Case 1:20-cv-00393-LO-TCB Document 867 Filed 01/21/22 Page 1 of 14 PageID# 23156
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`RAI STRATEGIC HOLDINGS, INC. and
`R.J. REYNOLDS VAPOR COMPANY,
`
`Plaintiffs 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
`
`REYNOLDS’S MEMORANDUM IN SUPPORT OF REYNOLDS’S MOTION IN
`LIMINE NO. 10 TO EXCLUDE EVIDENCE OR ARGUMENT THAT REYNOLDS
`INFRINGED OR HAS BEEN ACCUSED OF INFRINGING THIRD-PARTY PATENTS
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`

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`Case 1:20-cv-00393-LO-TCB Document 867 Filed 01/21/22 Page 2 of 14 PageID# 23157
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`TABLE OF CONTENTS
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`Page
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`INTRODUCTION ......................................................................................................................... 1
`BACKGROUND ........................................................................................................................... 1
`ARGUMENT ................................................................................................................................. 2
`I.
`ANY EVIDENCE OR ARGUMENT OF THIRD-PARTY INFRINGEMENT
`ACTIONS AGAINST REYNOLDS SHOULD BE EXCLUDED ................................... 3
`A LIMITED CARVE-OUT IS WARRANTED FOR DAMAGES ONLY ...................... 6
`II.
`CONCLUSION .............................................................................................................................. 8
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`
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`CASES
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`TABLE OF AUTHORITIES
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`Page
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`Averitt v. Southland Motor Inn
`720 F.2d 1178 (10th Cir. 1983) .................................................................................................5
`
`Crawford v. Yellow Cab Co.,
`572 F. Supp. 1205 (N.D. Ill. 1983) ............................................................................................5
`
`Fontem Ventures B.V. v. R.J. Reynolds Vapor Co.,
`No. 1:16-cv-01255-CCE-JEP (M.D.N.C. Apr. 4, 2016) ............................................................2
`
`LaserDynamics, Inc. v. Quanta Computer, Inc.,
`694 F.3d 51 (Fed. Cir. 2012)......................................................................................................4
`
`Luce v. United States,
`469 U.S. 38 (1984) .....................................................................................................................3
`
`Novartis Pharms. Corp. v. Teva Pharms. USA, Inc.,
`No. 05-CV-1887 (DMC), 2009 WL 3754170 (D.N.J. Nov. 5, 2009)....................................3, 5
`
`Ross v. Am. Red Cross,
`No. 2:09-cv-00905-GLF-MRA, 2012 WL 2004810 (S.D. Ohio June 5, 2012),
`aff’d, 567 F. App’x 296 (6th Cir. 2014) .................................................................................4, 5
`
`Schenone v. Zimmer, Inc.,
`No. 3:12-cv-1046-J-39MCR, 2014 WL 12619911 (M.D. Fla. Aug. 27, 2014) .........................3
`
`United States v. AseraCare Inc.,
`No. 2:12-CV-245-KOB, 2015 WL 5444124 (N.D. Ala. Sept. 15, 2015) ..................................4
`
`OTHER AUTHORITIES
`
`1 McCormick On Evid. § 186 (8th ed.) ...........................................................................................5
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`E.D. Va. L.R. 7(E) ...........................................................................................................................2
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`Fed. R. Evid. 401 .............................................................................................................................3
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`Fed. R. Evid. 402 .............................................................................................................................3
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`TABLE OF AUTHORITIES
`(continued)
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`Page
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`Fed. R. Evid. 403 .................................................................................................................3, 4, 6, 7
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`Fed. R. Evid. 404 .....................................................................................................................3, 4, 5
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`Fed. R. Evid. 801 .............................................................................................................................5
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`Fed. R. Evid. 802 .........................................................................................................................3, 5
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`INTRODUCTION
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`RAI Strategic Holdings, Inc. (“RAI”) and R.J. Reynolds Vapor Company (“RJRV”)
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`(collectively “Reynolds”) respectfully move in limine to preclude Altria Client Services LLC
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`(“ACS”), Philip Morris USA, Inc. (“PM USA”), and Philip Morris Products S.A. (“PMP”)
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`(collectively, “PM/Altria”) from introducing any evidence or argument that Reynolds infringed
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`or has been accused of infringing third-party patents. It would be irrelevant and unfairly
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`prejudicial for PM/Altria to refer to third-party infringement allegations against Reynolds, to
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`insinuate that Reynolds has infringed any such patents, or to suggest that Reynolds is a serial
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`infringer.
