Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 1 of 18 PageID# 10664
`
`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`RAI STRATEGIC HOLDINGS, INC. AND R.J.
`REYNOLDS VAPOR COMPANY
`
`Plaintiffs and Counterclaim
`Defendants,
`
`v.
`
`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA, INC.; and PHILIP MORRIS
`PRODUCTS S.A.
`
`Defendants and Counterclaim
`Plaintiffs.
`
`Case No. 1:20-cv-00393-LO-TCB
`
`REDACTED
`
`PHILIP MORRIS PRODUCTS S.A.’S REPLY IN SUPPORT OF MOTION
`FOR LEAVE TO AMEND COUNTERCLAIMS TO ADD INJUNCTIVE RELIEF
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 2 of 18 PageID# 10665
`
`
`
`I.
`
`II.
`
`TABLE OF CONTENTS
`
`
`
`INTRODUCTION ...............................................................................................................1
`
`ARGUMENT .......................................................................................................................3
`
`A.
`
`Reynolds Is Not Prejudiced By Amendment To Include Injunctive Relief .............3
`
`Page
`
`1.
`
`
`2.
`
`PMP’s Amendment Does Not Significantly Alter The Scope Of
`The Case.......................................................................................................3
`
`Additional Significant Discovery Is Not Required For PMP’s
`Proposed Amendment ..................................................................................5
`
`
`PMP’s Amendment Is Timely And Warranted Based Upon Recent
`Evidence Developed In The ITC Proceedings And Other Recent Events ...............8
`
`B.
`
`C.
`
`Reynolds Does Not Dispute The Other Elements Supporting The Liberal
`Amendment of Pleadings Here ..............................................................................13
`
`III.
`
`CONCLUSION ..................................................................................................................13
`
`
`
`
`
`
`
`i
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 3 of 18 PageID# 10666
`
`
`
`TABLE OF AUTHORITIES
`
`CASES
`
`Page(s)
`
`American Academy of Pediatrics v. FDA,
`399 F. Supp. 3d 479 (D. Md. 2019) ............................................................................................. 9
`
`CDS Family Trust v. Martin,
`No. 1:15-cv-02584-JMC, 2020 WL 758129 (D. Md. Feb. 14, 2020) ..................................... 5, 7
`
`Civil Eng’g Consulting Servs. Inc. v. Anderson Columbia Co.,
`No. 3:16-cv-2540-JFA, 2017 WL 11285414 (D.S.C. July 26, 2017) ......................................... 8
`
`Deasy v. Hill,
`833 F.2d 38 (4th Cir. 1987) ......................................................................................................... 5
`
`eBay Inc. v. MercExchange, LLC,
`547 U.S. 388 (2006) ................................................................................................................ 2, 4
`
`Equal Rights Ctr. v. Niles Bolton Assocs.,
`602 F.3d 597 (4th Cir. 2010) ....................................................................................................... 5
`
`Griaznov v. J-K Techs., LLC,
`No. ELH-16-2522, 2017 WL 915000 (D. Md. Mar. 8, 2017) ................................................... 13
`
`Mayfield v. Nat’l Ass’n for Stock Car Auto Racing, Inc.,
`674 F.3d 369 (4th Cir. 2012) ....................................................................................................... 5
`
`MercExchange, LLC v. eBay, Inc.,
`467 F. Supp. 2d 608 (E.D. Va. 2006) ...................................................................................... 4, 8
`
`San Bruno Mountain Watch v. Cypress Amloc Land Co.,
`No. C-04-03385, 2005 WL 8177591 (N.D. Cal. Nov. 3, 2005) .................................................. 4
`
`STATUTES
`
`35 U.S.C. § 283 ............................................................................................................................... 4
`
`RULES
`
`Fed. R. Civ. P. 15(a)(2) ................................................................................................................. 10
`
`Fed. R. Civ. P. 42(b) ....................................................................................................................... 4
`
`
`
`ii
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 4 of 18 PageID# 10667
`
`
`
`I.
