the burden of proof
`
`that are not set forth in detail in the post-hearing initial brief shall be deemed abandoned or
`
`withdrawn.”); see also id. Rule 11.2 (pre-hearing brief).
`
`When the Commission instituted the investigation, it ordered the ALJ to take evidence on
`
`the public interest and to make findings of fact on the public interest. Notice, 85 Fed. Reg.
`
`29482, 29482 (May 15, 2020); see 19 C.F.R. § 210.50(b)(1) (allowing the Commission to
`
`authorize the ALJ to take evidence and engage in factfinding concerning the public interest).
`
`Thus, the appropriate time for the parties to present and preserve public-interest arguments in
`
`this investigation began at the time the proceeding commenced before the ALJ. During the
`
`evidentiary hearing before the ALJ on February 21, 2021, the ALJ inquired whether section 337
`
`allowed the Commission to consult with HHS. See Hrg. Tr. at 1524:17-21 (Feb. 21, 2021).
`
`6
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 8 of 20 PageID# 41668
`
`Specifically, the ALJ stated, “I am interested in your views about my authority under 19 U.S.C.
`
`1337(b)(2), which instructs that the Commission may consult with the Department of Health and
`
`Human Services, and, by implication, the Food and Drug Administration.” Id. at 1524:17-21.
`
`Counsel for Philip Morris responded that “[w]e have absolutely no objection whatsoever to any
`
`of that,” meaning apparently, that Philip Morris had no objection to the Commission’s authority
`
`to consult with the Department of Health and Human Services. Id. at 1571:7-8. But Philip
`
`Morris never identified a specific consultation with the Department of Health and Human
`
`Services that was required (as opposed to being merely unobjectionable) or what form that
`
`coordination must take. Nor did Philip Morris ever tell the ALJ that failure to engage in Philip
`
`Morris’s unspecified consultation would be an error of law.
`
`That Philip Morris lay in the weeds is not a procedural wrinkle that can be brushed aside;
`
`it strikes at the bedrock of the requirement of administrative exhaustion. The Administrative
`
`Procedure Act, for example, generally limits the ALJ’s and the Commission’s authority to
`
`engage in ex parte communications relevant to the merits of the investigation. 5 U.S.C.
`
`§ 557(d)(1). Philip Morris did not subpoena the Secretary of Health and Human Services or urge
`
`the ALJ to do so. Such questions concerning the relationship between coordinate government
`
`entities must be raised and preserved in the investigation so that the agency can address these
`
`concerns adequately and in a timely manner. Consequently, and pursuant to the ALJ’s Ground
`
`Rules for the investigation, the issue is abandoned.
`
`In the underlying investigation, the Commission had the authority, as tribunals do, to
`
`excuse waiver in exceptional circumstances, including, for example, in instances of self-initiated
`
`Commission review of an ALJ’s determinations. E.g., 19 C.F.R. § 210.44. But Philip Morris
`
`never raised the “consult with” argument in its petition for Commission review of the ALJ’s
`
`7
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 9 of 20 PageID# 41669
`
`determinations despite Philip Morris’s actual knowledge of all proceedings before the ALJ.2 See
`
`Respondents’ Petition and Contingent Review of the Final Initial Determination (May 28, 2021).
`
`In view of the fact, as discussed above, that the Commission authorized the ALJ in this
`
`investigation to take evidence on the public interest, Philip Morris’s contention that a public-
`
`interest determination mandated further consultation with the Department of Health and Human
`
`Services should have been raised as a ground of error in Philip Morris’s petition for Commission
`
`review of the ALJ’s determinations. Because it was not raised, it has been deemed abandoned by
`
`Commission rule. 19 C.F.R. § 210.43(b)(2) (“Any issue not raised in a petition for review will
`
`be deemed to have been abandoned by the petitioning party and may be disregarded by the
`
`Commission in reviewing the initial determination . . . , and any argument not relied on in a
`
`petition for review will be deemed to have been abandoned and may be disregarded by the
`
`Commission.”)
