Case 1:20-cv-00393-LO-TCB Document 713 Filed 06/11/21 Page 1 of 12 PageID# 17338
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
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`RAI STRATEGIC HOLDINGS, INC. and
`R.J. REYNOLDS VAPOR COMPANY,
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`Plaintiffs and Counterclaim Defendants,
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`v.
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`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA INC.; and PHILIP MORRIS
`PRODUCTS S.A.,
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`Defendants and Counterclaim Plaintiffs.
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`Case No. 1:20-cv-00393-LO-TCB
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`REYNOLDS’S MEMORANDUM IN SUPPORT OF MOTION FOR RELIEF FROM
`STIPULATION ON DEPOSITION DATES IN LIGHT OF NEW INJUNCTION-RELATED
`CONTENTIONS FROM PHILIP MORRIS PRODUCTS S.A.
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`TABLE OF CONTENTS
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`INTRODUCTION ......................................................................................................................... 1
`FACTUAL BACKGROUND ........................................................................................................ 3
`ARGUMENT ................................................................................................................................. 5
`CONCLUSION .............................................................................................................................. 8
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`INTRODUCTION
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`Reynolds respectfully seeks relief from the parties’ stipulation (Dkt. 668) setting the date
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`for the deposition of Dr. James Figlar, Reynolds’s Rule 30(b)(6) designee on matters relating to
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`PMP’s request for a permanent injunction, because—after that stipulation was entered, after the
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`parties’ agreed date to complete injunction-related document productions, and after this Court
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`partially denied Reynolds’s motion to stay injunction-related discovery—PMP once again moved
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`the goalposts on this issue in a way that will require yet more discovery before Dr. Figlar’s
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`deposition can take place. As the Court is well aware by now, PMP added its claim for injunctive
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`relief nearly nine months after first asserting its counterclaims, and then made clear in its response
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`to contention interrogatories that its claim of “irreparable harm” was exclusively based on the
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`notion that sales of the IQOS product in the United States were being, and would continue to be,
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`adversely impacted by sales of Reynolds’s VUSE products, which are alleged to infringe PMP’s
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`patents. After those contentions were set, however, Judge Cheney of the ITC issued an Initial
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`Determination finding that the IQOS products infringe Reynolds’s patents, and that IQOS should
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`be excluded from the U.S. market. As this Court recognized, that decision, if upheld by the
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`Commission, whose decision is expected in September 2021, “undercuts the irreparable harm
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`undergirding PMP’s claim for injunctive relief.” (Dkt. 702.)
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`PMP knows this, too. So, immediately after convincing this Court to allow fact discovery
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`on its claim for injunctive relief to proceed—and after expressly assuring the Court that the parties
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`“are within weeks of” completing it (Dkt. 666 at 1)—PMP amended its contention interrogatory
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`responses to add completely new assertions of irreparable harm based on an entirely different
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`product. PMP now claims that its VEEV product (which is a vaping product, not a heat-not-burn
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`product like IQOS) will be adversely impacted by continuing sales of Reynolds’s VUSE products,
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`and so a permanent injunction barring VUSE from the U.S. market is warranted, even if the
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`Commission upholds Judge Cheney’s Initial Determination on IQOS. Setting aside for the
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`moment that VEEV is a poor candidate to serve as the basis for injunctive relief because it has
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`never been sold in the United States, the mere fact that PMP has chosen to add VEEV to this case
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`opens an entirely new area of fact discovery that must now be completed.
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`VEEV has never been the subject of discovery in this case, which to this point has focused
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`exclusively on PMP’s IQOS and Reynolds’s VUSE. If VEEV is now to be added to this case as a
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`basis for excluding Reynolds’s VUSE products from the market, then Reynolds has to conduct
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`discovery on VEEV, including written discovery and document requests. Reynolds also needs to
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`review and produce its own documents relating to VEEV. Reynolds will then have to amend its
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`contentions on the injunction issue, to respond specifically to the new allegations from PMP
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`around VEEV. And all of this has to happen before Dr. Figlar, Reynolds’s Rule 30(b)(6) designee
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`on “[t]he factual bases underlying [Reynolds’s] contention, including [Reynolds’s] response to
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`Interrogatory No. 30 . . . that PMP has not suffered irreparable injury,” can testify.