`
`INTRODUCTION
`
`
`
`Reynolds’ opposition is most notable for what it fails to dispute. Reynolds makes no
`
`contention that PMP’s proposed amendment to include a request for injunctive relief is futile.
`
`Reynolds also does not dispute that PMP’s proposed amendment adds no new claims. Instead,
`
`Reynolds focuses the majority of its brief on its purported prejudice of having to address PMP’s
`
`demand for injunctive relief, and on accusatory assertions of delay by PMP for what Reynolds
`
`calls “strategic” reasons. Reynolds’ bloated assertions about the scope of discovery and the
`
`scheduling impact lack merit and require Reynolds to ignore the discovery record in this case and
`
`the parallel ITC investigation. And Reynolds’ accusations of intentional and undue delay likewise
`
`ignore the evidence that emerged at the recent ITC hearing and post-trial briefing, as well as other
`
`subsequent events, in January and February 2021, making plain that the grant of an injunction in
`
`this case is both consistent with PMP’s ITC public interest contentions and compelled by the public
`
`interest.
`
`First, Reynolds contends that PMP’s amendment is prejudicial because injunctive relief
`
`will “significantly alter the scope of the case.” But Reynolds ignores that the request for injunctive
`
`relief will have no impact on the upcoming jury trial preparations, pretrial proceedings, or the jury
`
`trial schedule. The upcoming pretrial conference is directed to the jury trial on liability and
`
`damages, which is distinct from the post-trial equitable proceedings associated with PMP’s
`
`injunction request. And, to the extent any additional discovery is required, there is ample time
`
`between now and the jury trial (or even after the jury trial) for such discovery to be conducted with
`
`no disruption whatsoever of the upcoming jury trial preparations and proceedings.
`
`Reynolds’ “laundry list” of purported “necessary” discovery is belied by the record in this
`
`case and at the ITC. Reynolds fails to identify a single specific witness, a single specific category
`
`1
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 5 of 18 PageID# 10668
`
`
`
`of documents, or any specifics regarding the discovery it would allegedly require that has not
`
`already been extensively discovered in this case and in the ITC.1 Given the breadth of the Georgia
`
`Pacific analysis, it is unsurprising that Reynolds cannot identify any new discovery because all
`
`relevant discovery has already been conducted in the context of damages. At the very least,
`
`Reynolds’ claim to need months of additional discovery simply cannot withstand scrutiny. Indeed,
`
`Reynolds readily concedes that the parties have already “engaged in extensive discovery relating
`
`to the question of” public interest in the related ITC case—which is central to the issue of
`
`injunctive relief here. Dkt. 476 at 6.2 In the unlikely event that further discovery is needed on
`
`injunctive relief, it is untethered to the jury trial, and may take place on a separate schedule before
`
`or after the jury trial.
`
`Second, Reynolds’ accusations of strategic gamesmanship and delay disregard the
`
`voluminous record developed during the ITC trial and since PMP’s previous amendment of its
`
`pleadings. The recently developed record now makes plain that the public interest is served, not
`
`disserved, by entry of an injunction here. Reynolds is selling its accused VUSE e-cigarettes
`
`unlawfully, and, contrary to Reynolds’ previous assertions, recent information reflects that FDA
`
`is actively engaged in enforcement activities against illegal sales of e-cigarettes in the U.S.
`
`Notably,
`
`
`
`
`
`
`
`. In any event, the public interest is
`
`
`1 Discovery from the ITC case is deemed produced in this case pursuant to the cross-use agreement
`entered into between the parties. Dkt. 103 ¶ 18.
`2 Other than the public interest element, Reynolds does not even attempt to address the remaining
`eBay elements for an injunction, including irreparable harm, availability of remedies at law, and
`balance of hardships. eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006).
`
`2
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 6 of 18 PageID# 10669
`
`
`
`certainly not disserved by enjoining products that are presently being sold unlawfully, as exposed
`
`by recent factual developments, and the public interest issue warrants this Court’s consideration.
