Fontem Ventures BV v. Loec Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Fontem Ventures B.V. and Fontem Holdings 1 B.V. (Netherlands)
  • Defendant: LOEC, Inc., dba blu ecigs. (Delaware)
  • Plaintiff’s Counsel: Perkins Coie LLP
• Case Identification: 2:14-cv-01648, C.D. Cal., 03/05/2014
• Venue Allegations: Venue is based on Defendant allegedly conducting business, deriving revenue from sales, and committing acts of infringement within the judicial district.
• Core Dispute: Plaintiff alleges that Defendant’s "blu" brand of electronic cigarettes and related components infringe four U.S. patents directed to electronic cigarette technology.
• Technical Context: The technology at issue is in the field of electronic cigarettes, which are devices that atomize a liquid solution containing nicotine as an alternative to traditional combustible tobacco products.
• Key Procedural History: The complaint alleges that Defendant was put on notice of the patents-in-suit no later than February 13, 2014, through a Joint Status Report filed in a related, consolidated litigation, Ruyan Investment Holdings Limited v. Sottera, Inc. Following the filing of this complaint, U.S. Patent No. 8,365,742 was subject to an inter partes review (IPR) proceeding (IPR2016-01268), which concluded with a certificate confirming the patentability of asserted claims 2 and 3.

Case Timeline

Date	Event
2004-04-14	Earliest Priority Date for '331 and '628 Patents
2006-05-16	Earliest Priority Date for '742 and '957 Patents
2013-02-05	U.S. Patent No. 8,365,742 Issues
2013-02-19	U.S. Patent No. 8,375,957 Issues
2013-03-12	U.S. Patent No. 8,393,331 Issues
2013-07-23	U.S. Patent No. 8,490,628 Issues
2014-02-13	Alleged Date of Defendant's Knowledge of Patents
2014-03-05	Complaint Filing Date
2016-07-02	IPR Filed Against '742 Patent
2020-01-15	IPR Certificate Issued for '742 Patent

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 8,365,742 - "Electronic Cigarette", issued February 5, 2013

The Invention Explained

• Problem Addressed: The patent seeks to overcome disadvantages of prior electronic cigarettes, which it characterizes as being complicated in structure, providing "ideal aerosol effects," and having low atomizing efficiency ('742 Patent, col. 1:21-25).
• The Patented Solution: The invention proposes an electronic cigarette constructed from a main body (containing a battery and atomizer) and a detachable "cigarette bottle assembly" (i.e., a cartridge). The atomizer assembly contains a porous component that holds liquid and a heating wire ('742 Patent, col. 2:30-38). When a user inhales, airflow creates a negative pressure cavity that draws liquid from the porous component onto the heating wire, where it is vaporized into an aerosol ('742 Patent, col. 3:5-24). The design emphasizes a modular, easy-to-use structure where a user "just needs to plug the cigarette bottle assembly into the open end of the shell" ('742 Patent, col. 3:46-49).
• Technical Importance: The patent describes a two-part modular design (power supply and cartomizer) that simplified the user experience compared to earlier, more integrated or complex devices.

Key Claims at a Glance

• The complaint alleges infringement of at least independent claims 2 and 3.
• Independent Claim 2 requires:
  • A battery assembly and an atomizer assembly within a housing, electrically connected.
  • A liquid storage component in the housing.
  • The housing having one or more through-air-inlets.
  • The atomizer assembly including a porous component supported by a frame with a run-through hole.
  • A heating wire wound on a part of the porous component in the path of airflow.
  • The porous component being substantially surrounded by the liquid storage component.
• Independent Claim 3 (as corrected by a Certificate of Correction) requires:
  • A battery assembly and an atomizer assembly within a housing, electrically connected.
  • The housing having one or more through-air-inlets and an outlet.
  • The atomizer assembly including a frame with a run-through hole, and a porous component between the frame and the outlet.
  • A heating wire wound on a part of the porous component, substantially aligned with the run-through hole.
  • The porous component being in contact with a liquid supply in the housing.

U.S. Patent No. 8,375,957 - "Electronic Cigarette", issued February 19, 2013

The Invention Explained

• Problem Addressed: The patent identifies a need for cigarette substitutes that can effectively replicate the "smoking habit of repetitively inhaling and exhaling" and achieve a peak concentration of nicotine in the blood, which it contends earlier products failed to do ('957 Patent, col. 1:32-40).
• The Patented Solution: This invention details an electronic cigarette composed of a battery assembly and an atomizer assembly that are detachably connected via screw threads ('957 Patent, col. 1:60-67). The design incorporates a sensor that detects when a user inhales, which in turn signals a micro-controller unit (MCU) to activate a heating coil in the atomizer ('957 Patent, col. 5:26-34). The MCU provides sophisticated control over the device's operation, including managing power output and activation timing ('957 Patent, col. 5:35-44).
• Technical Importance: The patent focuses on the electronic control systems and the specific mechanical means of assembly (screw threads) for a modular e-cigarette, representing a step toward more reliable and feature-rich devices.

