Philip Morris and BAT end global patent clash over heat-not-burn cigarettes

In the agreement, which was announced today, Philip Morris and BAT waive claims from the previous lawsuits. They also waive their right to assert claims against each other over their own patents in the future. The settlement applies globally and, according to a Form K6 filing with the US SEC, the agreement is valid for eight years.

Competing market brands

BAT sells its product under the brand Glo, while Philip Morris markets its products under the Iqos brand. Both devices use heat-not-burn technology. However, Glo heats the tobacco sticks using induction technology, while IQOS uses a heating rod. Experts consider the e-cigarettes business a key driver of industry growth.

According to a press release, the settlement includes non-monetary provisions between both companies that resolve all ongoing global patent infringement litigation, encompassing all related injunctions and exclusion orders, and prevents future claims against current heated tobacco and vapour products. This also applies to the ban on imports of Philip Morris IQOS products into the United States.

The settlement also allows each party to innovate and introduce product iterations.

Mutual satisfaction

“We are pleased that this matter has been resolved to the mutual satisfaction of both parties,” says Jacek Olczak, CEO at Philip Morris.

“There is a clear and growing global desire from adults who smoke to choose from a range of smoke-free products, and we believe continued reduced-risk category innovation can accelerate declines in the harms associated with smoking to the benefit of consumers and public health at large – as we continue PMI’s journey to end the sale of cigarettes.”

Tadeu Marroco, chief executive of BAT, says, “This agreement is an important step forward for BAT and all our stakeholders. Having already built two £1bn brands in Vuse and Glo, the potential for their continued impact on Tobacco Harm Reduction is clear. I am delighted that this settlement will allow BAT to focus on developing innovative solutions that provide adult consumers with a greater choice of reduced risk products in support of our A Better Tomorrow purpose.”

Japan, Europe and the US

The settlement brings to an end one of the largest and most persistent patent lawsuits in recent years. The global dispute broke out in 2018, when Philip Morris launched a patent infringement action in Japan against BAT’s e-heated tobacco products. In spring 2020 BAT hit back, suing Philip Morris at the International Trade Commission in the US and filing lawsuits in several European countries, including Germany and the UK.

Until recently, the global battle focused on the US, Japan, Germany and the UK. In the meantime, PI proceedings were also pending in Bulgaria, the Czech Republic, Italy, Poland and Romania.

Signs of fatigue

However, after a heated start between 2018 and 2021, the dispute has recently been much quieter. After initial successes on both sides, the dispute appeared to stall; a certain stalemate apparently led to the current agreement. However, the two parties continued to dispute the granting of the opposing patents at the European Patent Office until the very end.

Nicola Dagg

According to JUVE Patent information, both companies continued settlement talks despite the litigation. Initial rumours of an imminent settlement were already circulating in spring 2023, but these had recently died down. It is not known what prompted the surprising agreement.

Kirkland and Vossius for BAT

Europe was at the centre of the dispute. Kirkland & Ellis acted for BAT in the UK, led by partners Jin Ooi and Nicola Dagg. In the UK, BAT was a new client for Kirkland at the commencement of proceedings in 2020.

The firm had also helped coordinate the litigation globally, with patent boutique Vossius & Partner running the German case. Lawyers Thure Schubert and Kai Rüting, as well as patent attorney Elard Schenck zu Schweinsberg, initiated the first claims against Philip Morris in Germany in spring 2020.

D Young & Co, Dehns and Venner Shipley handle most of the patent applications and opposition proceedings on behalf of BAT.

Philip Morris turns to boutiques

Alex Wilson

For Philip Morris, Powell Gilbert partners Alex Wilson and Peter Damerell led proceedings in the UK, with Hoyng ROKH Monegier running the cases over the heat-not-burn technology in Germany.

Düsseldorf-based partners Kay Kasper and Tobias Hahn had led the German cases on the claimant as well as on the defendant side since the dispute began. Dreiss partner and patent attorney Andreas Pfund handled the technical aspects of the cases.

UK patent attorney firm HGF handles most of the EPO work for Philip Morris. German firm Dreiss and UK firm Reddie & Grose are also active for Philip Morris concerning some of its patents.

In Italy, mixed Italian firm Bonelli Erede represents Philip Morris, with leading boutique Trevisan & Cuonzo active for BAT.