PMI and bat compete for the technical patent of heat heating non combustion (HNB) in the world and compete for the dominant position in the future market. In the future, heated tobacco products are expected to replace combustible tobacco, which further intensifies the competition in the segment of HNB.
Since the first launch of iqos devices in Japan in 2014, Philip Morris International has been the market leader in HNB segment. Iqos quickly won the recognition of consumers around the world and has been listed in 64 countries (and become a market leader). Fimo international plans to completely abandon combustible cigarettes in the next 10 years. The success of iqos is a key part of its "smoke-free future".
However, British American tobacco is a pioneer in the field of HNB segmentation. Renault tobacco launched its equipment Premier as early as the late 1980s. At that time, the market was not ready to accept tobacco substitutes, consumers did not like the taste and smell of premier, and the device did not achieve commercial success. In 1996, eclipse, the next HNB product launched by Renault tobacco, was not welcomed, and accord launched by Philip Morris International in 1998 was also ignored. Until 2014, British American Tobacco launched Revo equipment and Philip Morris International launched iqos, HNB made a comeback.
Now British American Tobacco and Philip Morris International are fighting for their glo and iqos patents. All this began in 2018, when Philip Morris International sued British American tobacco for infringing the patent rights of its HNB products in Japan. In 2020, bat launched a counterattack and filed patent infringement claims with the United States International Trade Commission (ITC) and the federal court of Virginia. Meanwhile, British American tobacco subsidiary nicoventures trading sued Philip Morris International in Munich and the UK. Therefore, Philip Morris International filed a cancellation action and tort counterclaim to the British court. In March 2021, the British High Court revoked two British American Tobacco patents EP 3398460 B1 and EP 3491944 B1, rejecting the infringement allegations of British American tobacco. As a result, in mid July, the court declared four HNB technology patents of Philip Morris International invalid, and British American Tobacco won back the lawsuit.
British American Tobacco patents were revoked because of their obvious nature. The court held that they lacked "creativity" in the existing philip morris international patents. The four revoked patents of Philip Morris International regarded the characteristics of metal insulator as an invention concept, and the court also invalidated them because of their obviousness. The British court of appeal rejected bat's appeal against the March 2021 decision.
The cases of EP 3398460 B1 and EP 3491944 B1 in Munich are still under trial, and the hearing is scheduled to be held in November this year. Philip Morris International also filed a lawsuit against these two patents with the European Patent Office, resulting in the invalidation of one patent and the litigation of the other patent is still under trial. British American tobacco has also applied for preliminary bans in Bulgaria, the Czech Republic, Poland and Romania, although without success. A legal battle between the two companies in Italy is also under trial. The European Patent Office (EPO) also opposes these two patents and has issued a preliminary opinion indicating that one of them is invalid.
In the lawsuit filed with the US International Trade Commission (ITC) last year, the administrative law judge of ITC preliminarily ruled that the iqos products of Philip Morris International infringed the patents of British American tobacco, and proposed to prohibit the import of iqos equipment, Marlboro cigarette bombs, heatsticks and parts, as well as the sales of such products. Therefore, British American Tobacco won a preliminary victory. However, at the end of July 2021, the Committee of the whole did not approve the decision, but reviewed the judge's decisions and recommendations.
The final order will be reviewed by the US trade representative and the federal court in September this year. Philip Morris International USA announced that due to this uncertainty, the company delayed the further expansion of iqos and Marlboro smoke bomb heatsticks in the United States, and said, "ITC is launching a long and multi-step legal process against us, and we are confident in our arguments. At the same time, we will continue to rely on our exclusive distributor Altria group in the United States to take necessary measures to ensure the success of iqos (the only electronic nicotine product authorized by FDA, which is conducive to public health compared with continuous smoking) in the United States and even around the world."
At present, Philip Morris International seems to have suffered a setback and had to suspend the launch of iqos in the United States, but the struggle is far from over. There may be one or two interesting turns after September this year.