Key Claims at a Glance

• The complaint alleges infringement of at least independent claims 1, 10, and 23.
• Independent Claim 1 requires:
  • A battery assembly containing a battery, a micro-controller unit (MCU), and a sensor connected to a circuit board.
  • A primary screwthread electrode on one end of the battery assembly housing.
  • An atomizer assembly containing an atomizer and a solution storage area.
  • A secondary screwthread electrode on the atomizer assembly housing for connecting to the primary screwthread electrode.
  • The atomizer including a heater coil wound around a porous component.

Multi-Patent Capsule

• *U.S. Patent No. 8,393,331, "Electronic Atomization Cigarette", issued March 12, 2013*

  • Technology Synopsis: This patent describes an electronic cigarette architecture comprising a shell, mouthpiece, and various internal components arranged sequentially, including a sensor and an atomizer in contact with a liquid supply. The invention focuses on the creation of an interconnected aerosol passage from an air inlet, through the atomizer, and to the mouthpiece, detailing the fluid dynamics of atomization. ('331 Patent, Abstract; col. 1:55-68).
  • Asserted Claims: At least claims 1 and 2 (Compl. ¶28).
  • Accused Features: The "blu" line of electronic cigarettes, including rechargeable and disposable models, as well as component parts (Compl. ¶28).

• *U.S. Patent No. 8,490,628, "Electronic Atomization Cigarette", issued July 23, 2013*

  • Technology Synopsis: This patent, related to the '331 patent, claims an electronic cigarette where the atomizer includes a porous body that projects into the liquid supply and a heating wire. A key aspect of the claimed invention is the specific orientation of the heating wire's central axis, which is "substantially perpendicular to the longitudinal axis of the housing." ('628 Patent, Abstract; Claim 1).
  • Asserted Claims: At least claims 1, 7, and 8 (Compl. ¶36).
  • Accused Features: The "blu" line of electronic cigarettes, including rechargeable and disposable models, as well as component parts (Compl. ¶36).

III. The Accused Instrumentality

Product Identification

The complaint names the "blu" brand of electronic cigarettes sold by Defendant LOEC, Inc. This includes (1) blu Rechargeable Electronic Cigarettes sold in various starter kits, (2) blu Electronic Cigarette Flavor Cartridge refills, (3) blu eCig Batteries, and (4) blu Disposable Electronic Cigarettes (Compl. ¶12).

Functionality and Market Context

The complaint describes the accused products as modular devices consisting of a battery component and a separate, replaceable flavor cartridge (Compl. ¶14, ¶22, ¶30, ¶38). It alleges that these two components are designed to be joined by the user, citing Defendant's website, which instructs users to "take a new cartridge and screw it onto the battery" (Compl. ¶14, fn. 3). The complaint further alleges that the cartridges are designed specifically for use with the "blu" battery components, citing product guides that state the cartridges "should not be used with any other device" (Compl. ¶14, fn. 5).
No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

'742 Patent Infringement Allegations

The complaint does not provide a detailed mapping of accused functionality to each claim element. The following table summarizes the infringement theory based on the general allegations against the accused products.

Claim Element (from Independent Claim 3)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
An electronic cigarette, comprising: a battery assembly and an atomizer assembly within a housing...electrically connected...	The accused "blu" products are functional electronic cigarettes alleged to contain an electrically connected battery and atomizer within a housing.	¶12	col. 6:33-37
with the housing having one or more through-air-inlets and an outlet;	The complaint does not provide specific factual allegations mapping to this element.	¶12	col. 6:38-39
the atomizer assembly includes a frame having a run through hole, and a porous component between the frame and the outlet;	The complaint does not provide sufficient detail for analysis of the internal structure of the accused atomizer.	¶12	col. 6:40-42
a heating wire wound on a part of the porous component which is substantially aligned with the run-through hole;	The complaint does not provide sufficient detail for analysis of the internal structure of the accused atomizer.	¶12	col. 6:43-46
and with the porous component in contact with a liquid supply in the housing.	The accused products allegedly feature an atomizer that makes contact with a liquid-containing cartridge to enable atomization.	¶12, ¶14	col. 6:47-49

'957 Patent Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
a battery assembly comprising...a battery, a micro-controller unit (MCU) and a sensor electrically connected to a circuit board...	The accused "blu" products are alleged to contain a battery assembly with the requisite internal control electronics.	¶20	col. 5:51-57
a primary screwthread electrode located on the first end of the battery assembly housing...	Defendant’s website instructs users to "screw" a new cartridge "onto the battery," which suggests the presence of a screwthread electrode on the battery component.	¶22	col. 5:58-60
an atomizer assembly comprising...an atomizer, and a solution storage area in the atomizer assembly housing;	The accused products include a cartridge component ("blu E-Cig Cartridges") that allegedly functions as the claimed atomizer assembly with a solution storage area.	¶21	col. 6:1-4
a secondary screwthread electrode located on the second end of the atomizer assembly housing...the battery assembly and the atomizer assembly connected through the...screwthread electrodes;	Defendant’s instructions to "unscrew the cartridge from the battery" suggest a mating screwthread on the atomizer assembly for connection.	¶22	col. 6:5-11
with the atomizer including a heater coil wound around a porous component.	The complaint does not provide sufficient detail for analysis of the internal structure of the accused atomizer.	¶20	col. 6:12-14

