Philip Morris USA has been involved in a patent dispute for its IQOS products since 2019, and the curtain is about to come down. On July 27, the U.S. International Trade Commission (ITC) approved the decision that the PM infringed two of the patents of R.J. Reynolds Tobacco Co., a subsidiary of British American Tobacco, and would probably face an import ban afterwards.
IQOS is the only heat-not-burn (HNB) product authorized by the U.S. Food and Drug Administration to be sold in the American market, largely for its potential benefits in reducing smokers’ exposure to burned tobaccos and toxic chemicals the combustion would bring. The product made its debut in Atlanta in October 2019, and has gained much popularity.
In April 2020, Reynolds, for the first time, filed suit against the PM, claiming that the defendant copied its HNB patented technology that it had developed for its e-cigarette products, such as Vuse Vibe. In May this year, a law judge of the ITC decided that the PM infringed two patents owned by Reynolds. And in July, this decision was accepted by the ITC, who is currently considering imposing a ban on the imports of IQOS devices, Marlboro HeatSticks, and other components, as well as the sale of such items that have been imported to the USA before.
According to the Bloomberg, back in several months before when asked about the patent infringement lawsuit, Philip Morris argued that even if a patent violation is found, it’s not in the public’s interest to ban the IQOS in the U.S. But Reynolds held the claim as an exaggeration, since there’re a string of alternatives available in the market.
The dispute reflects the throat-cutting tobacco battlefield. As consumers’ health awareness keeps rising and regulations on cigarettes go tighter, traditional tobacco is put at the risk of marginalization in the industry. To seek long-term growth, Big Tobacco is investing piles of cash to develop “safer and healthier” substitutes for cigarettes, such as snus, vaping devices, and heated tobacco. And smaller players are also joining the battle one after another. IQOS device is one of the alternative options, which can generate aerosol with nicotine for users to inhale by heating tobacco sticks wrapped in paper.
At the beginning of this year, the PM USA was still proceeding with its rapid expansion strategy, with an ambitious revenue goal at $1 billion for its IQOS product by 2025. However, since the company has decided to pause its IQOS expansion for the unfavorable ITC ruling, it seems that the goal is very hard to reach.