`
`Moreover, none of Philip Morris’s other Commission-directed submissions sought
`
`excusal of any abandonment, or otherwise raised or preserved the issue of the Department of
`
`Health and Human Service’s participation in this investigation. On June 15, 2021, Philip Morris
`
`filed a statement on public interest pursuant to 19 C.F.R. § 210.50(a)(4)(i). See Respondents’
`
`Submission on the Public Interest (June 15, 2021). Philip Morris argued the FID fails to consider
`
`key FDA findings that were already of record in the investigation, but did not argue that the
`
`Commission must “consult with” HHS or the FDA. Id. On August 10, 2021, Philip Morris filed
`
`its response to the Commission’s July 27, 2021 notice of review and schedule for submissions on
`
`
`2 Commission proceedings are conducted on a public record that appears on the
`Commission’s EDIS electronic filing and recordkeeping system. Accordingly, whether HHS or
`FDA or any other government party participated—or did not participate—was known to Philip
`Morris in real-time in the Commission investigation.
`
`8
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 10 of 20 PageID#
`41670
`
`certain issues under review and remedy, public interest, and bonding. See Respondents’ Opening
`
`Brief in Response to Commission’s Notice of Review (Aug. 10, 2021). Philip Morris did not
`
`argue in its response that the Commission was required and failed to “consult with” HHS or the
`
`FDA. Id.3 Philip Morris requested that the Commission hold a second hearing on the public
`
`interest issues, even though the ALJ previously held a hearing on public interest issues. Id. at 85;
`
`Comm’n Op. at 75-76. However, even if a second hearing was held on public interest, Philip
`
`Morris never requested, much less requested the Commission to order, that HHS or the FDA be
`
`compelled to participate in such a hearing. Id. On August 17, 2021, Philip Morris filed a reply
`
`submission in response to the other parties’ initial responses. Respondents’ Reply Submission to
`
`Commission’s Notice (Aug. 17, 2021). There, Philip Morris noted that “[t]he Commission may
`
`find it enlightening to discuss these matters directly with various party and third-party experts in
`
`this field and perhaps even representatives of FDA itself.” Id. at 62. Philip Morris’s position in
`
`its reply that the Commission “may find it enlightening” is at odds with its present contention
`
`that a specific, in-depth consultation with HHS is required as a matter of law.
`
`The Commission is aware that Philip Morris has urged the Federal Circuit to decide the
`
`consultation issue as being ostensibly a legal question. Philip Morris, Case No. 22-1227, ECF
`
`No. 18 (Dec. 21, 2021). But there is no basis in law or reason for any tribunal—the Federal
`
`Circuit in its proceedings, or the Commission in connection with this motion to stay—to excuse
`
`
`3 Philip Morris states: “Several of the third parties that filed public interest comments in
`support of IQOS prior to institution of this Investigation took time again to file additional views
`on their own at the Commission phase, including PPI, AVA, and former Congressman George
`Holding,” and cites a letter from former Congressman George Holding. Id. at 79. The letter
`stated, “I urge a careful review of the FDA’s authorizations of the IQOS and encourage direct
`consultations with the agency . . . .” Id. Neither the letter, however, nor any submission by
`Philip Morris argued that the absence of “direct consultations” (whatever that may be) would
`constitute legal error.
`
`9
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 11 of 20 PageID#
`41671
`
`Philip Morris’s abandonment. Unlike the one case that Philip Morris has cited to the Federal
`
`Circuit, Ericsson Inc. v. TCL Commc’n Tech. Holdings Ltd., 955 F.3d 1317, 1322-23 (Fed. Cir.
`
`2020), the issues here were never raised, much less briefed and preserved in Commission
`
`proceedings. Issues about the ALJ’s obligations or the Commission’s obligations in connection
`
`with the merits or the public interest inquiry must be raised at such a time as it matters. The
`
`“consult with” argument raised now by Philip Morris comes far too late, and the Commission
`
`deems it abandoned.
`
`
`2.
