Case 1:20-cv-00393-LO-TCB Document 846-4 Filed 01/21/22 Page 1 of 8 PageID# 22811
`Case 1:20-cv-00393-LO-TCB Document 846-4 Filed 01/21/22 Page 1 of 8 PagelD# 22811
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`EXHIBIT 4
`EXHIBIT4
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
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`SECOND SUPPLEMENTAL OPENING EXPERT REPORT OF
`JOSEPH C. McALEXANDER III
`REGARDING U.S. PATENT NUMBERS 6,803,545 AND 10,420,374
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`RJR STRATEGIC HOLDINGS, INC. AND R.J. REYNOLDS VAPOR COMPANY
`vs.
`ALTRIA CLIENT SERVICES LLC; PHILIP MORRIS USA INC.; and
`PHILIP MORRIS PRODUCTS S.A.,
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`Civil Action No. 1:20-cv-00393-LO-TCB
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`CONFIDENTIAL SOURCE CODE – ATTORNEYS’ EYES ONLY INFORMATION
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`In sum, neither of the two alleged design arounds that RJR identified would result
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`in a redesigned product that would be non-infringing, technically feasible, and commercially
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`acceptable. Each proposed design around, to the extent it does not infringe the '374 Patent, is
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`either technically unfeasible or unacceptable to consumers because it lacks the benefits achieved
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`by using the technology claimed in the '374 Patent and further would not achieve the same result.
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`As such, it is my opinion that RJR has not identified any suitable design arounds available in
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`September 2019 at the time of the hypothetical negotiation for the '374 Patent.
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`12.13 Third-Party Products
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`I understand that Reynolds has asserted that the MarkTen Elite and JUUL product
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`practiced or practice one or more of the Asserted Claims of the '545 and '374 Patents, at least as
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`those claims are being construed by Defendants.696 Reynolds subsequently asserted that the
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`MarkTen and MarkTen XL practice the Asserted Claims of the '545 Patent.697,
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`696 11-20-2020 Ltr. from J. Michalik at 1; see also RJR’s Resp. to ROG 21 (Oct. 29, 2020) at 12-
`13 (“For instance, based upon Defendants’/Counterclaim Plaintiffs’ contentions, their affiliate
`Nu Mark and their licensee JUUL made or continue to make products (i.e., the MarkTen Elite
`and the JUUL product) that practiced or practice one or more asserted claims of the ’545 and
`’374 Patents.”).
`697 RJR’s Resp. to ROG 28 (Jan. 4, 2021) at 7-8; I understand that RJR also alleges that the
`Accord Series K and Greensmoke products also practice the ’545 Patent. RJR’s Resp. to Rog
`28, dated Jan. 4, 2021, 7-8.
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`1:20-cv-00393-LO-TCB, McAlexander Expert Report - Infringement
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`12.13.1 The JUUL Device and MarkTen Products Practice the Asserted
`Claims of the '545 Patent
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` RJR admits that “JUUL makes, uses, sells, offers for sale, and/or imports into the
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`United States and has made, used, sold offered for sale, and/or imported into the United States one
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`or more Products that practices one or more claims of the '545 Patent.”698 Based on the evidence
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`that I have reviewed, I agree with Reynolds’ position. For example, the JUUL Device comprises
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`a lithium ion power source electrically connected to an electrical resistance heating element,699
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`and a controller to control the flow of modulated pulses of electrical power from the lithium ion
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`power source to the electrical resistance heating element to prevent damage to the lithium ion
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`power source.700 It also comprises a lithium ion battery cell with a maximum voltage greater than
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`4 volts.701 The lithium ion power source comprises circuitry to stop flow of current if the lithium
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`ion battery cell is short circuited.702
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`698 RJR’s Response to RFA Nos. 108-111, dated Jan. 4, 2021.
`699 DeviceSolutions Product Evaluation, JUUL, RJREDVA_001271814 at
`RJREDVA_001271842, RJREDVA_001271853-54; Device Solutions Teardown of JUUL
`Device, RJREDVA_001271556 at RJREDVA_001271558; Competitive Analysis Tear-down
`Report, JUUL, RJREDVA_001271567 at RJREDVA_001271568, RJREDVA_001271584;
`Deposition of S. Daugherty, dated 11.20.2020, at 171:5-10 (Device Solutions performed
`teardowns of multiple devices for RJR); Deposition of J. Figlar, dated May 3, 2021, at 64:19-
`67:12, 73:21-74:11.