`
`Third, PMP’s injunction demand in this case is foursquare with the position it has taken in
`
`the ITC investigation. In the ITC, PMP asserts that its IQOS products should not be excluded from
`
`the U.S. market because there are no other heat not burn products (“HNBs”) with PMTA and
`
`MRTP authorizations from the FDA. In contrast, PMP seeks injunctive relief against the VUSE
`
`products for which Reynolds’ own ITC trial witnesses testified there are a multitude of e-cigarette
`
`substitutes, including Juul and others. In other words, an injunction against PMP’s IQOS would
`
`eliminate the entire “category” of viable HNBs, leaving users with no HNB alternative to
`
`combustible cigarettes, whereas an injunction against Reynolds’ VUSE e-cigarettes would have
`
`no deleterious public interest implications due to the availability of a wide range of alternatives in
`
`the e-cigarette category.
`
`PMP’s amendment to include a demand for injunctive relief is neither burdensome, nor
`
`inconsistent with PMP’s positions in the ITC, and amendment is warranted based on recent factual
`
`developments supporting the public interest element of injunctive relief.
`
`II.
`
`ARGUMENT
`A.
`
`Reynolds Is Not Prejudiced By Amendment To Include Injunctive Relief
`1.
`
`PMP’s Amendment Does Not Significantly Alter The Scope Of The
`Case
`
`Reynolds contends that it will be “unduly prejudiced” by an amendment to include
`
`injunctive relief, because it would “significantly alter the scope of this case.” Dkt. 476 at 8.
`
`Reynolds is incorrect; the “scope of the case” remains the same.
`
`3
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 7 of 18 PageID# 10670
`
`
`
`Initially, Reynolds does not dispute that PMP’s proposed amendment adds no new claims.
`
`Because PMP does not seek to add new claims, the nature of the fact and expert proof for the
`
`upcoming infringement trial remains unchanged.
`
`Reynolds does not dispute that PMP’s request for a permanent injunction is a matter for
`
`the Court to decide—not the jury. eBay, 547 U.S. at 391 (“The decision to grant or deny permanent
`
`injunctive relief is an act of equitable discretion by the district court.”). PMP’s proposed
`
`amendment need not impact the jury trial or the related pretrial proceedings. It is only after
`
`infringement of the patents has been established that a district court will consider and may grant a
`
`permanent injunction against the infringer.3 35 U.S.C. § 283. Thus, PMP’s request for a
`
`permanent injunction can be handled on a separate track from the pretrial of the case. As Reynolds
`
`recognizes in a case cited in its own brief (Dkt. 476 at 11), this Court has allowed discovery to
`
`proceed even after the conclusion of a trial, to permit the parties to update the factual record for a
`
`motion for permanent injunction in order to address facts that developed after trial.
`
`MercExchange, LLC v. eBay, Inc., 467 F. Supp. 2d 608, 617-19 (E.D. Va. 2006).
`
`Here, the circumstances are less extreme. Trial is not yet scheduled, and whatever
`
`additional discovery Reynolds purportedly needs can occur before trial without interruption to the
`
`current schedule. But even were this not the case, the Court is within its discretion to re-open
`
`discovery after trial to develop limited facts relevant to PMP’s permanent injunction. See id.
`
`
`3 Denying PMP leave to amend is not proper even if Reynolds’ requested discovery would disrupt
`the current schedule and change the nature of the litigation (it would not). The Court has discretion
`to bifurcate discovery and trial on PMP’s requested injunction from the liability portion of the
`case. See Fed. R. Civ. P. 42(b); see also San Bruno Mountain Watch v. Cypress Amloc Land Co.,
`No. C-04-03385, 2005 WL 8177591, at *1 (N.D. Cal. Nov. 3, 2005) (“To the extent that
`Defendants are found liable for any of the claims, discovery and the presentation of evidence in
`the remedy phase, particularly as to injunctive relief, but also as to any civil penalties, can be
`focused on remediation of the liability that was actually found.”).
