Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 1 of 48 PageID# 1103
`
`
`
`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 THE
`AMENDED COMPLAINT AND COUNTERCLAIMS
`
`Defendant Philip Morris Products S.A. (“PMP” or “Defendant”) respectfully submits its
`
`Partial Answer in response to Plaintiffs RAI Strategic Holding, Inc. (“RAI”) and R.J. Reynolds
`
`Vapor Company’s (“RJRV”) (collectively, “RJR”) Amended Complaint. To the extent not
`
`specifically admitted herein, the allegations of the Amended Complaint are denied, including any
`
`allegations contained in the headings of the Amended Complaint.
`
`
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 2 of 48 PageID# 1104
`
`
`
`
`
`INTRODUCTION AND PRELIMINARY STATEMENT OF PMP
`
`RJR appears to have brought this action in the hopes of stopping PMP’s innovative IQOS
`
`heated tobacco system, which has a proven track record in switching smokers away from
`
`combustible cigarettes, from disrupting its core business in combustible cigarettes and overtaking
`
`its secondary line of e-vapor products. Having failed to develop a competing offering in the heated
`
`tobacco space, RJR apparently now seeks to block that space in its entirety by bringing this
`
`meritless litigation. But in its haste to do so, RJR has overlooked the fact that its own line of e-
`
`vapor products (which are far less effective in switching smokers away from combustible
`
`cigarettes than IQOS) infringe multiple patents owned by PMP.
`
`
`
`While Philip Morris International, PMP’s ultimate parent, built its success on the basis of
`
`combustible cigarettes, it has committed itself to building its future on the basis of smoke-free
`
`products that are substantially less harmful than combustible cigarettes. Consistent with that
`
`vision, PMP has emerged as the global leader and pioneer in reduced-risk alternatives to
`
`combustible cigarettes (“Reduced Risk Products” or “RRPs”). PMP has invested over seven
`
`billion dollars since 2008 on research and development relating to RRPs such as IQOS. And it has
`
`amassed a substantial portfolio of intellectual property, covering numerous innovations relating to
`
`smoke-free technologies, including both heated tobacco and e-vapor products.
`
`
`
`PMP first launched IQOS, a product that heats rather than burns tobacco to produce an
`
`aerosol instead of smoke (known as a “Heat-Not-Burn” or “HNB” product), in select cities in Italy
`
`and Japan in 2014. It is now sold in over 57 countries throughout the world. To date, over 11.2
`
`million smokers have switched to IQOS and given up smoking for good, and this number is
`
`growing daily. PMP conducted 10 clinical studies on IQOS and published over 340 peer-reviewed
`
`articles on RRPs. There are also over 30 independent studies corroborating PMP’s findings with
`
`2
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 3 of 48 PageID# 1105
`
`
`
`respect to IQOS. Among the findings: IQOS produces an aerosol with 90 to 95% less toxins than
`
`cigarette smoke.
`
`
`
`In 2019, after a lengthy review, the United States Food and Drug Administration (“FDA”)
`
`granted PMP’s request for a pre-market authorization to commercialize IQOS (through its
`
`distributor, Altria) in the United States. In granting that request, the FDA determined that
`
`marketing IQOS “would be appropriate for the protection of the public health.” Only July 7, 2020,
`
`the FDA authorized the marketing of a version of IQOS as a modified risk tobacco product, finding
`
`that IQOS “significantly reduces the production of harmful and potentially harmful chemicals.”
`
`To date, no other HNB or e-vapor product has received these authorizations.
`
`
`
`Apparently concerned by the commercial threat posed by IQOS, RJR is now attempting to
`
`stop IQOS with this case. But in its haste to stop IQOS, RJR committed two fatal errors. First, it
`
`asserted meritless patent claims. Second, it overlooked the fact that its own e-vapor products
`
`infringe multiple patents owned by PMP and co-defendants Altria Client Services and Philip
`
`Morris USA, Inc. PMP thus responds to RJR’s Complaint and brings counterclaims to recover the
`
`considerable damages flowing from RJR’s infringement.
`
`RESPONSES TO THE SPECIFIC ALLEGATIONS OF COMPLAINT
`
`THE PARTIES
`
`1.
`
`PMP is without knowledge or information sufficient to admit or deny the
`
`allegations in paragraph 1 of the Complaint and, on that basis, denies them.
