Case 1:20-cv-00393-LO-TCB Document 40 Filed 06/29/20 Page 1 of 46 PageID# 470
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`RAI STRATEGIC HOLDINGS, INC. AND R.J.
`REYNOLDS VAPOR COMPANY
`
`
`Plaintiffs,
`
`
`v.
`
`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA, INC.; and PHILIP MORRIS
`PRODUCTS S.A.
`
`
`Defendants.
`
`Case No. 1:20-cv-00393-LO-TCB
`
`
`
`
`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA, INC.; and PHILIP MORRIS
`PRODUCTS S.A.
`
`
`Counterclaim Plaintiffs,
`
`
`v.
`
`
`RAI STRATEGIC HOLDINGS, INC. AND R.J.
`REYNOLDS VAPOR COMPANY
`
`
`Counterclaim Defendants.
`
`
`
`DEFENDANT PHILIP MORRIS PRODUCTS S.A.’S PARTIAL ANSWER TO
`COMPLAINT AND COUNTERCLAIMS
`
`Defendant Philip Morris Products S.A. (“PMP” or “Defendant”) respectfully submits its
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`Partial Answer in response to Plaintiffs RAI Strategic Holding, Inc. (“RAI”) and R.J. Reynolds
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`Vapor Company’s (“RJRV”) (collectively, “RJR”) Complaint. To the extent not specifically
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`admitted herein, the allegations of the Complaint are denied, including any allegations contained
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`in the headings of the Complaint.
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`

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`INTRODUCTION AND PRELIMINARY STATEMENT OF PMP
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`
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`RJR appears to have brought this action in the hopes of stopping PMP’s innovative IQOS
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`heated tobacco system, which has a proven track record in switching smokers away from
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`combustible cigarettes, from disrupting its core business in combustible cigarettes and overtaking
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`its secondary line of e-vapor products. Having failed to develop a competing offering in the heated
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`tobacco space, RJR apparently now seeks to block that space in its entirety by bringing this
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`meritless litigation. But in its haste to do so, RJR has overlooked the fact that its own line of e-
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`vapor products (which are far less effective in switching smokers away from combustible
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`cigarettes than IQOS) infringe multiple patents owned by PMP.
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`
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`While Philip Morris International, PMP’s ultimate parent, built its success on the basis of
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`combustible cigarettes, it has committed itself to building its future on the basis of smoke-free
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`products that are substantially less harmful than combustible cigarettes. Consistent with that
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`vision, PMP has emerged as the global leader and pioneer in reduced-risk alternatives to
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`combustible cigarettes (“Reduced Risk Products” or “RRPs”). PMP has invested over seven
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`billion dollars since 2008 on research and development relating to RRPs such as IQOS. And it has
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`amassed a substantial portfolio of intellectual property, covering numerous innovations relating to
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`smoke-free technologies, including both heated tobacco and e-vapor products.
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`
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`PMP first launched IQOS, a product that heats rather than burns tobacco to produce an
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`aerosol instead of smoke (known as a “Heat-Not-Burn” or “HNB” product), in select cities in Italy
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`and Japan in 2014. It is now sold in over 50 countries throughout the world. To date, over 10.6
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`million smokers have switched to IQOS and given up smoking for good, and this number is
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`growing daily. PMP conducted 10 clinical studies on IQOS and published over 340 peer-reviewed
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`articles on RRPs. There are also over 30 independent studies corroborating PMP’s findings with
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`respect to IQOS. Among the findings: IQOS produces an aerosol with 90 to 95% less toxins than
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`cigarette smoke.
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`
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`In 2019, after a lengthy review, the United States Food and Drug Administration (“FDA”)
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`granted PMP’s request for a pre-market authorization to commercialize IQOS (through its
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`distributor, Altria) in the United States. In granting that request, the FDA determined that
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`marketing IQOS “would be appropriate for the protection of the public health.” To date, no other
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`HNB or e-vapor product has received such an authorization.
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`
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`Apparently concerned by the commercial threat posed by IQOS, RJR is now attempting to
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`stop IQOS with this case. But in its haste to stop IQOS, RJR committed two fatal errors. First, it
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`asserted meritless patent claims. Second, it overlooked the fact that its own e-vapor products
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`infringe multiple patents owned by PMP and co-defendants Altria Client Services and Philip
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`Morris USA, Inc. PMP thus responds to RJR’s Complaint and brings counterclaims to recover the
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`considerable damages flowing from RJR’s infringement.