`
`Philip Morris’s Motion Ignores the Commission’s Consistent and
`Longstanding Practices
`
`As discussed above, Philip Morris’s argument has been abandoned, and an opinion on a
`
`motion to stay presents an inappropriate opportunity for the Commission to opine at length on
`
`the issue as though Philip Morris preserved it. For the benefit of the parties, the public, and the
`
`Commission’s reviewing court, however, the Commission notes that the Commission’s practices
`
`and procedures in this case reflect the Commission’s longstanding and consistent interpretation
`
`of section 337 and Commission rules.
`
`Pursuant to its longstanding rules, the Commission serves copies of the notice of
`
`investigation upon various government agencies, including HHS.4 See 19 C.F.R. § 210.11(a)(4).
`
`
`4 The Commission’s practices, in relevant part, trace at least to the mid-1990s. In 1994,
`the Commission’s Inspector General (“IG”) investigated the Commission’s practices with respect
`to other agencies. ITC Office of Inspector General Audit Report No. IG-03-94 (Aug. 1994) at 4;
`see also PM Mot. at 6-7, n.7; Reynolds Opp. at 9-10. The IG “contacted representatives from
`HHS, Justice, FTC and the Customs Service, who all similarly” commented that “resource
`constraints had severely limited their ability to review the 337 documents; two said that the
`documents were immediately discarded.” Id. at 5. The IG recommended revising the
`Commission’s rules to address these concerns. Id. The Commission agreed that the system
`needed “improvement.” ITC Proposed Rules, 60 Fed. Reg. 16,082, 16,083 (proposed Mar. 29,
`1995) (to be codified at 19 C.F.R. § 210). After the IG’s 1994 report, the Commission engaged
`in notice-and-comment rulemaking that resulted in the amended regulations at issue here.
`
`10
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 12 of 20 PageID#
`41672
`
`The Commission actually served the Notice of Investigation on the HHS attorney who has been
`
`delegated by HHS to monitor Commission investigations. See Notice of Institution at 8, 22;
`
`19 U.S.C. § 1337(b)(2); 19 C.F.R. § 210.11(a)(4). Neither that attorney nor anyone else at HHS
`
`thereafter requested any unusual treatment for this investigation (such as paper copies) of future
`
`notices. Commission notices seeking briefing or comments from the public, including from
`
`interested government agencies, are published in the Federal Register, constituting notice, as a
`
`matter of law, under the Federal Register Act, 44 U.S.C. § 1501 et seq. See id. §§ 1507-1508.
`
`Here, the Commission published the notice of investigation and two additional notices in the
`
`Federal Register soliciting comments from the public, including government agencies. See 85
`
`Fed. Reg. 29482-83 (May 15, 2020) (notice of investigation); 86 Fed. Reg. 28382 (May 26,
`
`2021); 86 Fed. Reg. 41509-11 (Aug. 2, 2021).
`
`The present investigation was conducted in conformity with these rules. If Philip Morris
`
`was aggrieved by the application of the Commission’s duly-promulgated rules to this
`
`investigation, the time for objection was before the ALJ in the Commission investigation, and
`
`not in a collateral motion to stay, or in an appeal to the Commission’s reviewing court.
`
`Likewise, if Philip Morris desired more engagement with other government agencies than the
`
`Commission rules provide for, and which may be within the Commission’s discretion to
`
`exercise, it was incumbent upon Philip Morris to seek such engagement before the Commission,
`
`and to object during the proceeding itself if Philip Morris did not receive what it sought, rather
`
`than after the investigation has concluded and on appeal before the Federal Circuit.
`
`Philip Morris offers dictionary definitions for “consult” that it never presented to the
`
`Commission in the underlying investigation. To Philip Morris, “to consult” means “to seek
`
`information or advice from,” or to “to have regard to.” PM Mot., Ex. A (New Oxford American
`
`11
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 13 of 20 PageID#
`41673
`
`Dictionary (3d ed. 2010); id., Ex. B (Merriam-Webster’s Collegiate Dictionary (10th ed. 1999).