`
`2.
`
`PMP is without knowledge or information sufficient to admit or deny the
`
`allegations in paragraph 2 of the Complaint and, on that basis, denies them.
`
`3.
`
`PMP is without knowledge or information sufficient to admit or deny the
`
`allegations in paragraph 3 of the Complaint and, on that basis, denies them.
`
`3
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 4 of 48 PageID# 1106
`
`
`
`4.
`
`PMP is without knowledge or information sufficient to admit or deny the
`
`allegations in paragraph 4 of the Complaint and, on that basis, denies them.
`
`5.
`
`PMP is without knowledge or information sufficient to admit or deny the
`
`allegations in paragraph 5 of the Complaint and, on that basis, denies them.
`
`6.
`
`
`
`7.
`
`Admitted.
`
`JURISDICTION AND VENUE
`
`Paragraph 7 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits that the Complaint purports to be an action arising under
`
`the patent laws of the United States, 35 U.S.C. §§ 271, et seq., and that this Court has subject
`
`matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338, but PMP denies that there is any legal
`
`or factual basis for such action.
`
`8.
`
`PMP is without knowledge or information sufficient to admit or deny the
`
`allegations in paragraph 8 of the Complaint and, on that basis, denies them.
`
`9.
`
`Paragraph 9 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits for purposes of this action only that this Court has
`
`personal jurisdiction over it. PMP otherwise denies the allegations in paragraph 9 of the
`
`Complaint.
`
`10.
`
`PMP is without knowledge or information sufficient to admit or deny the
`
`allegations in paragraph 10 of the Complaint and, on that basis, denies them.
`
`11.
`
`Paragraph 11 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits for purposes of this action only that venue exists in this
`
`District for the claims against PMP pursuant to 28 U.S.C. §§ 1391 and 1400(b). PMP otherwise
`
`4
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 5 of 48 PageID# 1107
`
`
`
`denies the allegations in paragraph 11 of the Complaint. PMP specifically denies the allegations
`
`of paragraph 11 of the Complaint relating to PMP’s alleged infringement of any patents.
`
`FACTUAL BACKGROUND
`
`THE ASSERTED PATENTS
`
`12.
`
`PMP admits that the face of U.S. Patent No. 9,814,268 (“the ’268 patent”) states
`
`that it is titled “Tobacco-containing smoking article.” PMP further admits that the face of the ’268
`
`patent states that it issued on November 4, 2017 and that it includes two independent claims. PMP
`
`admits that Plaintiffs have quoted claim 16 of the ’268 patent in paragraph 12 of the Complaint.
`
`PMP otherwise denies the allegations in paragraph 12 of the Complaint.
`
`13.
`
`The Court has stayed Plaintiff’s Counts Two, Three, and Four pursuant to 28 U.S.C.
`
`§ 1659. See Dkt. 27. PMP will provide a response at the appropriate time when the stay is lifted.
`
`14.
`
`The Court has stayed Plaintiffs’ Counts Two, Three, and Four pursuant to 28 U.S.C.
`
`§ 1659. See Dkt. 27. PMP will provide a response at the appropriate time when the stay is lifted.
`
`15.
`
`The Court has stayed Plaintiffs’ Counts Two, Three, and Four pursuant to 28 U.S.C.
`
`§ 1659. See Dkt. 27. PMP will provide a response at the appropriate time when the stay is lifted.
`
`16.
`
`The Court has stayed Plaintiffs’ Counts Two, Three, and Four pursuant to 28 U.S.C.
`
`§ 1659. See Dkt. 27. PMP will provide a response at the appropriate time when the stay is lifted.
`
`17.
`
`The Court has stayed Plaintiffs’ Counts Two, Three, and Four pursuant to 28 U.S.C.
`
`§ 1659. See Dkt. 27. PMP will provide a response at the appropriate time when the stay is lifted.
`
`18.
`
`The Court has stayed Plaintiffs’ Counts Two, Three, and Four pursuant to 28 U.S.C.
`
`§ 1659. See Dkt. 27. PMP will provide a response at the appropriate time when the stay is lifted.
`
`19.