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`RESPONSES TO THE SPECIFIC ALLEGATIONS OF COMPLAINT
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`THE PARTIES
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`1.
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`PMP is without knowledge or information sufficient to admit or deny the
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`allegations in paragraph 1 of the Complaint and, on that basis, denies them.
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`2.
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`PMP is without knowledge or information sufficient to admit or deny the
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`allegations in paragraph 2 of the Complaint and, on that basis, denies them.
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`3.
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`PMP is without knowledge or information sufficient to admit or deny the
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`allegations in paragraph 3 of the Complaint and, on that basis, denies them.
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`4.
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`PMP is without knowledge or information sufficient to admit or deny the
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`allegations in paragraph 4 of the Complaint and, on that basis, denies them.
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`3
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`5.
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`PMP is without knowledge or information sufficient to admit or deny the
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`allegations in paragraph 5 of the Complaint and, on that basis, denies them.
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`6.
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`PMP is without knowledge or information sufficient to admit or deny the
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`allegations in paragraph 6 of the Complaint and, on that basis, denies them.
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`7.
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`PMP is without knowledge or information sufficient to admit or deny the
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`allegations in paragraph 7 of the Complaint and, on that basis, denies them.
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`8.
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`9.
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`Admitted.
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`Admitted.
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`10.
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`Admitted.
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`JURISDICTION AND VENUE
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`11.
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`Paragraph 11 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits that the Complaint purports to be an action arising under
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`the patent laws of the United States, 35 U.S.C. §§ 271, et seq., and that this Court has subject
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`matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338, but PMP denies that there is any legal
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`or factual basis for such action.
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`12.
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`PMP is without knowledge or information sufficient to admit or deny the
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`allegations in paragraph 12 of the Complaint and, on that basis, denies them.
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`13.
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`Paragraph 13 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits for purposes of this action only that this Court has
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`personal jurisdiction over it. PMP otherwise denies the allegations in paragraph 13 of the
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`Complaint.
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`14.
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`PMP is without knowledge or information sufficient to admit or deny the
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`allegations in paragraph 14 of the Complaint and, on that basis, denies them.
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`15.
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`Paragraph 15 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits for purposes of this action only that venue exists in this
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`District for the claims against PMP pursuant to 28 U.S.C. §§ 1391 and 1400(b). PMP otherwise
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`denies the allegations in paragraph 15 of the Complaint. PMP specifically denies the allegations
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`of paragraph 15 of the Complaint relating to PMP’s alleged infringement of any patents.
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`FACTUAL BACKGROUND
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`THE ASSERTED PATENTS
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`16.
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`In lieu of responding to the allegations in paragraph 16, PMP has filed a motion to
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`dismiss concurrently with this Partial Answer directed to the allegations of this paragraph.
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`17.
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`In lieu of responding to the allegations in paragraph 17, PMP has filed a motion to
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`dismiss concurrently with this Partial Answer directed to the allegations of this paragraph.
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`18.
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`The Court has stayed Plaintiff’s Counts Three, Four, and Five pursuant to 28 U.S.C.
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`§ 1659. See Dkt. 27. PMP will provide a response at the appropriate time when the stay is lifted.
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`19.
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`The Court has stayed Plaintiff’s Counts Three, Four, and Five pursuant to 28 U.S.C.
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`§ 1659. See Dkt. 27. PMP will provide a response at the appropriate time when the stay is lifted.
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`20.
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`The Court has stayed Plaintiff’s Counts Three, Four, and Five pursuant to 28 U.S.C.
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`§ 1659. See Dkt. 27. PMP will provide a response at the appropriate time when the stay is lifted.
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`21.
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`The Court has stayed Plaintiff’s Counts Three, Four, and Five pursuant to 28 U.S.C.
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`§ 1659. See Dkt. 27. PMP will provide a response at the appropriate time when the stay is lifted.
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`22.
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`The Court has stayed Plaintiff’s Counts Three, Four, and Five pursuant to 28 U.S.C.
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`§ 1659. See Dkt. 27. PMP will provide a response at the appropriate time when the stay is lifted.