`700 DeviceSolutions Product Evaluation, JUUL, RJREDVA_001271814 at
`RJREDVA_001271845-46,, RJREDVA_001271858-70; Device Solutions Teardown of JUUL
`Device, RJREDVA_001271556 at RJREDVA_001271557-64; Deposition of J. Figlar, dated
`May 3, 2021, at 64:19-67:12, 73:21-74:11.
`701 See, e.g., DeviceSolutions Product Evaluation, JUUL, RJREDVA_001271814 at
`RJREDVA_001271844 (battery having voltage of 4.2 V).
`702 See, e.g., DeviceSolutions Product Evaluation, JUUL, RJREDVA_001271814 at
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`682. RJR also admits that NuMark’s MarkTen, MarkTen Elite, and MarkTen XL
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`practiced one or more asserted claims of the '545 Patent.”? Based on the evidence that I have
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`reviewed, I agree with Reynolds’position.’ For example, the MarkTen Elite comprisesa lithium
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`ion power source electrically connected to an electrical resistance heating element,’ and a
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`controller to control the flow of modulated pulses of electrical power from the lithium ion power
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`source to the electrical resistance heating element to prevent damage to the lithium ion power
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`source.’°° It also comprises a lithium ion battery cell with a greater than 4 V maximum voltage
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`and a lithium ion powersource which comprises circuitry to stop flow of currentif the lithium ion
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`battery cell is short circuited.’°”
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`RJREDVA_001271843, RIREDVA_001271858-59.
`703 RJR’s Response to Rog No. 28, dated Jan. 4, 2021.
`704 T am not aware of any evidenceindicating that MarkTenis not representative of MarkTen
`dated Dec. 4, 2020. at 35:6-36:7 (testifying that the
`Elite and MarkTenXL for purposes of the °545 Patent claims. See, e.g., Deposition of E. Hawes,
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` ; Deposition of J. Figlar,
`77:11-78:17.
`109 Sky Carman ’MARKTENELITE’Product Teardown, RJREDVA_000948368at
`RJREDVA_000948369-72; Deposition of J. Figlar, dated May 3, 2021, at 52:15-53:14,56:13-
`62:16.
`106 Sky Carman "MARKTENELITE’Product Teardown, RIREDVA_000948368 at
`RJREDVA_000948369-72; VUSE Ciro Controller Specification, RIREDVA_000958597at
`RJREDVA_000958602-604; Deposition of J. Figlar, dated May 3, 2021, at 52:15-53:14,56:13-
`62:16.
`107 Sky Carman *MARKTENELITE’Product Teardown” RIREDVA_000948368at
`RJREDVA_000948369-72; VUSE Ciro Controller Specification, RIREDVA_000958597at
`RJREDVA_000958602-604; Deposition of J. Figlar, dated May 3, 2021, at 52:15-53:14,56:13-
`62:16.
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` The high value of the technology claimed in the '545 Patent relative to the
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`technology claimed in the Spray Atomizer Patents is further evidenced by statements made by RJR
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`in a presentation titled “VUSE Mass Customizable: Technologies for R&D Exploratory." For
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`example, RJR expressly acknowledged the significant value of the '545 Patent by stating that
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`“safety comes first” and that lithium ion batteries were the only technology available for e-vapor
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`devices such as the VUSE Products.800 And, as discussed above, RJR used the technology claimed
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`in the '545 Patent to achieve these benefits and gain success in the marketplace, further showing
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`the significant value of the technology claimed in the '545 Patent.
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` The high value of the technology claimed in the '545 Patent relative to the
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`technology claimed in the Spray Atomizer Patents is further evidenced by the comparative
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`difficulty of designing around the '545 Patent. The technology claimed in the '545 Patent
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`represents a significant advancement over the prior art and covers important technology necessary
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`for safely using a lithium ion battery in an electrical smoking system and is difficult to design
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`around. The VUSE Products each practice the '545 Patent and RJR itself admits that the numerous
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`commercial products from a variety of parties (MarkTen Elite, JUUL, MarkTen, MarkTen XL,
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`GreenSmoke, Accord Series K) practice the '545 Patent, reflecting the difficulty in designing
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`800 VUSE Mass Customizable: Technologies for R&D Exploratory, RJREDVA_000864466 at
`RJREDVA_000864480; #VUSE_BrandStory, RJREDVA_001536538 at RJREDVA_001536538
`(“Safety First”); Deposition of K. Calderon, dated Nov. 22, 2020, at 218:8-231:20.