• Identified Points of Contention:
  • Technical Questions: A primary factual question for discovery will be to determine the precise internal construction of the accused "blu" products. The complaint lacks detailed allegations about the structure of the atomizer (e.g., whether it contains a "frame" as required by the '742 patent) and the specific nature of the control circuitry (e.g., whether it uses an "MCU" as required by the '957 patent).
  • Scope Questions: The litigation may turn on the construction of key claim terms. For the '742 patent, the definitions of "frame" and "porous component" will be central. For the '957 patent, a key question is whether the term "micro-controller unit (MCU)" can be construed to read on the specific type of control chip used in the accused products, which may or may not have the full range of features typically associated with that term.

V. Key Claim Terms for Construction

For the '742 Patent: "frame"

• The Term: "frame" (Claim 1)
• Context and Importance: Claim 1 requires that the "porous component is supported by the frame" and that the "frame has a run-through hole." The infringement analysis will depend on whether the accused device contains a structure that meets this definition, or if the support for the porous material is integrated into another component in a way that falls outside the claim's scope.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The patent does not provide an explicit definition for "frame," which may support an argument that the term should be given its plain and ordinary meaning of a general supporting structure.
  • Evidence for a Narrower Interpretation: The specification describes embodiments where the frame is a distinct component, stating "the atomizer assembly... includes a frame (82), [and] the porous component (81) set on the frame (82)" ('742 Patent, col. 5:43-45). Figures 17 and 18 depict this frame (82) as a discrete structural element. This could support a narrower construction that requires a separate, identifiable frame component.

For the '957 Patent: "micro-controller unit (MCU)"

• The Term: "micro-controller unit (MCU)" (Claim 1)
• Context and Importance: The presence of an "MCU" is a specific limitation in claim 1. Whether the control chip in the accused "blu" products qualifies as an "MCU" will be a critical issue. Practitioners may focus on this term because the accused device could potentially use a less complex, non-programmable application-specific integrated circuit (ASIC), creating a dispute over whether such a chip meets the "MCU" limitation.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The patent describes the functions of the MCU, such as scanning a sensor, restricting atomizing capacity, and controlling the indicator light ('957 Patent, col. 5:26-44). A party could argue that any integrated circuit that performs these enumerated control functions within the device constitutes an "MCU" in the context of the invention.
  • Evidence for a Narrower Interpretation: The term "MCU" often carries a specific technical meaning to one skilled in the art, typically implying a programmable processor core, memory, and I/O peripherals on a single chip. The patent does not explicitly define the term differently. A party could therefore argue that if the accused device's chip lacks these features (e.g., it is a non-programmable logic circuit), it does not meet this limitation.

VI. Other Allegations

• Indirect Infringement: The complaint alleges both contributory and induced infringement. The claims are based on the sale of components—specifically, "blu E-Cig Cartridges" and "blu E-cig Batteries"—that are allegedly intended to be combined by customers to form the infringing device (Compl. ¶13, ¶14). The basis for inducement includes allegations that Defendant’s website and user manuals actively instruct customers on how to assemble and use the products in an infringing manner (Compl. ¶14). The basis for contributory infringement includes allegations that the components have no substantial non-infringing use, supported by citations to Defendant's product guides which state the parts are "designed to be used only with your blu electronic cigarette" (Compl. ¶14, fn. 5).
• Willful Infringement: While not pleaded as a separate count, the complaint lays the groundwork for a willfulness claim. It alleges that Defendant had knowledge of all four patents-in-suit "at least as of February 13, 2014" from legal documents filed in a related case (Compl. ¶11, ¶19, ¶27, ¶35). Any infringement occurring after this date could therefore be argued to be willful, potentially exposing Defendant to enhanced damages.

VII. Analyst’s Conclusion: Key Questions for the Case

• An Evidentiary Question of Technical Operation: Because the complaint provides limited detail on the internal workings of the accused products, a central issue will be factual: does discovery evidence show that the "blu" e-cigarettes contain the specific internal structures—such as the "frame" supporting a "porous component" required by the '742 patent and the "micro-controller unit (MCU)" of the '957 patent—or is there a fundamental mismatch in their technical design and operation?
• A Definitional Question of Claim Scope: The case will likely turn on claim construction. A key question for the court will be one of definitional scope: can a term like "micro-controller unit (MCU)", which in the art often implies programmability and a processor core, be construed broadly enough to cover the potentially simpler, application-specific control circuit allegedly used in the accused products?
• A Legal Question of Intent for Indirect Infringement: Given the modular nature of the accused products, a critical battle will be over indirect infringement. A core question will be whether Plaintiff can prove that Defendant's instructional materials and product-specific design constitute the specific intent required for inducement, and whether Defendant can show that its separate components have substantial non-infringing uses to defeat the claim for contributory infringement.