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`23.
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`The Court has stayed Plaintiff’s Counts Three, Four, and Five pursuant to 28 U.S.C.
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`§ 1659. See Dkt. 27. PMP will provide a response at the appropriate time when the stay is lifted.
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`24.
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`PMP admits that the face of U.S. Patent No. 10,492,542 (“the ’542 patent”) states
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`that it is titled “Smoking articles and use thereof for yielding inhalation materials.” PMP further
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`admits that the face of the ’542 patent states that it issued on December 3, 2019 and that it includes
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`two independent claims. PMP admits that Plaintiffs have quoted claim 1 of the ’542 patent in
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`paragraph 24 of the Complaint. PMP otherwise denies the allegations in paragraph 24 of the
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`Complaint.
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`THE ACCUSED PRODUCTS
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`25.
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`PMP admits that it has developed a heat-not-burn tobacco heating system called
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`IQOS and the IQOS system includes an electrically powered device that comprises a holder and a
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`charger, and a disposable tobacco unit. PMP otherwise denies the allegations in paragraph 25 of
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`the Complaint.
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`26.
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`Paragraph 26 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits that some of the packaging for the IQOS device sold in
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`the United States recites: “Manufactured for Philip Morris USA, Richmond VA. Made in
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`Malaysia,” and that some of the packaging for the tobacco unit states: “Mfd. for Philip Morris
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`USA, Richmond, VA. Made in Italy.” PMP is without knowledge or information sufficient to
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`admit or deny the remaining allegations in paragraph 26 of the Complaint and, on that basis, denies
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`them.
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`27.
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`Paragraph 27 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits that the holder, into which the tobacco unit is placed,
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`heats the tobacco via a heating blade. PMP admits the adult consumer pushes a button to turn on
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`the heating unit. PMP further admits the holder includes a battery and supplies heat to the tobacco
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`unit via the heating blade for six minutes or 14 puffs, whichever comes first. PMP is without
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`knowledge or information sufficient to admit or deny the remaining allegations in paragraph 27 of
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`the Complaint and, on that basis, denies them.
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`28.
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`Paragraph 28 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits that the IQOS system’s tobacco unit is designed for
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`heating, not for burning or smoking, and contains a processed tobacco plug. PMP admits the
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`tobacco plug is made from tobacco leaves, which are ground and formed into tobacco sheets, called
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`cast-leaf. PMP further admits the adult consumer draws on the tobacco unit to inhale a nicotine
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`containing aerosol. PMP admits that the tobacco unit is available in different flavors, including
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`regular and menthol flavors. PMP further admits that the tobacco unit is sometimes referred to as
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`a HeatStick or Marlboro™ HeatStick. PMP is without knowledge or information sufficient to
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`admit or deny the remaining allegations in paragraph 28 of the Complaint and, on that basis, denies
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`them.
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`29.
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`Paragraph 29 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits that the IQOS device includes a charger for charging the
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`holder and is sold with an AC power adaptor for recharging the charger. PMP further admits that
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`the charger contains its own battery that charges the holder. PMP is without knowledge or
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`information sufficient to admit or deny the remaining allegations in paragraph 29 of the Complaint
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`and, on that basis, denies them.
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`30.
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`Paragraph 30 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits that the holder, tobacco unit, and the charger are
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`authorized by the FDA for use as part of the IQOS system. PMP specifically denies the allegations
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`of paragraph 30 of the Complaint relating to PMP’s alleged infringement of any patents. PMP is
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`without knowledge or information sufficient to admit or deny the remaining allegations in
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`paragraph 30 of the Complaint and, on that basis, denies them.
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`31.
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`Paragraph 31 contains legal conclusions to which no answer is required. PMP
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`specifically denies the allegations of paragraph 31 of the Complaint relating to PMP’s alleged
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`infringement of any patents.
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`32.
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`Paragraph 32 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits that it sells the charger, holder, tobacco unit, and a
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`cleaner outside the United States. PMP further admits that the tobacco units are sold separately
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`in, for example, packs of 20. PMP is without knowledge or information sufficient to admit or deny
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`the remaining allegations in paragraph 32 of the Complaint and, on that basis, denies them.
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`33.