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`After receiving PMP’s new disclosures concerning VEEV, Reynolds suggested that the
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`injunction witnesses for both sides be postponed until the necessary written and document
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`discovery relating to VEEV could be conducted. PMP refused, insisting that all of the depositions
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`go forward as scheduled. This is unreasonable. If it proceeds on June 24, Dr. Figlar’s deposition
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`likely will need to be re-done after completion of the additional discovery stemming from PMP’s
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`latest shift in contentions. Dr. Figlar should not be forced to sit for two depositions simply because
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`PMP opted, late in the game, to alter the fundamental premise of its claim for injunctive relief.
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`FACTUAL BACKGROUND
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`In June 2020, PMP asserted three patents against Reynolds’s VUSE line of vaping
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`products. (Dkt. 40.) Nine months later, PMP sought leave to add a claim for injunctive relief to
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`exclude the VUSE products from the U.S. market if PMP prevails on liability. (Dkt. 463.) The
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`2
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`Court granted PMP’s request for leave to amend its pleadings to add a claim for injunctive relief
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`on March 12. (Dkt. 483.) Thereafter, the parties engaged in fact discovery on PMP’s newly-
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`requested remedy consistent with the Court’s order and ensuing scheduling orders. The discovery
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`included PMP’s April 9 response to Reynolds’s Interrogatory No. 23 in which PMP confirmed its
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`request to add a claim for injunctive relief was based entirely on the alleged loss of future sales of
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`IQOS in the U.S. market if Reynolds’s VUSE products are not enjoined. (Ex. 1 [PMP’s Apr. 9,
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`2021, Response to Six Set of Interrogatories].) Reynolds then provided its own comprehensive
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`response to PMP’s Interrogatory No. 30, explaining in detail why PMP is not entitled to injunctive
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`relief. (Ex. 2 [Reynolds’s Apr. 20, 2021, Response to Interrogatory No. 30].) The parties’
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`discovery efforts also included, after some wrangling, agreeing to complete injunction-related
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`document productions by June 7. It also included finalizing the deposition dates for the parties’
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`Rule 30(b)(6) designees on injunction-related deposition topics. (Dkt. 668.) For his part,
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`Dr. Figlar is designated to testify on, among other topics,
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` The factual bases underlying [Reynolds’s] contention, including
`79.
`[Reynolds’s] response to Interrogatory No. 30 and all supplements thereto, (i)
`that PMP has not suffered irreparable injury, (ii) that remedies available at law,
`such as monetary damages, are adequate to compensate for that injury, (iii) that
`considering the balance of hardships between [Reynolds] and PMP, a remedy in
`equity is unwarranted, and (iv) that the public interest would be disserved by a
`permanent injunction.
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`(Ex. 3 [PMP’s Third Rule 30(b)(6) Notice].)
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`In the interim, on May 14, 2021, the presiding Administrative Law Judge in a parallel
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`proceeding before the International Trade Commission issued an Initial Determination finding that
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`IQOS infringes two Reynolds patents, finding Reynolds’s patents are not invalid, and
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`recommending a limited exclusion order prohibiting importation of IQOS products into the United
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`States.
