Altria can’t sell Iqos in US because Biden won’t intervene in patent litigation

Philip Morris International shows an iQOS electronic cigarette, which heats the tobacco sticks but does not burn them.

Fabrice Coffrini | AFP | Getty Images

Altria and Philip Morris International no longer able to sell or import Iqos tobacco devices into the United States after the Biden administration chose not to take action in an ongoing patent litigation .

Rival RJ Reynolds, a subsidiary of British American Tobacco, had filed a complaint with the US International Trade Commission. At the end of September, the ITC ruled that the Iqos device infringed two of Reynolds’ patents. As part of the process, the Biden administration conducted a 60-day administrative review and decided not to take any action to overturn the ITC’s decision.

“Today’s announcement provides a measure of the success of our enforcement of intellectual property rights to ensure that we can continue to innovate, as is common practice in innovation-based industries,” said Gareth Cooper, deputy general counsel for British American Tobacco, said in a statement.

Altria launched the Iqos device in the United States two years ago, but began product development more than ten years ago before Philip Morris split from the company. The device heats the tobacco without burning it, which is believed to give users the same nicotine boost without as many toxins as smoking a cigarette.

Philip Morris sells the device in dozens of international markets and has licensed Altria to sell it in the United States. While Iqos does not represent a large part of Altria’s business in the United States, it is part of the company’s move away from traditional tobacco products, which has seen demand plummet. Altria said it has 20,000 U.S. consumers as users of the device, but will no longer be able to purchase it in the United States.

This is not the end of the patent dispute between Reynolds, Altria and Philip Morris. Reynolds also filed a claim with the US Patent and Trademark Office regarding Iqos. This process is expected to take six to 12 months, although decisions can be appealed, which could drag it out even longer.

“While this decision will cause short-term disruption, we continue to see a great opportunity for IQOS and other smoke-free products cleared by the FDA in the United States over the next several years,” Philip Morris said in a statement. .

Philip Morris also said his contingency plans to return to the United States were underway. The two companies could move production to the United States or modify the design enough to avoid patent infringement claims.

British American Tobacco shares were down 1% pre-market on Tuesday, while shares of Altria and Philip Morris both fell less than 1%.

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