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`around this patent.801 Meanwhile, the Spray Atomizer Patents are narrower in scope, usually
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`having a number of additional limitations and thus are not as difficult to design around.
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` The value of the technology claimed in the '545 Patent is also evidenced by the fact
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`that many products have achieved commercial success by using the '545 patented technology. For
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`example, as discussed above, RJR admits that the GreenSmoke, MarkTen Elite, MarkTen,
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`MarkTen XL, and JUUL Products all practice the '545 Patent.802 In addition, as I discuss above,
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`RJR has made significant use of the technology claimed in the '545 Patent in each VUSE Products.
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`The widespread use of the technology claimed in the '545 Patent throughout the industry, in
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`commercial products and the commercial success of some of those practicing products, provides
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`further evidence of the significant value of the technology claimed in the '545 Patent.803 For
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`example, RJR’s corporate representative on a number of financial and market share topics,
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`Nicholas Gilley, admitted that the JUUL Device is the biggest sales leader in the United States e-
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`vapor market804 and there are multiple documents I have reviewed (and discussed with P. Meyer)
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`showing the commercial success of the JUUL Device and RJR’s VUSE products.805 Many of the
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`801 RJR Interrogatory Resp. to Rog. No. 28, dated Jan. 4, 2021.
`802 RJR Interrogatory Resp. to Rog. No. 28, dated Jan. 4, 2021.
`803 Supra at 12.13.1 (describing how the VUSE Products, JUUL Product, and MarkTen Elite
`Products practice the ’545 Patent).
`804 Deposition of N. Gillley, dated Dec. 3, 2020, at 127:127:4-10.
`805 RJREDVA_001618195-RJREDVA_001618197; RJREDVA_001626244;
`RJREDVA_001481662 (also listed as Exs. 12-16 of Deposition of N. Gilley, dated Dec. 3, 2020)
`(showing commercial success of VUSE Products); RJRITC_001144036 (showing comparative
`market share of Vapor Products); Conversations with P. Meyer dated Dec. 5, 2020, Feb. 20,
`2021, and Feb. 23, 2021.
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`benefits derived from RJR’s usage of the '545 Patent invention are recognized by RJR as being
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`important to consumers in the industry, including but not limited to, safety,806 battery life,807
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`consistent delivery,808 and size,809 As I explain above, a product embodying the technology of the
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`Spray Atomizer Patents would also necessarily use the technology claimed in the '545 Patent.810
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`In comparison, I am not aware of evidence that the technology claimed in the Spray Atomizer
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`Patents is practiced by as many companies, used in as many products, or has achieved as much
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`commercial success, as the technology claimed in the '545 Patent.
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` For at least the reasons discussed above and throughout this Report, while the
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`technology is directed to the same subject matter and the patents claim very similar technology, it
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`is my opinion that the technology claimed in the '545 Patent is more valuable than the combined
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`value of the technology claimed in the Spray Atomizer Patents.
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`12.14.6 Technological Comparability Of The RJRT-Minusa Agreement
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`I have been asked to analyze the technical comparability between the technology
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`claimed in the '545 and '374 Patents and the technology claimed in the patents identified in
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`806 Deposition of K. Calderon, dated Nov. 12, 2020, at 225:12-227:6 (and associated exhibits).
`807 Id. at 105:17-112:22; 142:8-14; 252:2-253:8; 255:21-257:15; 261:8-10; 278:8-12; 308:9-
`309:9; 345:10-21 (and associated exhibits).
`808 Id. at 185:8-187:15; 262:4-9 (and associated exhibits).
`809 Id. at 208:19-209:13;212:10-214:3; 241:17-244:20; 249:13-250:19; 263:17-265:10; 299:1-
`302:22; 310:9-15.
`810 Supra at 12.14.3.1.
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