`
`4
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 8 of 18 PageID# 10671
`
`
`
`Consequently, PMP’s request for injunctive relief does not “change the nature of the litigation”
`
`(Dkt. 476 at 9), and Reynolds is not prejudiced. CDS Family Trust v. Martin, No. 1:15-cv-02584-
`
`JMC, 2020 WL 758129, at *5 (D. Md. Feb. 14, 2020) (finding no prejudice where the amendment
`
`does not “materially alter the course of this litigation” and allowing amendment).
`
`Reynolds’ cited cases (Dkt. 476 at 9) are distinguishable, because in those cases (unlike
`
`here) the proposed amendment would change the nature of the litigation. In Mayfield, the proposed
`
`amendment was denied because it sought to include new allegations and causes of action that arose
`
`out of “an entirely new event and nucleus of facts.” Mayfield v. Nat’l Ass’n for Stock Car Auto
`
`Racing, Inc., 674 F.3d 369, 380 (4th Cir. 2012). In Equal Rights Center, the proposed amendment
`
`was denied because it sought to add a new claim after the close of discovery, which would change
`
`the nature of the litigation. Equal Rights Ctr. v. Niles Bolton Assocs., 602 F.3d 597, 603 (4th Cir.
`
`2010). And in Deasy, the proposed amendment was denied because it sought to add a new claim
`
`which raised a new issue that would “alter substantially the nature of the lawsuit,” after discovery
`
`was complete and shortly before trial. Deasy v. Hill, 833 F.2d 38, 42 (4th Cir. 1987). In contrast,
`
`here there are no new allegations or causes of action that would change the nature of the case. And
`
`PMP’s motion to amend was made with six-weeks of discovery remaining. See Dkt. 461.
`
`2.
`
`Additional Significant Discovery Is Not Required For PMP’s
`Proposed Amendment
`
`Reynolds contends that it “has done no discovery at all, nor undertaken any expert analysis”
`
`on the factors for injunctive relief, and that it would need to engage in “significant fact and expert
`
`discovery” to mount an opposition. Dkt. 476 at 8, 13. Reynolds’ discourse on the required
`
`discovery is over-stated and incorrect.
`
`Discovery on injunctive relief has been a part of this case since April 2020. Reynolds itself
`
`sought injunctive relief for its own asserted patents in April 2020, which remained in the case until
`
`5
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 9 of 18 PageID# 10672
`
`
`
`the case was temporarily stayed in December 2020. When Defendants asked Reynolds for the
`
`“complete factual and legal bases” for Reynolds’ contention that it was entitled to injunctive relief,
`
`Reynolds served a single paragraph—just one—response. See Ex. 1 (Reynolds’ Response to
`
`Defendants’ Interrogatory No. 8). Reynolds apparently did not believe that “extensive discovery”
`
`was needed by PMP to justify Reynolds’ own request for injunctive relief.
`
`Reynolds nonetheless contends that the “necessary discovery [for PMP’s injunctive relief]
`
`would take months to complete.” Dkt. 476 at 15. But Reynolds fails to identify a single specific
`
`witness, category of documents, or any other specific discovery it purportedly requires. The truth
`
`is that most or all of the discovery Reynolds contends is “necessary” is duplicative of discovery
`
`already taken. For example, Reynolds asserts that it would need to issue document requests on
`
`“the relevant product market.” Dkt. 476 at 14. But the parties already issued document requests
`
`on “the relevant product market” in which the accused VUSE products compete, back in August
`
`and September 2020. See, e.g., Ex. 2 (Defendants’ RFP No. 100) (requesting documents as to the
`
`“market in which Counterclaim Defendants contend Counterclaim Defendants’ products compete
`
`with the Accused Products, and the market share associated with each product in the market”); Ex.
`
`3 (Plaintiffs’ RFP No. 258) (requesting documents as to “the market in which Defendants contend
`
`Defendants’ Products compete with the Reynolds Accused Products, and the market share
`
`associated with each Product in the market”). And in response to those requests and others, the
`
`parties have produced numerous responsive documents relating to “the relevant product market”
`
`and taken extensive discovery in on that topic as it relates to parties’ damages claims, which have
`
`been pending since April and June 2020. Consequently, discovery on the market in which the
`
`accused VUSE products compete is already in the case.