`
`It is difficult to decipher Philip Morris’s arguments because the Commission appears to have
`
`satisfied each definition. The first definition is met because the Commission sought information
`
`from the listed agencies in the Federal Register notices and by actual service of the notice of
`
`investigation. The second definition is met because the FDA’s views were part of the record
`
`here and were considered by both the ALJ and the Commission. Both the ALJ and the
`
`Commission extensively considered the FDA’s statements regarding IQOS when considering the
`
`public interest factors. Comm’n Op. at 56-72; FID at 103-118. Such arguments could have been
`
`explored in more detail in the underlying investigation if Philip Morris had timely raised the
`
`issue.
`
`Reynolds argues that the Commission’s statutory obligation to consult with government
`
`agencies is discretionary under section 337, but in all events, was satisfied here. Reynolds Opp.
`
`at 4-10. The Commission finds it unnecessary to reach those arguments here, where Philip
`
`Morris fails to show an admittedly difficult legal question, even under its preferred definitions,
`
`and ignores its dispositive abandonment.
`3.
`
`
`Philip Morris Fails to Raise an Admittedly Difficult Legal Issue
`Regarding Reynolds’s Domestic Industry
`
`Philip Morris also argues that the Commission erred in finding that Reynolds satisfies the
`
`domestic industry requirement. PM Mot. at 8-10. In particular, Philip Morris takes issue with
`
`the Commission’s crediting of Reynolds’ investments in its VUSE Solo and Vibe e-cigarette
`
`products. Id. at 9-10. The Federal Circuit has recognized that “the domestic industry
`
`requirement generally involves questions of both law and fact.” Motorola Mobility, LLC v. ITC,
`
`737 F.3d 1345, 1348 (Fed. Cir. 2013). In the present case, the issue is the substantiality or
`
`significance of Reynolds’ investments, a question of fact. Accordingly, the Commission finds
`
`12
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 14 of 20 PageID#
`41674
`
`that Philip Morris raises no legal question, much less an admittedly difficult one, for purposes of
`
`a stay. Even if the question were viewed as legal, the Commission has addressed the issues
`
`raised by Philip Morris below, and, upon further consideration has determined that none of the
`
`issues are admittedly difficult. FID at 97-99. In addition to the reasons set forth in the FID,
`
`Philip Morris itself notes that the FDA recently issued marketing orders for the VUSE Solo. PM
`
`Mot. at 8, n.8. Philip Morris can hardly argue that a product with the same PMTA marketing
`
`authorization as its own IQOS is illegal. Moreover, Philip Morris points to no authority that
`
`FDA approval is a condition precedent to the establishment of a domestic industry, nor is the
`
`Commission aware of any such authority.
`
`Philip Morris has not shown an admittedly difficult legal issue regarding Reynolds’s
`
`domestic industry products.
`
`
`4.
`
`Philip Morris’s Conclusory Arguments Regarding Infringement and
`Invalidity Do Not Support a Stay
`
`Philip Morris argues without support or explanation that it will “likely succeed in
`
`challenging the Commission’s findings that the asserted claims of [the ’123 patent] and [the
`
`’915 patent] are valid and infringed. PM Mot. at 11. Philip Morris cites the Commission’s
`
`Opinion but none of its own experts’ testimony or evidence. Id. Accordingly, Philip Morris’s
`
`subsequent notice to the Commission concerning the PTAB Final Written Decision is irrelevant
`
`to the issues actually presented in the motion to stay.5 Philip Morris’s conclusory statement in
`
`
`5 Moreover, the notice fails to identify any admittedly difficult legal issue arising from
`the Commission’s invalidity determinations on the Commission’s administrative record. Cf.
`Certain Network Devices, Related Software and Components Thereof (II) (“Network Devices”),
`Inv. No. 337-TA-945, Comm’n Op., 2017 WL 10954555, at *8 (Aug. 16, 2017) (finding that
`PTAB decisions that occurred after the issuance of the Commission’s remedial orders failed to
`demonstrate a changed circumstance warranting suspension of the Commission’s orders); Cisco
`
`
`
`13
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 15 of 20 PageID#
`41675
`
`its motion, even as supplemented by its notice of supplemental authority, fails to demonstrate
`
`any admittedly difficult legal questions with respect to infringement or validity.