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`Paragraph 33 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits that it offers for sale and sells the IQOS device with a
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`User Guide and Quick Start Guide outside the United States. PMP specifically denies any
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`allegations related to infringement of the Asserted Patents. PMP is without knowledge or
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`information sufficient to admit or deny the remaining allegations in paragraph 33 of the Complaint
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`and, on that basis, denies them.
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`34.
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`PMP is without knowledge or information sufficient to admit or deny the
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`allegations in paragraph 34 of the Complaint and, on that basis, denies them.
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`35.
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`Paragraph 35 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits the adult consumer inserts the tobacco unit into the
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`holder, which contains an electronically controlled heater. PMP admits the adult consumer pushes
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`a button to turn on the heater, and then draws on the tobacco unit to inhale a nicotine containing
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`aerosol. PMP admits the tobacco units respond to the warming of the heat blade inside the holder,
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`which heats the tobacco, and that the tobacco reaches a temperature below 350°C, which is a high
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`enough temperature to release a nicotine-containing aerosol without burning the tobacco.
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`36.
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`PMP admits that ACS is licensed to distribute, offer to sell, and sell the IQOS
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`system and the corresponding tobacco sticks in the U.S. PMP is without knowledge or information
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`sufficient to admit or deny the remaining allegations in paragraph 36 of the Complaint and, on that
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`basis, denies them.
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`37.
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`PMP admits that ACS is licensed to distribute, offer to sell, and sell the IQOS
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`system and the corresponding tobacco sticks in the U.S. PMP further admits that some of the
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`packaging for the IQOS device that it sells in the United States recites: “Manufactured for Philip
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`Morris USA, Richmond VA. Made in Malaysia,” and that some of the packaging for the tobacco
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`unit states: “Mfd. for Philip Morris USA, Richmond, VA. Made in Italy.” PMP is without
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`knowledge or information sufficient to admit or deny the remaining allegations in paragraph 37 of
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`the Complaint and, on that basis, denies them.
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`38.
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`39.
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`Denied.
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`Paragraph 39 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits that PMP prosecuted PMTAs with the FDA seeking
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`approval to offer for sale and sell the IQOS system in the United States, and that ACS and PM
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`USA consulted with Philip Morris Products S.A. in preparation of certain aspects of a PMTA.
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`PMP is without knowledge or information sufficient to admit or deny the remaining allegations in
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`paragraph 39 of the Complaint and, on that basis, denies them.
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`THE IMPORTATION, SALE, OFFER FOR SALE, AND DISTRIBUTION OF
`IQOS DEVICES
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`40.
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`PMP admits that, on or around May 24, 2017, it filed PMTAs with the FDA seeking
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`approval to offer for sale and sell the IQOS system in the United States. PMP admits that Altria
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`Client Services LLC and Philip Morris USA, Inc. consulted on the preparation of certain aspects
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`of a PMTA application. PMP is without knowledge or information sufficient to admit or deny the
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`remaining allegations in paragraph 40 of the Complaint and, on that basis, denies them.
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`41.
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`42.
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`Admitted.
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`PMP is without knowledge or information sufficient to admit or deny the remaining
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`allegations in paragraph 42 of the Complaint and, on that basis, denies them.
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`43.
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`Paragraph 43 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits that admit that IQOS systems are manufactured by third
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`parties outside of the United States and certain IQOS systems are imported and sold in the United
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`States. PMP is without knowledge or information sufficient to admit or deny the remaining
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`allegations in paragraph 43 of the Complaint and, on that basis, denies them.
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`DEFENDANTS KNOW OF THE ASSERTED PATENTS, KNOW AND
`SPECIFICALLY INTEND THAT THE IQOS PRODUCTS INFRINGE THE
`ASSERTED PATENTS, AND KNOW THAT THE IQOS PRODUCTS ARE
`ESPECIALLY MADE OR ESPECIALLY ADAPTED FOR USE IN
`INFRINGING THE ASSERTED PATENTS
`
`44.
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`Paragraph 44 contains legal conclusions to which no answer is required. To the
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`extent an answer is required, PMP admits that the face of U.S. Patent No. 10,123,566 and U.S.
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`Design Patent No. D844,221 list U.S. Patent No. 8,314,591 (“the ’591 patent”); the face of U.S.
