Star Scientific and R.J. Reynolds Face Off In Court

The trial in a patent infringement case involving two tobacco companies could result in the biggest patent infringement award in the history of the U.S., or it could open the door for reduced harm tobacco products, the Baltimore Herald de Paris reported.

 

Star Scientific Inc., Chester, Va. is suing R. J. Reynolds Tobacco Co. The jury selection occurred on Monday, May 18, and the trial is scheduled for three to four weeks at the U.S. District Court for Maryland, Baltimore (Northern) Division.

 

Star Scientific is the exclusive licensee of patents-owned by inventor and principal stockholder Jonnie Williams-for a method that greatly eliminates tobacco specific nitrosamines (TSNAs), in cured tobacco. In other words, the method potentially eliminates what is thought to be a potent carcinogen from both smokeless and smoked tobacco, the Herald de Paris reported.

 

Star originally licensed the use of this method to produce possibly reduced risk tobacco products (called “PREPs”, for “possibly reduced exposure products”) to Brown and Williamson (B&W) Tobacco Co. in 1998-1999.

 

Right after the patents were publicized in 2000, tobacco giants, such as R. J. Reynolds (RJR) and Philip Morris also began sharply reducing the TSNA in their products by a process Star Scientific alleges incorporates steps covered in its patents.

 

Star filed a suit, which covers only the years 2001 to 2002, and addresses only alleged infringement by RJR, which is now part of Reynolds American Inc. (RAI). Star seeks damages between $250-300 million, plus future royalties.

 

If Star wins the case, royalties from other tobacco companies who may have infringed would be collected and the amount owed Star during the life of the patents could amount to more than a billion dollars.

 

Background

The case against RJR thickened when, after first embracing the method from Star, B&W had a change of heart a couple years later, perhaps because the other big tobacco companies refused to go along with the new technology.

 

B&W suddenly decided to drop the new PREPs it was test marketing, end its relationship with Star Scientific, and merge with its decades-long arch rival RJR (which Star was suing) to form RAI, Herald de Paris reported.

 

Star had borrowed millions of dollars from B&W to finance the equipment necessary to supply B&W with “safer” tobacco. When B&W walked away, Star was left in debt to B&W, and facing huge litigation expenses in fighting the merger.

 

A judge in 2005 took the case in a different direction by bifurcating the issue of RJR’s charge of inequitable conduct, a charge that implies that the patents were obtained fraudulently by withholding information from the U.S. Patent and Trademark Office (USPTO). The judge for unexplained reasons took until June 2007 to rule that Star had committed inequitable conduct in obtaining the patents and also granted two summary judgments against Star, saying each of the matters “ended the case” for Star’s patents.

 

Then in August of 2008, a three judge panel for the U.S. Court of Appeals for the Federal Circuit (CAFC) unanimously overturned all the lower court’s rulings against Star, labeling the lower court’s IC decision as, “clearly erroneous,” and reversing the district court’s grant of summary judgment holding Star’s patents to be indefinite, the Herald de Paris reported.

 

CAFC sent the case back to the lower court for trial on the matter of infringement. In February 2009, the U.S. Supreme Court refused to hear RJR/RAI’s appeal. The trial starting today now will finally address the suit originally filed in 2001.

 

Expert testimony directly concerning the role of TSNAs in causing many of the cancers from smoking will likely be part of the damages argument, although  RJR/RAI has unleashed a plethera of motions to avoid litigation on what role smoking plays in causing cancer, and how it does so. While both the court and RJR/RAI would like to avoid this, it could become necessary in proving the worth of Star’s patent.

 

Tobacco giant Philip Morris will be present at trial, as they were at the trial in 2005, even though not formally connected with it. Morris attempted to have Star’s patents invalidated via a declarative action early on as this matter played out in the Maryland court, the Herald de Paris reported.

 

Pending passage of a law now in the U.S. Senate that would cause FDA regulation of the tobacco industry, perhaps while the trial is in process, could shake things up even further. That possibility is seen highly favorable to Star, as the FDA is deemed likely to require that the industry minimize TSNAs in its products, as it does in other products it regulates.

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