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`Reynolds recognizes that one limited carve-out from such preclusion is appropriate.
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`Specifically, given each side’s discussion of the Reynolds litigation settlement agreement with
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`third-party Fontem Ventures B.V. and Fontem Holdings 1 B.V. (collectively, “Fontem”), that
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`agreement and the underlying litigation may be referenced for the sole purpose of the damages
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`analysis. Reynolds similarly is willing to limit its discussion of Fontem’s allegations of
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`infringement against
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`
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` to the extent that the
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` Settlement Agreement is
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`deemed relevant to and admissible for purposes of any damages analysis.1
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`BACKGROUND
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`Reynolds filed its patent infringement complaint on April 9, 2020, as amended July 13,
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`2020. (Dkt. Nos. 1, 52.) In response, PM/Altria filed counterclaims of infringement and willful
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`
`
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`1 PM/Altria’s damages expert’s reliance on the 2016 “U.S. Settlement and License
`Agreement between
`,” PX-124, (“
` Settlement
`Agreement”) is the subject of a concurrently filed motion to exclude certain testimony of Paul K.
`Meyer.
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`infringement of PM/Altria patents and sought treble damages for the same. (Dkt. Nos. 193, 198,
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`274, 279, 473, 483.)
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`Among its trial exhibit designations, PM/Altria designated documents relating to third-
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`party infringement actions and accusations against Reynolds. For instance, PM/Altria has
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`designated a first amended complaint filed by patentee Fontem against Reynolds in 2017 (PX-
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`431), which was consolidated with other patent-infringement actions filed by Fontem against
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`Reynolds and collectively involved several Fontem patents. See Fontem Ventures B.V. v. R.J.
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`Reynolds Vapor Co., No. 1:16-cv-01255-CCE-JEP (M.D.N.C. Apr. 4, 2016). PM/Altria further
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`designated the 2018 agreement between Fontem and Reynolds that settled that consolidated
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`litigation (the 2018 “U.S. Settlement and License Agreement between Fontem and RJRV,” PX-
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`125) (“Fontem-Reynolds Settlement Agreement”).
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`On December 10, 2021, the parties met and conferred pursuant to E.D. Virginia Local
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`Rule 7(E) regarding their proposed motion in limine topics, and Reynolds raised the topic of
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`excluding any evidence or argument that Reynolds infringed or has been accused of infringing
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`third-party patents unless relevant and admissible for damages purposes. The parties were
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`unable to reach a resolution on these issues.
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`ARGUMENT
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`PM/Altria should not be allowed to introduce evidence and arguments that Reynolds
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`infringed or was accused of infringing third-party patents, including any mention of third-party
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`infringement actions against Reynolds or related entities. Such third-party patents and
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`proceedings are not relevant to any liability issue to be tried, i.e., alleged infringement, willful
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`infringement, and invalidity of PM/Altria’s asserted patents. And any relevance to damages is
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`discussed in Part II below, regarding the limited carve-out for the sole purpose of damages
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`(given the parties’ discussion of the Fontem-Reynolds Settlement Agreement as part of their
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`damages analyses).
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`The Court’s right to issue in limine orders comes from its “inherent authority to manage
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`the course of trials.” Luce v. United States, 469 U.S. 38, 41 n.4 (1984). Preclusion is warranted
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`here under several Federal Rules of Evidence (“FRE” or “Rule”), including at least Rules 401,
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`402, 403, 404(b), and 802.