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`Design Patent No. D844,221 and U.S. Patent No. 10,258,087 list U.S. Patent No. 7,726,320 (“the
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`’320 patent”); and the face of U.S. Patent No. 10,278,424 lists U.S. Patent No. 9,078,473. PMP is
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`without knowledge or information sufficient to admit or deny the remaining allegations in
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`paragraph 44 of the Complaint and, on that basis, denies them.
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`45.
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`46.
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`Denied.
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`Denied.
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`COUNTS ONE AND TWO
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`
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`47-66. In lieu of responding to the allegations in paragraphs 47-66, PMP has filed a motion
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`to dismiss concurrently with this Partial Answer directed to the allegations of these paragraphs.
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`COUNTS THREE THROUGH FIVE
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`
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`67-96. The Court has stayed Counts Three, Four, and Five of the Complaint under 28
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`U.S.C. § 1659. See Dkt. 27. PMP will respond to these counts at the appropriate time when the
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`stay is lifted.
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`COUNT SIX
`INFRINGEMENT OF U.S. PATENT NO. 10,432,542
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`97.
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`PMP re-alleges, adopts, and incorporates by reference the allegations included
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`within paragraphs 1 through 96 as if fully set forth herein.
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`98.
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`PMP is without knowledge or information sufficient to admit or deny the
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`allegations in paragraph 98 of the Complaint and, on that basis, denies them.
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`99.
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`Paragraph 99 contains legal conclusions to which no answer is required. PMP is
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`without knowledge or information sufficient to admit or deny the remaining allegations in
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`paragraph 99 of the Complaint and, on that basis, denies them.
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`100. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
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`draft claims directed at the Accused Products, but the claims are far removed from the alleged
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`invention possessed at the time of filing and described by the inventors when they filed the original
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`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
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`written description, anticipation, and obviousness.
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`101. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
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`draft claims directed at the Accused Products, but the claims are far removed from the alleged
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`invention possessed at the time of filing and described by the inventors when they filed the original
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`11
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`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
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`written description, anticipation, and obviousness.
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`102. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
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`draft claims directed at the Accused Products, but the claims are far removed from the alleged
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`invention possessed at the time of filing and described by the inventors when they filed the original
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`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
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`written description, anticipation, and obviousness.
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`103. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
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`draft claims directed at the Accused Products, but the claims are far removed from the alleged
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`invention possessed at the time of filing and described by the inventors when they filed the original
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`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
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`written description, anticipation, and obviousness.
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`104. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
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`draft claims directed at the Accused Products, but the claims are far removed from the alleged
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`invention possessed at the time of filing and described by the inventors when they filed the original
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`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
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`written description, anticipation, and obviousness.
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`105. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
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`draft claims directed at the Accused Products, but the claims are far removed from the alleged
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`invention possessed at the time of filing and described by the inventors when they filed the original
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`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
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`written description, anticipation, and obviousness.
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`106. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
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`draft claims directed at the Accused Products, but the claims are far removed from the alleged
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`invention possessed at the time of filing and described by the inventors when they filed the original
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`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
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`written description, anticipation, and obviousness.
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`RESPONSE TO PRAYER FOR RELIEF
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`107. PMP denies that Plaintiffs are entitled to any relief sought in its Complaint or any
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`relief whatsoever.
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`AFFIRMATIVE AND OTHER DEFENSES
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`Pursuant to Federal Rule of Civil Procedure 8(c), and without altering any applicable
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`burdens of proof or burdens of persuasion, PMP asserts the following defenses to the Complaint
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`and reserves its right to assert additional defenses.
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`FIRST AFFIRMATIVE DEFENSE
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`(Non-Infringement)
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`PMP does not and has not infringed any valid, enforceable, asserted claim of the Asserted
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`Patents, either literally or under the doctrine of equivalents, under any theory of infringement.
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`SECOND AFFIRMATIVE DEFENSE
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`(Invalidity)
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`Each asserted claim of the Asserted Patents is invalid for failure to comply with one or
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`more of the requirements of Title 35 of the United States Code, including without limitation, 35
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`U.S.C. §§ 101, 102, 103, 112, and/or 116, and the rules, regulations, and laws pertaining thereto.