`
`PMP admits that the face of U.S. Patent No. 10,492,542 (“the ’542 patent”) states
`
`that it is titled “Smoking articles and use thereof for yielding inhalation materials.” PMP further
`
`admits that the face of the ’542 patent states that it issued on December 3, 2019 and that it includes
`
`5
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 6 of 48 PageID# 1108
`
`
`
`two independent claims. PMP admits that Plaintiffs have quoted claim 1 of the ’542 patent in
`
`paragraph 19 of the Complaint. PMP otherwise denies the allegations in paragraph 19 of the
`
`Complaint.
`
`THE ACCUSED PRODUCTS
`
`20.
`
`PMP admits that it has developed a heat-not-burn tobacco heating system called
`
`IQOS and the IQOS system includes an electrically powered device that comprises a holder and a
`
`charger, and a disposable tobacco unit. PMP otherwise denies the allegations in paragraph 20 of
`
`the Complaint.
`
`21.
`
`Paragraph 21 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits that some of the packaging for the IQOS device sold in
`
`the United States recites: “Manufactured for Philip Morris USA, Richmond VA. Made in
`
`Malaysia,” and that some of the packaging for the tobacco unit states: “Mfd. for Philip Morris
`
`USA, Richmond, VA. Made in Italy.” PMP is without knowledge or information sufficient to
`
`admit or deny the remaining allegations in paragraph 21 of the Complaint and, on that basis, denies
`
`them.
`
`22.
`
`Paragraph 22 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits that the holder, into which the tobacco unit is placed,
`
`heats the tobacco via a heating blade. PMP admits the adult consumer pushes a button to turn on
`
`the heating unit. PMP further admits the holder includes a battery and supplies heat to the tobacco
`
`unit via the heating blade for six minutes or 14 puffs, whichever comes first. PMP is without
`
`knowledge or information sufficient to admit or deny the remaining allegations in paragraph 22 of
`
`the Complaint and, on that basis, denies them.
`
`6
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 7 of 48 PageID# 1109
`
`
`
`23.
`
`Paragraph 23 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits that the IQOS system’s tobacco unit is designed for
`
`heating, not for burning or smoking, and contains a processed tobacco plug. PMP admits the
`
`tobacco plug is made from tobacco leaves, which are ground and formed into tobacco sheets, called
`
`cast-leaf. PMP further admits the adult consumer draws on the tobacco unit to inhale a nicotine
`
`containing aerosol. PMP admits that the tobacco unit is available in different flavors, including
`
`regular and menthol flavors. PMP further admits that the tobacco unit is sometimes referred to as
`
`a HeatStick or Marlboro™ HeatStick. PMP is without knowledge or information sufficient to
`
`admit or deny the remaining allegations in paragraph 23 of the Complaint and, on that basis, denies
`
`them.
`
`24.
`
`Paragraph 24 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits that the IQOS device includes a charger for charging the
`
`holder and is sold with an AC power adaptor for recharging the charger. PMP further admits that
`
`the charger contains its own battery that charges the holder. PMP is without knowledge or
`
`information sufficient to admit or deny the remaining allegations in paragraph 24 of the Complaint
`
`and, on that basis, denies them.
`
`25.
`
`Paragraph 25 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits that the holder, tobacco unit, and the charger are
`
`authorized by the FDA for use as part of the IQOS system. PMP specifically denies the allegations
`
`of paragraph 25 of the Complaint relating to PMP’s alleged infringement of any patents. PMP is
`
`without knowledge or information sufficient to admit or deny the remaining allegations in
`
`paragraph 25 of the Complaint and, on that basis, denies them.
`
`7
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 8 of 48 PageID# 1110
`
`
`
`26.
`
`Paragraph 26 contains legal conclusions to which no answer is required. PMP
`
`specifically denies the allegations of paragraph 26 of the Complaint relating to PMP’s alleged
`
`infringement of any patents.
`
`27.
`
`Paragraph 27 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits that it sells the charger, holder, tobacco unit, and a
`
`cleaner outside the United States. PMP further admits that the tobacco units are sold separately
`
`in, for example, packs of 20. PMP is without knowledge or information sufficient to admit or deny
`
`the remaining allegations in paragraph 27 of the Complaint and, on that basis, denies them.
`
`28.