`
`As another example, Reynolds now asserts that it must seek additional discovery on “the
`
`6
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 10 of 18 PageID# 10673
`
`
`
`public interest issues surrounding the market for alternatives to combustible cigarettes.” Dkt. 476
`
`at 14. But Reynolds concedes that the parties “engaged in extensive discovery relating to the
`
`question of” public interest in the related ITC case. Dkt. 476 at 6. Mostly at Reynolds’ insistence,
`
`Reynolds admits that the parties “exchanged hundreds of pages of interrogatory responses on this
`
`issue,” “presented opinions and testimony from seven experts in a variety of disciplines,”
`
`“exchanged ten expert reports, and deposed the experts.” Dkt. 476 at 6 (emphasis original). This
`
`“extensive discovery” in the ITC action on public interest is deemed produced in this action under
`
`the parties’ cross-use agreement. Dkt. 103 ¶ 18.
`
`Reynolds downplays this “extensive” public interest discovery from the ITC action because
`
`the “injunction issue before the ITC related exclusively to Defendants’ IQOS products, not any
`
`product of Reynolds.” Dkt. 476 at 13 n.2. But Reynolds argued in the ITC action that the public
`
`interest “market for alternatives to combustible cigarettes” included both VUSE and IQOS, and
`
`thus the “extensive” public interest discovery on that market must also be applicable here. Ex. 13,
`
`Complainants’ Initial ITC Post-Hearing Br. at 144. This extensive discovery—already completed
`
`and the subject of a trial—belies Reynolds’ cries of prejudice. In CDS Family Trust, the court
`
`found no prejudice and granted leave to amend, in part because documents and deposition
`
`testimony relevant to the sought amendment had already been discovered. 2020 WL 758129, at
`
`*5. As the Court in CDS Family Trust ruled: “The mere fact that the opposing party, here the
`
`Defendants, will be required to take some limited additional discovery, or invest additional
`
`resources in litigation [taking additional discovery], is not enough to warrant denial of an
`
`amendment.” Id. So too here.
`
`Despite the “extensive” discovery that has already occurred and is deemed produced in this
`
`case, Reynolds asserts that the parties “cannot complete this necessary work in the time remaining
`
`7
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 11 of 18 PageID# 10674
`
`
`
`under the Court’s schedule.” Dkt. 476 at 14. Nonsense. As discussed above, any such discovery—
`
`in the unlikely event it has not already occurred and which is untethered to the jury trial—need not
`
`all take place before discovery closes on April 12 and the pretrial conference on April 16. It need
`
`not even take place before trial. See MercExchange, 467 F. Supp. 2d at 617-19. Because no trial
`
`date has yet been set, there remains time to engage in any discovery on injunctive relief, to the
`
`extent Reynolds is able to (belatedly) identify it. That discovery will not impose any undue
`
`prejudice on Reynolds. See Civil Eng’g Consulting Servs. Inc. v. Anderson Columbia Co., No.
`
`3:16-cv-2540-JFA, 2017 WL 11285414, at *3 (D.S.C. July 26, 2017) (motion to amend filed
`
`“within the discovery period and many steps removed from trial … does not constitute prejudice
`
`sufficient to deny the motion to amend”). Most certainly, any needed discovery is not measured
`
`in months.
`
`B.
`
`PMP’s Amendment Is Timely And Warranted Based Upon Recent Evidence
`Developed In The ITC Proceedings And Other Recent Events
`
`
`
`Reynolds contends “that PMP’s delay in seeking to add a claim for injunctive relief in this
`
`case is undue, as it comes eight months after its counterclaims were made.” Dkt. 476 at 3. Once
`
`again, Reynolds is wrong. Reynolds’ argument is based on the false assumption that all facts
`
`known to PMP in February 2021 (when it filed its Motion) were known to PMP in June 2020
`
`(when it filed its counterclaims) and/or in October 2020 (when it amended those counterclaims).