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`In view of the Initial Determination, Reynolds moved on May 21 to stay injunction-related
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`proceedings. (Dkt. 649.) PMP opposed Reynolds’s motion, insisting no stay should result because
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`the parties “are within weeks of” completing discovery. (Dkt. 666 at 1.) On June 7, the Court
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`ruled that the parties should complete fact discovery on PMP’s request for injunction, but also
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`noted that the ALJ’s Initial Determination “undercuts the irreparable harm undergirding PMP’s
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`claim for injunctive relief.” (Dkt. 702.) On June 8, nearly a month after ALJ Cheney issued his
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`Initial Determination, but just after the parties’ agreed deadline to complete injunction-related
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`document productions and one day after this Court ruled on Reynolds’s motion to stay, PMP
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`served a supplemental response to Reynolds’s Interrogatory No. 23. (Ex. 4 [PMP’s June 8, 2021,
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`Supp. Response to Interrogatory No. 23].)
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`In its supplemental response, PMP identified a new basis for its claim for injunctive
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`relief—its VEEV vaping product. Id. at 39-44. Among other allegations, PMP asserted that
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`“Reynolds’ infringement of the Philip Morris Asserted Patents has harmed VEEV’s future
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`standing in the U.S. market in ways similar to those described above for IQOS. Consequently,
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`VEEV’s trajectory in the United States already has been negatively affected by Reynolds’
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`infringement.” Id. at 41.
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`PMP’s VEEV product is not and never has been marketed or sold in the United States.
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`PMP does not have PMTA authorization for the VEEV product. Id. at 40. Indeed, PMP has not
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`even filed an application for approval for VEEV nor identified any plans to do so. Moreover, the
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`VEEV product is new to this case. Reynolds has conducted no discovery on the product. Reynolds
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`has sought no documents on the product. Reynolds has taken no depositions on the product. And
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`Reynolds needs the opportunity to review and possibly produce its own documents relevant to
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`VEEV.
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`In response to PMP’s change in course, Reynolds proposed that the parties delay the
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`upcoming depositions of Dr. Gilchrist (one of PMP’s designees on injunction-related Rule 30(b)(6)
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`topics), Dr. Figlar, and Mr. King (PMP’s other designee on injunction-related Rule 30(b)(6) topics)
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`until after completion of the written and document discovery Reynolds indicated it plans to serve.
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`(Ex. 5 [June 10, 2021, Michalik Letter to Koh].) Reynolds’s proposal also would permit Reynolds
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`to supplement its response to PMP’s Interrogatory No. 30 to explain why, in view of the additional
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`VEEV-related discovery, PMP still is not entitled to injunctive relief. Id. Reynolds proposed the
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`parties could complete written and document discovery during June and July and could then
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`schedule the Gilchrist, Figlar, and King depositions in early to mid-August. Id. Reynolds’s
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`proposal would complete fact discovery on PMP’s claim for injunctive relief more than seven
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`months before trial. PMP rejected Reynolds’s proposal for the orderly completion of injunction-
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`related fact discovery and instead insisted that all three deposition proceed on their scheduled
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`dates.
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`ARGUMENT
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`Reynolds is entitled to complete discovery on PMP’s shifting contentions concerning its
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`claim for injunctive relief, including the newly-disclosed VEEV product, before Reynolds’s Rule
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`30(b)(6) designee on injunction-related topics is forced to sit for deposition. Otherwise, the
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`orderly course of discovery will be turned on its head. PMP’s position is untenable. Reynolds has
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`proposed an orderly schedule to complete all remaining fact discovery on PMP’s new contentions
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`supporting its claim for injunctive relief, with PMP completing written and document discovery
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`related to PMP’s new contentions regarding its VEEV product. Depositions would then follow.1
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`1 PMP also insists that the Gilchrist and King depositions proceed as scheduled on June 18 and 25,
`respectively. These motions are not the subject of Reynolds’s present motion. However, given
`the written and document discovery Reynolds is seeking from PMP with respect to the VEEV
`product, Reynolds expects further Rule 30(b)(6) depositions of PMP will be required after
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`All injunction fact discovery would be completed by mid-August, more than seven months before
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`trial is set to begin in this matter. PMP cannot identify any prejudice it would suffer from
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`proceeding under Reynolds’s proposed schedule. On the other hand, Reynolds and Dr. Figlar
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`would suffer significant prejudice if Dr. Figlar’s deposition goes forward on June 24.