`
`Paragraph 28 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits that it offers for sale and sells the IQOS device with a
`
`User Guide and Quick Start Guide outside the United States. PMP specifically denies any
`
`allegations related to infringement of the Asserted Patents. PMP is without knowledge or
`
`information sufficient to admit or deny the remaining allegations in paragraph 28 of the Complaint
`
`and, on that basis, denies them.
`
`29.
`
`PMP is without knowledge or information sufficient to admit or deny the
`
`allegations in paragraph 29 of the Complaint and, on that basis, denies them.
`
`30.
`
`Paragraph 30 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits the adult consumer inserts the tobacco unit into the
`
`holder, which contains an electronically controlled heater. PMP admits the adult consumer pushes
`
`a button to turn on the heater, and then draws on the tobacco unit to inhale a nicotine containing
`
`aerosol. PMP admits the tobacco units respond to the warming of the heat blade inside the holder,
`
`which heats the tobacco, and that the tobacco reaches a temperature below 350°C, which is a high
`
`enough temperature to release a nicotine-containing aerosol without burning the tobacco.
`
`8
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 9 of 48 PageID# 1111
`
`
`
`31.
`
`PMP admits that ACS is licensed to distribute, offer to sell, and sell the IQOS
`
`system and the corresponding tobacco sticks in the U.S. PMP is without knowledge or information
`
`sufficient to admit or deny the remaining allegations in paragraph 31 of the Complaint and, on that
`
`basis, denies them.
`
`32.
`
`PMP admits that ACS is licensed to distribute, offer to sell, and sell the IQOS
`
`system and the corresponding tobacco sticks in the U.S. PMP further admits that some of the
`
`packaging for the IQOS device that it sells in the United States recites: “Manufactured for Philip
`
`Morris USA, Richmond VA. Made in Malaysia,” and that some of the packaging for the tobacco
`
`unit states: “Mfd. for Philip Morris USA, Richmond, VA. Made in Italy.” PMP is without
`
`knowledge or information sufficient to admit or deny the remaining allegations in paragraph 32 of
`
`the Complaint and, on that basis, denies them.
`
`33.
`
`Paragraph 33 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits that PMP prosecuted PMTAs with the FDA seeking
`
`approval to offer for sale and sell the IQOS system in the United States, and that ACS and PM
`
`USA consulted with Philip Morris Products S.A. in preparation of certain aspects of a PMTA.
`
`PMP is without knowledge or information sufficient to admit or deny the remaining allegations in
`
`paragraph 33 of the Complaint and, on that basis, denies them.
`
`THE IMPORTATION, SALE, OFFER FOR SALE, AND DISTRIBUTION OF
`IQOS DEVICES
`
`34.
`
`PMP admits that, on or around May 24, 2017, it filed PMTAs with the FDA seeking
`
`approval to offer for sale and sell the IQOS system in the United States. PMP admits that Altria
`
`Client Services LLC and Philip Morris USA, Inc. consulted on the preparation of certain aspects
`
`of a PMTA application. PMP is without knowledge or information sufficient to admit or deny the
`
`remaining allegations in paragraph 34 of the Complaint and, on that basis, denies them.
`
`9
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 10 of 48 PageID# 1112
`
`
`
`35.
`
`36.
`
`Admitted.
`
`PMP is without knowledge or information sufficient to admit or deny the remaining
`
`allegations in paragraph 36 of the Complaint and, on that basis, denies them.
`
`37.
`
`Paragraph 37 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits that admit that IQOS systems are manufactured by third
`
`parties outside of the United States and certain IQOS systems are imported and sold in the United
`
`States. PMP is without knowledge or information sufficient to admit or deny the remaining
`
`allegations in paragraph 37 of the Complaint and, on that basis, denies them.
`
`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
`
`38.
`
`Paragraph 38 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP admits that the face of U.S. Design Patent No. D844,221 and
`
`U.S. Patent No. 10,258,087 list U.S. Patent No. 7,726,320 (“the ’320 patent”); and the face of U.S.
`
`Patent No. 10,278,424 lists U.S. Patent No. 9,078,473. PMP is without knowledge or information
`
`sufficient to admit or deny the remaining allegations in paragraph 38 of the Complaint and, on that
`
`basis, denies them.
`
`39.
`
`40.
`
`Denied.
`
`Denied.