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`THIRD AFFIRMATIVE DEFENSE
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`(Prosecution History Estoppel and Disclaimer)
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`Plaintiffs are barred, based on statements, representations, and admissions made during
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`prosecution of the patent applications resulting in the Asserted Patents or related patent
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`applications, from asserting any interpretation of any valid, enforceable claim of the Asserted
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`Patents that would be broad enough to cover any Accused Product alleged to infringe the Asserted
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`Patents, either literally or under the doctrine of equivalents.
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`FOURTH AFFIRMATIVE DEFENSE
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`(Equitable Defenses)
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`Plaintiffs’ attempted enforcement of the Asserted Patents against PMP is barred by one
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`or more of the equitable doctrines, such as estoppel, acquiescence, waiver, and unclean hands.
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`FIFTH AFFIRMATIVE DEFENSE
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`(Limitation on Damages)
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`Plaintiffs’ claims for damages are statutorily limited or barred by 35 U.S.C. §§ 286 and/or 287.
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`SIXTH AFFIRMATIVE DEFENSE
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`(Preclusion of Costs)
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`Plaintiffs are barred under 35 U.S.C. § 288 from recovering costs associated with its action.
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`SEVENTH AFFIRMATIVE DEFENSE
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`(No Injunctive Relief)
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`Plaintiffs are not entitled to injunctive relief as they have, at a minimum, an adequate
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`remedy at law upon any finding of infringement and have not suffered any irreparable injury.
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`EIGHTH AFFIRMATIVE DEFENSE
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`(No Willfulness)
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`Plaintiffs are barred from obtaining a finding of willfulness or receiving enhanced
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`damages because they have not alleged that PMP engaged in reprehensible conduct, and PMP
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`has engaged in no such conduct, which is a prerequisite for a willfulness finding and an award
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`of enhanced damages.
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`Case 1:20-cv-00393-LO-TCB Document 40 Filed 06/29/20 Page 15 of 46 PageID# 484
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`NINTH AFFIRMATIVE DEFENSE
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`(Failure to State a Claim)
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`The Complaint fails to state a claim upon which relief can be granted, for at least the
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`reasons described in the Motion to Dismiss filed in this action.
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`RESERVATION OF RIGHTS
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`PMP hereby reserves the right to amend its Partial Answer and reserves all defenses set out
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`in Rule 8(c) of the Federal Rules of Civil Procedure, the Patent Laws of the United States, and
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`any other defenses, at law or in equity, which become applicable after the substantial completion
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`of discovery or otherwise in litigation.
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`COUNTERCLAIMS
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`Counterclaim Plaintiff Philip Morris Products S.A. (“PMP” or “Counterclaim Plaintiff”)
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`hereby counterclaims and alleges against Counterclaim Defendants R.J. Reynolds Vapor Company
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`(“RJRV”) and RAI Strategic Holdings, Inc. (“RAI”) (collectively, “RJR” or “Counterclaim
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`Defendants”) as follows:
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`NATURE OF THE ACTION
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`1.
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`This is an action arising under the patent laws of the United States, 35 U.S.C.
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`§§ 271, et seq., to (i) address infringement and obtain damages resulting from RJRV’s
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`unauthorized making, using, sale, offer for sale, and/or importation into the United States through
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`its infringing “VUSE” e-vapor products; and (ii) obtain a declaration that Counterclaim
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`Defendants’ asserted patents are invalid and not infringed.
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`2.
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`PMP holds patents on innovative e-vapor technologies, including inventions
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`covered by U.S. Patent Nos. 9,814,265 (“the ’265 patent”); 10,555,556 (“the ’556 patent”); and
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`10,104,911 (“the ’911 patent”) (collectively, “the PMP Asserted Patents”).
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`Case 1:20-cv-00393-LO-TCB Document 40 Filed 06/29/20 Page 16 of 46 PageID# 485
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`3.
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`RJRV, without authorization, makes, imports, uses, offers for sale, and/or sells a
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`line of “VUSE” e-vapor products, including the VUSE ALTO, VUSE SOLO, VUSE CIRO, and
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`VUSE VIBE Power Units and associated “Flavor Packs” (which RJRV also refers to as
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`“cartridges,” “tanks,” and “pods”) (collectively, “the Accused VUSE Vapor Products”) that
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`infringe the PMP Asserted Patents. See https://vusevapor.com. RJRV provides the Accused
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`VUSE Vapor Products in a kit containing a VUSE Power Unit, USB charger, and one or more
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`Flavor Packs. RJRV also provides the VUSE Power Unit and USB charger without any Flavor
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`Packs. The Flavor Packs are also sold separately, for example, in packages containing only Flavor
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`Packs.