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`I.
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`ANY EVIDENCE OR ARGUMENT OF THIRD-PARTY INFRINGEMENT
`ACTIONS AGAINST REYNOLDS SHOULD BE EXCLUDED
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`Several Federal Rules of Evidence independently warrant exclusion of third-party
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`infringement actions, other than for the limited purpose addressed in Part II.
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`First, exclusion is warranted under Rules 401 and 402. Pursuant to Rule 402,
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`“[i]rrelevant evidence is not admissible.” Evidence is “relevant” only if it has “any tendency to
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`make a fact more or less probable than it would be without the evidence” and “the fact is of
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`consequence in determining the action.” FRE 401. Here, whether Reynolds infringed and/or
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`was accused of infringing other third-party patents is irrelevant to any liability issue in this case
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`(i.e., alleged infringement, invalidity, and willful infringement). See Novartis Pharms. Corp. v.
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`Teva Pharms. USA, Inc., No. 05-CV-1887 (DMC), 2009 WL 3754170, at *9 (D.N.J. Nov. 5,
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`2009) (in a patent-infringement case, excluding evidence of prior and/or collateral litigations);
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`see also Schenone v. Zimmer, Inc., No. 3:12-cv-1046-J-39MCR, 2014 WL 12619911, at *1
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`(M.D. Fla. Aug. 27, 2014) (in a product liability case, excluding evidence from unrelated legal
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`proceedings, because plaintiffs failed to “establish[] that the underlying facts of [that] case
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`[were] substantially similar to the underlying facts of the instant case”).
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`Second, even if somehow relevant, any relevance would be substantially outweighed by
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`Rule 403 considerations, including “a danger of . . . unfair prejudice, confusing the issues [and]
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`misleading the jury.” FRE 403. For instance, a jury could improperly find infringement or
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`willful infringement if it were misled (intentionally or not) to view Reynolds as a serial infringer
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`based on evidence of third-party infringement accusations against Reynolds. The risk is
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`particularly acute given that some of the other Reynolds patent litigation (such as the litigation
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`with Fontem), while unrelated to PM/Altria’s patents asserted here, concern the same general
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`subject matter of electronic cigarettes. Presenting evidence or argument of such third-party
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`patent actions thus risks a jury improperly attributing culpability in this action based on those
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`unrelated actions. Exclusion under Rule 403 is therefore warranted. LaserDynamics, Inc. v.
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`Quanta Computer, Inc., 694 F.3d 51, 51 (Fed. Cir. 2012) (in a patent-infringement case, finding
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`that the “probative value of evidence pertaining to settlement in another case was substantially
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`outweighed by danger of unfair prejudice, confusion of issues, and misleading [the] jury”).
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`Third, to the extent Rule 404(b) applies to corporations, its exclusion of “[e]vidence of
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`any other crime, wrong, or act” used “to show that on a particular occasion the person acted in
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`accordance with the character” warrants exclusion here. Fed. R. Evid. 404(b)(1); see United
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`States v. AseraCare Inc., No. 2:12-CV-245-KOB, 2015 WL 5444124, at *4 (N.D. Ala. Sept. 15,
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`2015) (“Federal Rule of Evidence 404 applies to corporations, such as AseraCare . . . . Applying
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`Rule 404(b)(1), the court ruled that it would not allow ‘any anecdotal evidence that would be
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`indicative of an effort to show propensity.’”); Ross v. Am. Red Cross, No. 2:09-cv-00905-GLF-
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`MRA, 2012 WL 2004810, at *4-5 (S.D. Ohio June 5, 2012) (“[T]his Court need not decide
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`whether Rule 404(b) applies here in order to decide that exclusion of the ADLs [adverse
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`determination letters] is warranted in this case. The primary value to Plaintiff’s case of the
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`ADLs, which are unrelated to the incident at issue here, is in their suggestion that the Red Cross
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`must have violated certain rules in this case because it did so in other instances. Even if this
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`information were probative of a fact in this litigation, its probative value is substantially
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`outweighed by the risk of unfair prejudice.”), aff’d, 567 F. App’x 296, 313 (6th Cir. 2014); see
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`also Averitt v. Southland Motor Inn 720 F.2d 1178, 1182 (10th Cir. 1983) (applying Rule 404(b)
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`to corporations); Crawford v. Yellow Cab Co., 572 F. Supp. 1205, 1208 (N.D. Ill. 1983) (same);
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`1 McCormick On Evid. § 186 (8th ed.) (“These rules categorically exclude most ‘character
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`evidence’—defined as evidence offered solely to prove a person acted in conformity with a trait
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`of character on a given occasion. This exclusionary rule applies to businesses and other
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`organizations as well as natural persons.”). Here, reference to prior infringement proceedings
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`against Reynolds involving third-party patentees risks suggesting that Reynolds has the
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`propensity to be an infringer. Exclusion of such evidence is warranted under Rule 404(b).