`
`COUNT ONE
`
`41. PMP re-alleges, adopts, and incorporates by reference the allegations included
`
`within paragraphs 1 through 40 as if fully set forth herein.
`
`42.
`
`PMP is without knowledge or information sufficient to admit or deny the
`
`allegations in paragraph 42 of the Complaint and, on that basis, denies them.
`
`10
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 11 of 48 PageID# 1113
`
`
`
`43.
`
`Paragraph 43 contains legal conclusions to which no answer is required. To the
`
`extent an answer is required, PMP denies the remaining allegations in paragraph 43.
`
`Denied.
`
`PMP admits that the quoted language in paragraph 45 appears in claim 16 of the
`
`44.
`
`45.
`
`’268 patent.
`
`46.
`
`Paragraph 46 contains legal conclusions to which no response is required. To the
`
`extent an answer is required, PMP states that the IQOS system includes an electrically powered
`
`device that comprises a holder and a charger, and a disposable tobacco unit. PMP otherwise denies
`
`the allegations in paragraph 46.
`
`47.
`
`Paragraph 47 contains legal conclusions to which no response is required. To the
`
`extent an answer is required, PMP states that the IQOS system includes an electrically powered
`
`device that comprises a battery. PMP otherwise denies the allegations of paragraph 47.
`
`48.
`
`Paragraph 48 contains legal conclusions to which no response is required. To the
`
`extent an answer is required, PMP states that the document cited speaks for itself. PMP otherwise
`
`denies the allegations of paragraph 48.
`
`49.
`
`PMP admits that the quoted language in paragraph 49 appears in claim 16 of the
`
`’268 patent.
`
`50.
`
`Paragraph 50 contains legal conclusions to which no response is required. To the
`
`extent an answer is required, PMP denies the allegations in paragraph 50.
`
`51.
`
`PMP admits that the quoted language in paragraph 51 appears in claim 16 of the
`
`’268 patent.
`
`52.
`
`Paragraph 52 contains legal conclusions to which no response is required. To the
`
`extent an answer is required, PMP denies the allegations in paragraph 52.
`
`11
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 12 of 48 PageID# 1114
`
`
`
`53.
`
`PMP admits that the quoted language in paragraph 53 appears in claim 16 of the
`
`’268 patent.
`
`54.
`
`Paragraph 54 contains legal conclusions to which no response is required. To the
`
`extent an answer is required, PMP admits that the IQOS system includes a holder that comprises
`
`a battery. PMP otherwise denies the allegations in paragraph 54.
`
`55.
`
`PMP admits that the quoted language in paragraph 55 appears in claim 16 of the
`
`’268 patent.
`
`56.
`
`Paragraph 56 contains legal conclusions to which no response is required. To the
`
`extent an answer is required, PMP denies the allegations of paragraph 56.
`
`57.
`
`PMP states that the document cited in paragraph 57 speaks for itself. PMP
`
`otherwise denies the remaining allegations of paragraph 57.
`
`58.
`
`PMP admits that the quoted language in paragraph 58 appears in claim 16 of the
`
`’268 patent.
`
`59.
`
`PMP states that the document cited in paragraph 59 speaks for itself. PMP
`
`otherwise denies the remaining allegations of paragraph 59.
`
`60.
`
`PMP admits that the quoted language in paragraph 60 appears in claim 16 of the
`
`’268 patent.
`
`61.
`
`62.
`
`’268 patent.
`
`Denied.
`
`PMP admits that the quoted language in paragraph 62 appears in claim 16 of the
`
`63.
`
`PMP states that the document cited in paragraph 63 speaks for itself. PMP
`
`otherwise denies the allegations in paragraph 63.
`
`64.
`
`Denied.
`
`12
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 13 of 48 PageID# 1115
`
`
`
`65.
`
`66.
`
`67.
`
`68.
`
`69.
`
`Denied.
`
`Denied.
`
`Denied.
`
`Denied.
`
`Paragraph 69 contains a summary request for relief, and no response is required.
`
`To the extent a response is required, PMP denies that Plaintiffs are entitled to any relief sought in
`
`their Complaint or any relief whatsoever.
`
`COUNTS TWO THROUGH FOUR
`
`
`
`70-158. The Court has stayed Counts Two, Three, and Four of the Complaint under 28
`
`U.S.C. § 1659. See Dkt. 27. The Amended Complaint improperly adds allegations to Counts that
`
`this Court expressly stayed under 19 U.S.C. § 1659(a). See Dkt. 27. This is not permitted.