`
`The record shows otherwise; additional information came to light during the ITC trial in January
`
`2021 (and in subsequent post-trial briefing over the next month), as well as from other post-
`
`October 2020 events. The cumulative weight of this information has made plain that the balance
`
`of the public interest favors an injunction.
`
`Indeed, the Court should want to consider these issues in the interests of justice. Of
`
`significant importance is information concerning the illegal status of accused VUSE e-cigarettes.
`
`8
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 12 of 18 PageID# 10675
`
`
`
`At the January 2021 ITC trial, Stacy Ehrlich, PMP’s FDA expert, provided unrebutted testimony
`
`that e-cigarettes, including Reynolds’ VUSE products, were being sold illegally in the United
`
`States in violation of a court order issued by the U.S. District Court for the District of Maryland in
`
`American Academy of Pediatrics v. FDA, 399 F. Supp. 3d 479 (D. Md. 2019). Ex. 4 at 1414:10-
`
`1417:5 (Ehrlich Public Hr’g Tr.); see Ex. 5 at 75-77 (PMP Posthr’g Br.). And on cross-
`
`examination during the January 2021 ITC trial, Reynolds’ FDA expert, Mr. Clissold admitted that
`
`if FDA wants to extend the one-year grace period from enforcement for otherwise illegal e-
`
`cigarettes established by the Maryland District Court, it would need judicial permission to do so.
`
`Ex. 6 at 571:3-18 (Clissold Public Hr’g Tr.).4
`
`
`
`Reynolds argued that the illegality of its VUSE products was inconsequential because FDA
`
`would not seek enforcement against unlawfully sold e-cigarettes. Ex. 6 at 536:4-538:1 (Clissold
`
`ITC Hr’g Tr.). Ms. Ehrlich, however, testified at the ITC hearing that in December 2020 alone,
`
`FDA seized at least 33,000 of these products. Ex. 4 at 1451:4-16 (Ehrlich Public Hr’g Tr.). Ms.
`
`Ehrlich also testified that FDA sent out “another bolus of warning letters against illegally marketed
`
`e-cigarette products” in late January 2021. Ex. 4 at 1419:21-1420:4 (Ehrlich Public Hr’g Tr.).
`
`PMP could not have known these yet-to-exist facts in June 2020 or when it made its amendment
`
`of the pleadings in October 2020—facts which undermine Reynolds’ position on the purported
`
`inconsequential nature of VUSE products’ illegal status. In addition, Ms. Ehrlich testified that, as
`
`of October 2020, the VUSE Solo was subject to immediate enforcement, given that the one-year
`
`grace period (calculated from the filing date of the PMTA) granted by the Maryland District Court
`
`had expired without any FDA authorization. Ex. 4 at 1416:5-1417:5 (Ehrlich Public Hr’g Tr.).
`
`
`4 This is in contrast to his previous and inconsistent deposition testimony, where Mr. Clissold
`offered “no opinion” as to what FDA would do once the one-year period under Pediatrics expired.
`Ex. 7 at 84:7-18 (Clissold ITC Dep. Tr.).
`
`9
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 13 of 18 PageID# 10676
`
`
`
`These new developments demonstrate that Reynolds’ VUSE e-cigarettes are illegal and at risk of
`
`FDA enforcement. Such newly developed evidence supports a balancing of public interest that
`
`favors permanent injunctive relief in this case. Simply stated, PMP believes that the public interest
`
`is not furthered by Reynolds’ sale of illegal products, but regardless the question is one that the
`
`Court should carefully consider.