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`First, PMP’s new contention that its VEEV product supports its claim for injunctive relief
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`is new and late-disclosed. Reynolds has not yet had the opportunity to conduct discovery on this
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`contention because PMP just introduced it into the case. Thus, Reynolds expects it will need to
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`review and produce its own documents relevant to PMP’s new theory. It also will need to
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`supplement its own response to PMP’s Interrogatory No. 30 (the subject matter of one of the
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`deposition topics on which Dr. Figlar is designated) to explain why the VEEV product would not
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`be a basis for granting PMP injunctive relief after PMP produces documents relevant to its new
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`VEEV-related contentions and responds to other written discovery requests. But Reynolds can
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`only do so after it receives from PMP the VEEV-related discovery to which it is entitled. Requiring
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`Dr. Figlar to testify on Deposition Topic 79, among other injunction-related topics, on June 24
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`before VEEV-related discovery is complete would be premature and likely require another
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`deposition after Reynolds supplements its response to Interrogatory No. 30 to address VEEV.
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`Given trial is almost ten months away, permitting the parties to complete written discovery on
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`VEEV, including allowing Reynolds the opportunity to investigate PMP’s new VEEV-related
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`contentions, before Dr. Figlar testifies as Reynolds’s Rule 30(b)(6) designee is more than
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`reasonable.
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`Reynolds receives the information sought by its discovery requests. If that requires a second
`deposition of Dr. Gilchrist or Mr. King, that is a problem of PMP’s own making. Reynolds offered
`to delay their depositions until August, as well, and PMP insisted they proceed before PMP
`produced all documents relevant to those depositions. Reynolds thus reserves the right to seek
`relief from the Court in the form of additional deposition time with PMP’s corporate designees on
`PMP’s claim for injunctive relief.
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`Second, any prejudice PMP suggests it might suffer would be the result of its own delay.
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`PMP moved for leave to amend its counterclaims to add a claim for injunctive relief on March 1.
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`The Court granted PMP’s motion on March 12. PMP identified and explained the bases supporting
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`its claim for injunctive relief—limited to IQOS and not including VEEV—in response to
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`Reynolds’s Interrogatory No. 23 served April 9. ALJ Cheney issued his Initial Determination
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`recommending exclusion of IQOS from the United States in the parties parallel ITC proceeding
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`on May 14. Dr. Figlar’s deposition date (June 24) has been set since the parties submitted a joint
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`stipulation on May 27. PMP even opposed Reynolds’s motion to stay injunction-related
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`proceedings by insisting the parties “are within weeks of” completing injunction fact discovery.
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`And so they should have been. At any juncture along that timeline, PMP could have explained—
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`but didn’t—how its VEEV product allegedly supports its claim for injunctive relief.
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`Instead, all the while, PMP sat on its contention interrogatory response identifying IQOS
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`as the sole basis for its request for injunctive relief. PMP delayed disclosure of the VEEV product
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`as a basis for its injunctive relief claim until nearly a month after ALJ Cheney issued his Initial
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`Determination in the parallel ITC proceeding. PMP delayed (not coincidentally) disclosing the
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`VEEV product as a basis for its injunctive relief claim until the day after the parties’ agreed
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`deadline for completing injunction-related document productions. PMP delayed disclosing the
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`VEEV product as a basis for its injunctive relief claim until the day after this Court issued its ruling
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`on Reynolds’s motion to stay injunction-related proceedings. PMP should not be heard to
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`complain that discovery on its claim for injunctive relief is dragging on when PMP is the party
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`changing its contentions and introducing new theories at this late date.
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` Besides, PMP would not suffer prejudice in any event. Under Reynolds’s proposal,
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`rejected out of hand by PMP, injunction fact discovery would be completed by mid-August, only
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`two months from now. This matter is not set for trial until April 2022. Absent PMP introducing
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`yet another new theory to support its request for injunctive relief, injunction fact discovery still
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`would be complete almost seven months before trial.