`
`Plaintiffs cannot amend allegations for stayed counts without leave of the Court. See, e.g., Sandisk
`
`Corp. v. Phison Elecs. Corp., Nos. 07-cv-605, 2008 WL 4533715 (W.D. Wis. Sept. 17, 2008)
`
`(addressing motions practice where the parties sought leave of the court to lift a stay under 19
`
`U.S.C. § 1659 to proceed with ministerial discovery). Consequently, the new allegations set forth
`
`in Counts Two, Three, and Four from the Amended Complaint are not properly part of this action.
`
`(Dkt. 52, ¶¶ 70-158). Absent this Court lifting the stay imposed by its June order, which Plaintiffs
`
`failed to confer on and failed to move for, Plaintiffs have no ability to amend any portion of the
`
`stayed Counts. PMP will respond to these counts if they are properly amended and at the
`
`appropriate time when the stay is lifted.
`
`COUNT FIVE
`INFRINGEMENT OF U.S. PATENT NO. 10,432,542
`
`159. PMP re-alleges, adopts, and incorporates by reference the allegations included
`
`within paragraphs 1 through 158 as if fully set forth herein.
`
`13
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 14 of 48 PageID# 1116
`
`
`
`160. PMP is without knowledge or information sufficient to admit or deny the
`
`allegations in paragraph 160 of the Complaint and, on that basis, denies them.
`
`161. Paragraph 161 contains legal conclusions to which no answer is required. PMP is
`
`without knowledge or information sufficient to admit or deny the remaining allegations in
`
`paragraph 161 of the Complaint and, on that basis, denies them.
`
`162. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
`
`draft claims directed at the Accused Products, but the claims are far removed from the alleged
`
`invention possessed at the time of filing and described by the inventors when they filed the original
`
`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
`
`written description, anticipation, and obviousness.
`
`163. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
`
`draft claims directed at the Accused Products, but the claims are far removed from the alleged
`
`invention possessed at the time of filing and described by the inventors when they filed the original
`
`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
`
`written description, anticipation, and obviousness.
`
`164. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
`
`draft claims directed at the Accused Products, but the claims are far removed from the alleged
`
`invention possessed at the time of filing and described by the inventors when they filed the original
`
`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
`
`written description, anticipation, and obviousness.
`
`165. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
`
`draft claims directed at the Accused Products, but the claims are far removed from the alleged
`
`invention possessed at the time of filing and described by the inventors when they filed the original
`
`14
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 15 of 48 PageID# 1117
`
`
`
`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
`
`written description, anticipation, and obviousness.
`
`166. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
`
`draft claims directed at the Accused Products, but the claims are far removed from the alleged
`
`invention possessed at the time of filing and described by the inventors when they filed the original
`
`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
`
`written description, anticipation, and obviousness.
`
`167. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
`
`draft claims directed at the Accused Products, but the claims are far removed from the alleged
`
`invention possessed at the time of filing and described by the inventors when they filed the original
`
`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
`
`written description, anticipation, and obviousness.
`
`168. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
`
`draft claims directed at the Accused Products, but the claims are far removed from the alleged
`
`invention possessed at the time of filing and described by the inventors when they filed the original
`
`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
`
`written description, anticipation, and obviousness.
`
`169. Denied. Plaintiffs filed for the ’542 patent in September 2019 and attempted to
`
`draft claims directed at the Accused Products, but the claims are far removed from the alleged
`
`invention possessed at the time of filing and described by the inventors when they filed the original
`
`patent application on August 9, 2011 and are therefore invalid for, among other things, lack of
`
`written description, anticipation, and obviousness.
`
`15
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 16 of 48 PageID# 1118
`
`
`
`RESPONSE TO PRAYER FOR RELIEF
`
`170. PMP denies that Plaintiffs are entitled to any relief sought in their Complaint or any
`
`relief whatsoever.
`
`AFFIRMATIVE AND OTHER DEFENSES
`
`Pursuant to Federal Rule of Civil Procedure 8(c), and without altering any applicable
`
`burdens of proof or burdens of persuasion, PMP asserts the following defenses to the Complaint
`
`and reserves its right to assert additional defenses.