`
`
`
`Moreover, the illegality of Reynolds’ VUSE e-cigarettes is unlikely to change anytime
`
`soon, if ever. On February 16, 2021, Mitch Zeller, Director of FDA’s Center for Tobacco Products,
`
`reported that, as of mid-January 2021, FDA had conducted initial non-substantive processing for
`
`PMTAs involving over 4.8 million products. Ex. 8 at 2 (Zeller Article). Because initial intake of
`
`these FDA applications is ongoing, even the list of companies submitting timely PMTAs that FDA
`
`promised to the public is still incomplete. Ex. 8 at 3 (Zeller Article). This means that substantive
`
`review for the vast majority of these products has not even begun, and FDA likely will take more
`
`than a year to issue determinations, with no guarantee of authorization. Ex. 8 at 5 (Zeller Article);
`
`Ex. 6 at 537:9-10 (Clissold ITC Hr’g Tr.). And because there is no final list of requirements for
`
`PMTAs, FDA’s review process could be further stymied. As Ms. Ehrlich testified at the ITC trial,
`
`the near-final PMTA rules were submitted to the Federal Register for pre-publication review on
`
`January 19, 2021, but they were withdrawn due to a change in Presidential Administrations, with
`
`no indication of a later publication date or anticipated date by which any PMTA rules may be
`
`implemented. Ex. 4 at 1429:22-1430:15 (Ehrlich Public Hr’g Tr.).
`
`
`
`The above post-October 2020 developments, in combination with other information,
`
`demonstrate that Reynolds cannot credibly claim to be acting in the public interest as it continues
`
`to sell illegal (and infringing) products in the United States. “[W]hen justice so requires,” Federal
`
`Rule of Civil Procedure 15(a)(2) instructs that the Court “should freely give leave” to amend the
`
`10
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 14 of 18 PageID# 10677
`
`
`
`Complaint. The Court should grant such leave in this case so that it can fairly evaluate whether it
`
`should prevent Reynolds from relying on products FDA has deemed unlawful.
`
`
`
`Notwithstanding the above, Reynolds contends that PMP delayed seeking to add injunctive
`
`relief until the close of the ITC action for “entirely strategic” reasons because PMP’s request for
`
`injunctive relief is “inconsistent with the public health arguments that it was making before the
`
`ITC.” Dkt. 476 at 16-17. There are no inconsistencies in PMP’s positions, none. In the ITC
`
`investigation, Reynolds seeks to remove PMP’s IQOS from the U.S. market. IQOS is the only
`
`PMTA- and MRTP-authorized inhalable non-combustible, and the only commercially viable HNB
`
`product available to U.S. consumers.5 See, e.g., Ex. 4 at 1405:16-1406:1 (Ehrlich ITC Hr’g Tr.);
`
`Ex. 9 at 138:15-25 (Figlar ITC Hr’g Tr.). Thus, blocking the sale of IQOS would mean denying
`
`American smokers access to an entire product category of alternatives to combustible cigarettes—
`
`HNB. In contrast, in this case, PMP seeks an injunction against VUSE e-cigarettes—a single
`
`product in a product category with many alternatives and substitutes readily available to U.S.
`
`consumers, even with the removal of Reynolds’ devices. As Reynolds’ own expert, Dr. Murrelle,
`
`testified, there are “thousands of existing PRRPs [potentially reduced risk products] on the U.S.
`
`market.” Ex. 10 at 454:8-9 (Murrelle Public Hr’g Tr.) This includes “PMTAs for approximately
`
`a billion products in the ENDS [e-cigarette] category alone,” which Dr. Murrelle learned of after
`
`September 2020. Ex. 10 at 458:21-25 (Murrelle Public Hr’g Tr.).
`
`
`
`
`
`In addition to ITC evidence and other post-October 2020 developments discussed above,
`
`Reynolds itself recently produced new information that sways the public interest balance in favor
`
`
`5 Besides IQOS, the only other HNB sold on the U.S. market is Reynolds’ Eclipse, but Reynolds’
`own witness testimony shows that Eclipse has been extremely unpopular with U.S. consumers for
`over two decades and thus cannot serve as an IQOS substitute. See, e.g., Ex. 9 at 114:20-116:22
`(Figlar ITC Hr’g Tr.).