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`4.
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`Counterclaim Defendants have incorrectly alleged that PMP infringes U.S. Patent
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`Nos. 8,314,591 (“the ’591 patent”); 9,814,268 (“the ’268 patent”); and 10,492,542 (“the ’542
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`patent”) (collectively, “the RJR Asserted Patents”). PMP does not infringe any valid, enforceable,
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`asserted claim of the RJR Asserted Patents. PMP therefore seeks a declaration that the asserted
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`claims of the RJR Asserted Patents are invalid and not infringed. In addition, Counterclaim
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`Defendants have asserted U.S. Patent Nos. 9,839,238; 9,901,123; and 9,930,915, which have been
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`stayed pursuant to 28 U.S.C. § 1659. See Dkt. 27.
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`PARTIES
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`5.
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`RAI is a North Carolina corporation with its principal place of business located at
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`401 North Main Street, Winston-Salem, North Carolina 27101. Upon information and belief, RAI
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`is a wholly-owned subsidiary of Reynolds American Inc., which in turn is a wholly-owned
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`subsidiary of British American Tobacco plc, a publicly-traded company on the London Stock
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`Exchange headquartered in London, England.
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`6.
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`RJRV is a North Carolina corporation with its principal place of business located
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`at 401 North Main Street, Winston-Salem, North Carolina 27101. Upon information and belief,
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`Case 1:20-cv-00393-LO-TCB Document 40 Filed 06/29/20 Page 17 of 46 PageID# 486
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`RJRV is a wholly-owned subsidiary of Reynolds American Inc., which in turn is a wholly-owned
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`subsidiary of British American Tobacco plc, a publicly-traded company on the London Stock
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`Exchange headquartered in London, England.
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`7.
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`Philip Morris Products S.A. is organized under the laws of Switzerland with its
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`principal place of business located at Quai Jeanrenaud 3, 2000 Neuchâtel, Switzerland.
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`JURISDICTION AND VENUE
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`8.
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`This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338
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`because this action arises under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, et seq.
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`and the Patent Act of the United States, 35 U.S.C. § 1, et seq.
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`9.
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`Personal jurisdiction is proper in this Court over Counterclaim Defendants at least
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`because Counterclaim Defendants have consented to the Court’s jurisdiction by filing the
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`Complaint in this Court, and because, on information and belief, Counterclaim Defendants have
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`engaged in infringing acts in this jurisdiction.
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`10.
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`Venue is proper at least because Counterclaim Defendants have consented to venue
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`through their filing of this lawsuit in this Court, pursuant to 28 U.S.C. §§ 1391 and 1400.
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`11.
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`In their Complaint, Counterclaim Defendants allege that PMP infringes the RJR
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`Asserted Patents. PMP denies that it infringes any valid, enforceable asserted claim of the ’542
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`patent and has moved to dismiss Counterclaim Defendants’ allegations related to the remaining
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`RJR Asserted Patents. An actual controversy has thus arisen and now exists between PMP and
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`the Counterclaim Defendants.
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`THE PMP ASSERTED PATENTS
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`12.
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`The ’265 patent is titled “Permeable Electric Thermal Resistor Foil for Vaporizing
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`Fluids from Single-Use Mouthpieces with Vaporizer Membranes,” and issued on November 14,
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`Case 1:20-cv-00393-LO-TCB Document 40 Filed 06/29/20 Page 18 of 46 PageID# 487
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`2017. PMP owns the entire right, title, and interest in and to the ’265 patent. A true and accurate
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`copy of the ’265 patent is attached as Exhibit A.
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`13.
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`The ’556 patent is titled “Cartridge for an Aerosol-Generating System,” and issued
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`on February 11, 2020. PMP owns the entire right, title, and interest in and to the ’556 patent. A
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`true and accurate copy of the ’556 patent is attached as Exhibit B.
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`14.
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`The ’911 patent is titled “Aerosol Generating System with Prevention of
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`Condensate Leakage,” and issued on October 23, 2018. PMP owns the entire right, title, and
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`interest in and to the ’911 patent. A true and accurate copy