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`Fourth, exclusion is also warranted under Rule 802 because evidence of other
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`infringement accusations against Reynolds are statements “not ma[d]e while testifying at the
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`current trial or hearing,” Rule 801, and would be offered to prove the truth of the matter
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`asserted—namely, that Reynolds in fact infringed (or, at the very least, in fact was previously
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`accused of infringing) those third-party patents. See, e.g., Novartis, 2009 WL 3754170, at *7, 9
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`(excluding as inadmissible hearsay statements in a complaint from a separate legal proceeding).
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`Here, similar to Novartis, PM/Altria would be relying on infringement allegations made in a
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`separate legal proceeding by third-parties unrelated to this case. Such references should be
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`excluded under Rule 802.
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`For any and all of these reasons, and given that any potential relevance could not
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`outweigh the unfair prejudice of referring to other infringement allegations against Reynolds and
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`thereby misleading the jury, see Rule 403, such argument, evidence, and testimony should be
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`excluded.
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`II.
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`A LIMITED CARVE-OUT IS WARRANTED FOR DAMAGES ONLY
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`While any discussion of other infringement actions against Reynolds is entirely irrelevant
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`to any liability issue, and would be unfairly prejudicial and likely to mislead the jury, a limited
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`carve-out is necessary to allow evidence of a specific settlement agreement, but solely as it
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`relates to damages. Specifically, the parties have each proffered expert opinions on damages that
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`discuss the Fontem-Reynolds Settlement Agreement. The carve-out will allow discussion of this
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`Agreement, but only to the extent that it is discussed within the scope of the disclosed expert
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`opinions. In other words, neither lawyers nor witnesses may expound on any of the facts in any
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`of the expert reports to paint Reynolds as a serial infringer or bad actor with respect to prior
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`third-party infringement lawsuits, including but not limited to commentary in opening
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`statements, closing arguments, witness examination or cross-examination, and other testimony or
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`statements. For all of the reasons stated above, such testimony and statements are irrelevant. A
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`portrayal of Reynolds as a serial infringer also would unfairly prejudice Reynolds, and outweigh
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`any potential relevance. See FRE 403. Similarly, if the Court decides that the
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`Settlement Agreement is relevant and admissible despite Reynolds’s pending motion to exclude
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`certain testimony of PM/Altria’s damages expert Meyer concerning that Agreement, Reynolds
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`has no intention of using that evidence to dwell on those infringement allegations against
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`, a sister company of ACS and PM USA (nor attempt to use any of the multitude of other
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`infringement actions brought against PM/Altria to portray PM/Altria as a serial infringer).