`
`B.
`
`Irreparable Harm
`
`Philip Morris argues that, unless the LEO and CDOs are stayed, it will be irreparably
`
`harmed due to lost IQOS revenues, loss of talent, business opportunities, and goodwill in the
`
`industry. PM Mot. at 11-13. Philip Morris mainly relies on loss of revenue to Philip Morris
`
`USA and to PMI, but the Commission finds such economic harm insufficient to warrant a stay.
`
`Id. at 11-12; Celsis, 664 F.3d at 930. The Commission has repeatedly considered and rejected
`
`the argument that lost sales and lost market position constitute “irreparable injury.” See Certain
`
`High-Brightness Light Emitting Diodes, and Products Containing Same, Inv. No. 337-TA-556,
`
`Comm’n Op. at 10-12 (Aug. 20, 2007) (“High-Brightness LEDs”); Certain Lens-Fitted Film
`
`Packages, Inv. No. 337-TA-406, Comm’n Op. at 15 (June 28, 1999)) (“LFFPs”); see also
`
`Wisconsin Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985) (internal citations omitted).
`
`The Commission has considered Philip Morris’s remaining arguments and has
`
`determined that Philip Morris has not demonstrated irreparable harm. As Philip Morris notes,
`
`IQOS’ release was limited and it was available in only four states with only 20,000 users in the
`
`United States prior to the Commission’s final determination. PM Mot. at 12, 16. Moreover, in
`
`its motion, Philip Morris offers vague and unsupported declarations with generalizations, such as
`
`alleged loss of goodwill for IQOS and HeatSticks that are sold in only four states and “projected”
`
`revenue losses without supporting calculations or substantiation of underlying assumptions. Id.
`
`at 11-13. Philip Morris’s motion is therefore speculative and unsupported.
`
`
`Sys., Inc. v. Int’l Trade Comm’n, No. 17-2289, Order at 3 (Fed. Cir. Sep. 22, 2017) (ECF 57)
`(denying a stay of the Commission’s remedial orders where the movant sought a stay on the
`basis of subsequent PTAB determinations).
`
`14
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 1488-2 Filed 04/28/23 Page 16 of 20 PageID#
`41676
`
`The Commission also notes inconsistencies between different stay factors in Philip
`
`Morris’s motion. Compare, for example, Philip Morris’s “increasing momentum of sales” and
`
`similar allegations for irreparable harm, PM Mot. at 12, with Philip Morris’s allegations in that a
`
`stay will not substantially harm Reynolds, id. at 13-14. For lack of harm to Reynolds, Philip
`
`Morris adopts and relies on Reynolds’s contention that “IQOS has come nowhere close to being
`
`robustly adopted . . . and is unlikely to ever be robustly adopted in the U.S.” Id. If that is true
`
`for the lack of harm to Reynolds, then it is true for irreparable harm; and it is consistent with
`
`Philip Morris’s statements to investors. See Reynolds Opp. at 1-2, 17-19.
`
`Philip Morris has failed to show that it will suffer irreparable harm absent a stay.
`
`C.
`
`Balance of Hardships
`
`Philip Morris argues that a stay of the LEO and CDOs will not cause substantial or
`
`irreparable harm to Reynolds. Id. at 13-14. Philip Morris further argues that any potential harm
`
`to Reynolds would be recoverable in the form of money damages in the pending district court
`
`action in the U.S. District Court for the Eastern District of Virginia, in which Reynolds’s
`
`infringement counts based on the ’915 and ’123 patents are stayed. Id. (citing Certain Digital
`
`Models, Digital Data, and Treatment Plans for Use in Making Incremental Dental Positioning
`
`Adjustment Appliances, the Appliances Made Therefrom, and Methods of Making the Same, Inv.
`
`No. 337-TA-833 (“Digital Models”), Comm’n Op. at 8 (June 11, 2014)).
`
`Digital Models doe