`
`11
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 15 of 18 PageID# 10678
`
`
`
`of injunctive relief,
`
`Ex. 11 (2/19/2021 J. Michalik email).
`
`
`
`
`
` Ex. 12 ¶ 28 (Ehrlich Initial Expert Rep.)
`
`”).
`
`
`
` Specifically,
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`. Ex. 12 ¶¶ 23-28 (Ehrlich Initial Expert Rep.) But
`
`12
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 16 of 18 PageID# 10679
`
`
`
`the deadline for submitting PMTAs on existing products, set by the U.S. District Court for
`
`Maryland, passed in September 2020.
`
`
`
`In short, recent discovery in this case, along with Reynolds’ admissions and other
`
`developments in the ITC, evidence the strong public interest in enjoining Reynolds’ accused
`
`product sales warranting this Court’s consideration.
`
`C.
`
`Reynolds Does Not Dispute The Other Elements Supporting The Liberal
`Amendment of Pleadings Here
`
`Reynolds does not contend that PMP’s request for leave to amend is futile, and thus leave
`
`to amend should not be denied on this basis. Griaznov v. J-K Techs., LLC, No. ELH-16-2522,
`
`2017 WL 915000, at *11 (D. Md. Mar. 8, 2017) (granting motion to amend to include permanent
`
`injunctive relief because “there are claims in the proposed Amended Complaint for which plaintiff
`
`may be able to obtain injunctive relief”) (citation omitted).
`
`III. CONCLUSION
`
`PMP respectfully requests that the Court grant its motion for leave to amend its
`
`counterclaims to include injunctive relief, and allow PMP to file its proposed Second Amended
`
`Counterclaims.
`
`
`
`Dated: March 11, 2021
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Respectfully submitted,
`
`
`By: /s/ Maximilian A. Grant
`Maximilian A. Grant (VSB No. 91792)
`(max.grant@lw.com)
`Lawrence J. Gotts (VSB No. 25337)
`lawrence.gotts@lw.com
`Matthew J. Moore (pro hac vice)
`matthew.moore@lw.com
`Latham & Watkins LLP
`555 Eleventh Street, N.W., Suite 1000
`Washington, DC 20004
`Telephone: (202) 637-2200
`Facsimile: (202) 637-2201
`
`13
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 17 of 18 PageID# 10680
`
`
`
`
`
`
`
`Clement J. Naples (pro hac vice)
`clement.naples@lw.com
`LATHAM & WATKINS LLP
`885 Third Avenue
`New York, NY 10022-4834
`Tel: (212) 906-1200; Fax: (212) 751-4864
`
`Gregory J. Sobolski (pro hac vice)
`greg.sobolski@lw.com
`Latham & Watkins LLP
`505 Montgomery Street, Suite 2000
`San Francisco, CA 94111
`Telephone: (415) 391-0600
`Facsimile: (415) 395-8095
`
`Brenda L. Danek (pro hac vice)
`brenda.danek@lw.com
`LATHAM & WATKINS LLP
`330 North Wabash Avenue, Suite 2800
`Chicago, IL 60611
`Tel: (312) 876-7700; Fax: (312) 993-9767
`
`Counsel for Defendant-Counterclaim Plaintiff
`Philip Morris Products S.A.
`
`14
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 477 Filed 03/11/21 Page 18 of 18 PageID# 10681
`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`I hereby certify that on this 11th day of March, 2021, a true and correct copy of the
`
`foregoing was served using the Court’s CM/ECF system, with electronic notification of such filing
`
`to all counsel of record:
`
`
`
`
`
`
`
`/s/ Maximilian A. Grant
`Maximilian A. Grant (VSB No. 91792)
`LATHAM & WATKINS LLP
`555 Eleventh Street, N.W., Suite 1000
`Washington, DC 20004
`Telephone: (202) 637-2200
`Facsimile: (202) 637-2201
`Email: max.grant@lw.com
`
`Counsel for Defendant-Counterclaim
`Plaintiff Philip Morris Products S.A.
`
`
`
`
`
`15
`
`