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`CONCLUSION
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`Reynolds’s Motion for Relief From Stipulation on Deposition Dates in Light of New
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`Injunction-Related Contentions from Philip Morris Products S.A. should be granted. Reynolds
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`respectfully requests that the Court enter an Order directing that, notwithstanding Dkt. 668, the
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`deposition of Dr. Figlar will not go forward on June 24. Instead, Dr. Figlar will be produced for
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`deposition on a mutually-agreed date after Reynolds and PMP have completed discovery relating
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`to PMP’s new contentions about the VEEV product.
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`Case 1:20-cv-00393-LO-TCB Document 713 Filed 06/11/21 Page 11 of 12 PageID# 17348
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`Dated: June 11, 2021
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`
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`Stephanie E. Parker
`JONES DAY
`1221 Peachtree Street, N.E.
`Suite 400
`Atlanta, GA 30361
`Telephone: (404) 521-3939
`Facsimile: (404) 581-8330
`Email: separker@jonesday.com
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`
`Anthony M. Insogna
`JONES DAY
`4655 Executive Drive
`Suite 1500
`San Diego, CA 92121
`Telephone: (858) 314-1200
`Facsimile: (844) 345-3178
`Email: aminsogna@jonesday.com
`
`William E. Devitt
`JONES DAY
`77 West Wacker
`Suite 3500
`Chicago, IL 60601
`Telephone: (312) 269-4240
`Facsimile: (312) 782-8585
`Email: wdevitt@jonesday.com
`
`Sanjiv P. Laud
`JONES DAY
`90 South Seventh Street
`Suite 4950
`Minneapolis, MN 55402
`Telephone: (612) 217-8800
`Facsimile: (844) 345-3178
`Email: slaud@jonesday.com
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`Respectfully submitted,
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` /s/ David M. Maiorana
`David M. Maiorana (VA Bar No. 42334)
`Ryan B. McCrum
`JONES DAY
`901 Lakeside Ave.
`Cleveland, OH 44114
`Telephone: (216) 586-3939
`Facsimile: (216) 579-0212
`Email: dmaiorana@jonesday.com
`Email: rbmccrum@jonesday.com
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`John J. Normile
`JONES DAY
`250 Vesey Street
`New York, NY 10281
`Telephone: (212) 326-3939
`Facsimile: (212) 755-7306
`Email: jjnormile@jonesday.com
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`
`Alexis A. Smith
`JONES DAY
`555 South Flower Street
`Fiftieth Floor
`Los Angeles, CA 90071
`Telephone: (213) 243-2653
`Facsimile: (213) 243-2539
`Email: asmith@jonesday.com
`
`Charles B. Molster, III Va. Bar No. 23613
`THE LAW OFFICES OF
`CHARLES B. MOLSTER, III PLLC
`2141 Wisconsin Avenue, N.W. Suite M
`Washington, DC 20007
`Telephone: (703) 346-1505
`Email: cmolster@molsterlaw.com
`
`Counsel for Plaintiffs RAI Strategic Holdings,
`Inc. and R.J. Reynolds Vapor Company
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`1
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`Case 1:20-cv-00393-LO-TCB Document 713 Filed 06/11/21 Page 12 of 12 PageID# 17349
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`CERTIFICATE OF SERVICE
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`I hereby certify that on 11th day of June, 2021, a true and correct copy of the foregoing was
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`served using the Court’s CM/ECF system, with electronic notification of such filing to all counsel
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`/s/ David M. Maiorana
`David M. Maiorana (VA Bar No. 42334)
`JONES DAY
`901 Lakeside Ave.
`Cleveland, OH 44114
`Telephone: (216) 586-3939
`Facsimile: (216) 579-0212
`Email: dmaiorana@jonesday.com
`
`Counsel for Plaintiffs RAI Strategic Holdings,
`Inc. and R.J. Reynolds Vapor Company
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`of record.
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