`
`FIRST AFFIRMATIVE DEFENSE
`
`(Non-Infringement)
`
`PMP does not and has not infringed any valid, enforceable, asserted claim of the Asserted
`
`Patents, either literally or under the doctrine of equivalents, under any theory of infringement.
`
`SECOND AFFIRMATIVE DEFENSE
`
`(Invalidity)
`
`Each asserted claim of the Asserted Patents is invalid for failure to comply with one or
`
`more of the requirements of Title 35 of the United States Code, including without limitation, 35
`
`U.S.C. §§ 101, 102, 103, 112, and/or 116, and the rules, regulations, and laws pertaining thereto.
`
`THIRD AFFIRMATIVE DEFENSE
`
`(Prosecution History Estoppel and Disclaimer)
`
`Plaintiffs are barred, based on statements, representations, and admissions made during
`
`prosecution of the patent applications resulting in the Asserted Patents or related patent
`
`applications, from asserting any interpretation of any valid, enforceable claim of the Asserted
`
`Patents that would be broad enough to cover any Accused Product alleged to infringe the Asserted
`
`Patents, either literally or under the doctrine of equivalents.
`
`16
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 17 of 48 PageID# 1119
`
`
`
`FOURTH AFFIRMATIVE DEFENSE
`
`(Equitable Defenses)
`
`Plaintiffs’ attempted enforcement of the Asserted Patents against PMP is barred by one
`
`or more of the equitable doctrines, such as estoppel, acquiescence, waiver, and unclean hands.
`
`FIFTH AFFIRMATIVE DEFENSE
`
`(Limitation on Damages)
`
`Plaintiffs’ claims for damages are statutorily limited or barred by 35 U.S.C. §§ 286 and/or 287.
`
`SIXTH AFFIRMATIVE DEFENSE
`
`(Preclusion of Costs)
`
`Plaintiffs are barred under 35 U.S.C. § 288 from recovering costs associated with its action.
`
`SEVENTH AFFIRMATIVE DEFENSE
`
`(No Injunctive Relief)
`
`Plaintiffs are not entitled to injunctive relief as they have, at a minimum, an adequate
`
`remedy at law upon any finding of infringement and have not suffered any irreparable injury.
`
`EIGHTH AFFIRMATIVE DEFENSE
`
`(No Willfulness)
`
`Plaintiffs are barred from obtaining a finding of willfulness or receiving enhanced
`
`damages because they have not alleged that PMP engaged in reprehensible conduct, and PMP
`
`has engaged in no such conduct, which is a prerequisite for a willfulness finding and an award
`
`of enhanced damages.
`
`NINTH AFFIRMATIVE DEFENSE
`
`(Failure to State a Claim)
`
`
`
`The Complaint fails to state a claim upon which relief can be granted, for at least the
`
`reasons described in the Motion to Dismiss filed in this action.
`
`17
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 65 Filed 07/27/20 Page 18 of 48 PageID# 1120
`
`
`
`
`
`RESERVATION OF RIGHTS
`
`PMP hereby reserves the right to amend its Partial Answer and reserves all defenses set out
`
`in Rule 8(c) of the Federal Rules of Civil Procedure, the Patent Laws of the United States, and
`
`any other defenses, at law or in equity, which become applicable after the substantial completion
`
`of discovery or otherwise in litigation.
`
`COUNTERCLAIMS1
`
`
`
`Counterclaim Plaintiff Philip Morris Products S.A. (“PMP” or “Counterclaim Plaintiff”)
`
`hereby counterclaims and alleges against Counterclaim Defendants R.J. Reynolds Vapor Company
`
`(“RJRV”) and RAI Strategic Holdings, Inc. (“RAI”) (collectively, “RJR” or “Counterclaim
`
`Defendants”) as follows:
`
`NATURE OF THE ACTION
`
`1.
`
`This is an action arising under the patent laws of the United States, 35 U.S.C.
`
`§§ 271, et seq., to (i) address infringement and obtain damages resulting from RJRV’s
`
`unauthorized making, using, sale, offer for sale, and/or importation into the United States through
`
`its infringing “VUSE” e-vapor products; and (ii) obtain a declaration that Counterclaim
`
`Defendants’ ass