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`The parties’ use of the Fontem-Reynolds Settlement Agreement for purposes of a
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`damages analysis does not open the door to broader use to refer to third-party infringement
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`allegations. In fact, the parties’ experts are not themselves relying on the fact that Fontem-
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`Reynolds Settlement Agreement arose out of the context of infringement allegations. To the
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`contrary, PM/Altria’s damages expert, Paul K. Meyer, expressly states that
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` Amended and Supplemental Opening Expert
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`
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`Report of Paul K. Meyer dated April 26, 2021 at ¶ 195. Mr. Meyer further states
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` as opposed to reflecting any litigation considerations. Id. While Mr. Meyer notes
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`that the hypothetical negotiation here assumes that the patents are “enforceable, valid, and
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`infringed,” whereas the Fontem-Reynolds Settlement Agreement did not make any such
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`assumptions (“there was at least some uncertainty as to whether the [patents] were enforceable,
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`valid, or infringed”), this difference plays little role in his analysis. Id. at ¶ 221. The same can
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`be said for the
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` Settlement Agreement. Id. at ¶ 264.
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`In short, even PM/Altria’s expert disavows the litigation context of the Settlement
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`Agreements, reinforcing that any otherwise admissible use of those Agreements at trial on the
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`issue of damages should not open the door to argument or commentary referring to third-party
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`infringement allegations. There is no reason for a lawyer or witness to focus on or highlight
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`aspects of the agreements regarding infringement allegations. Instead, lawyers and witnesses
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`should limit any argument or testimony regarding those Agreements and their underlying
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`litigation to the scope of the damages expert reports.
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`Accordingly, consistent with Part I above, superfluous or unnecessary references,
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`argument, or evidence relating to the Fontem-Reynolds Settlement Agreement and the
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`underlying litigation should be excluded. The parties may discuss this Agreement within the
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`scope of the expert opinions, and the Agreement shall not be used to portray Reynolds as a serial
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`infringer. Provided PM/Altria abides by that, Reynolds agrees to do the same with respect to the
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` Settlement Agreement, if that Agreement and the related opinions are
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`otherwise deemed admissible.
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`CONCLUSION
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`Reynolds respectfully asks that the Court grant Reynolds’s motion in limine to preclude
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`PM/Altria from offering any evidence or argument that Reynolds infringed or has been accused
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`of infringing third-party patents, with a limited carve-out related solely to damages for the
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`Fontem-Reynolds Settlement Agreement, for which both parties would be limited to discussion
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`within the scope of their disclosed expert opinions. To the extent that the Court decides that the
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` Settlement Agreement is relevant to and admissible for any damages analysis,
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`Reynolds would similarly agree to limit its discussion of that Agreement.
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`Case 1:20-cv-00393-LO-TCB Document 867 Filed 01/21/22 Page 13 of 14 PageID# 23168
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`Dated: January 21, 2022
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`
`
`Stephanie E. Parker
`JONES DAY
`1420 Peachtree Street, N.E.
`Suite 800
`Atlanta, GA 30309
`Telephone: (404) 521-3939
`Facsimile: (404) 581-8330
`Email: separker@jonesday.com
`
`
`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
`
`
`Respectfully submitted,
`
`
`
`
`
`
`
` /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
`
`John J. Normile
`JONES DAY
`250 Vesey Street
`New York, NY 10281
`Telephone: (212) 326-3939
`Facsimile: (212) 755-7306
`Email: jjnormile@jonesday.com
`
`
`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
`THE LAW OFFICES OF
`CHARLES B. MOLSTER, III PLLC
`2141 Wisconsin Avenue, N.W. Suite M
`Washington, DC 20007
`Telephone: (202) 787-1312
`Email: cmolster@molsterlaw.com
`
`Counsel for RAI Strategic Holdings, Inc. and
`R.J. Reynolds Vapor Company
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`Case 1:20-cv-00393-LO-TCB Document 867 Filed 01/21/22 Page 14 of 14 PageID# 23169
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`CERTIFICATE OF SERVICE
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`I hereby certify that on this 21st day of January, 2022, a true and correct copy of the
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`foregoing was served using the Court’s CM/ECF system, with electronic notification of such filing
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`to all counsel of record.
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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 RAI Strategic Holdings, Inc. and
`R.J. Reynolds Vapor Company
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