DCT

1:20-cv-00472

Altria Client Services LLC v. RJ Reynolds Vapor Co

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 1:20-cv-00472, M.D.N.C., 01/05/2021
  • Venue Allegations: Venue is alleged to be proper as Defendants are incorporated in North Carolina, maintain their principal places of business within the district, have regular and established places of business in the district, and have committed alleged infringing acts there.
  • Core Dispute: Plaintiff alleges that Defendant's VUSE e-vapor products and VELO smokeless nicotine pouches infringe nine patents related to the design of electronic vaping devices and the packaging of oral tobacco products.
  • Technical Context: The dispute is set in the highly competitive electronic cigarette and modern oral nicotine product markets, focusing on the mechanical and electrical construction of vaping pods and the packaging design for smokeless pouches.
  • Key Procedural History: The complaint alleges that Defendants were aware of the asserted patents due to their practice of surveying patent literature and because the patents-in-suit or their family members were cited during the prosecution of Defendants' own patents. The complaint also notes that Defendants submitted Premarket Tobacco Product Applications (PMTAs) to the FDA for the accused VUSE products. Subsequent to the filing of this complaint, U.S. Patent Nos. 10,143,242 and 10,264,824, two of the lead e-vapor patents, were the subject of inter partes review (IPR) proceedings (IPR2021-00650 and IPR2021-00652), which resulted in the cancellation of all asserted claims.

Case Timeline

Date Event
2007-11-02 Earliest Priority Date for ’319, ’996, and ’070 Patents
2010-09-21 U.S. Patent No. 7,798,319 Issues
2012-12-17 Earliest Priority Date for ’242 and ’824 Patents
2013-06-11 U.S. Patent No. 8,458,996 Issues
2013-10-15 U.S. Patent No. 8,556,070 Issues
2015-04-22 Earliest Priority Date for ’517, ’269, ’541, ’357 Patents
2018-07-01 Accused VUSE ALTO Product Launch (approx. July 2018)
2018-12-04 U.S. Patent No. 10,143,242 Issues
2019-04-23 U.S. Patent No. 10,264,824 Issues
2019-05-28 U.S. Patent No. 10,299,517 Issues
2019-07-01 Accused VELO Products Launch (approx. July 2019)
2019-11-26 U.S. Patent No. 10,485,269 Issues
2019-12-03 U.S. Patent No. 10,492,541 Issues
2020-03-17 U.S. Patent No. 10,588,357 Issues
2021-01-05 Complaint Filing Date

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

U.S. Patent No. 10,143,242 - “Cartomizer Flavor Enhancement”

The Invention Explained

  • Problem Addressed: The patent background describes the basic operation of an electronic cigarette that emulates tobacco smoking by producing a vapor, but notes a desire for "enhancing the flavor and smell as part of the e-Cig experience" (’242 Patent, col. 1:15-29).
  • The Patented Solution: The patent specification discloses various methods for adding flavor, such as flavor stickers, shells, or boosters attached to the cartomizer (’242 Patent, col. 2:37-46). However, the claimed invention is a specific structural arrangement of an electronic vaping device, comprising a battery portion with an air-flow sensor and circuitry, coupled to a liquid-filled cartridge that includes a heating coil wrapped around a wick, an airflow tube, and an outer housing. A key feature is a mouthpiece that attaches to and "surrounds at least a portion of the end region of the cartridge" (’242 Patent, col. 9:1-10:4).
  • Technical Importance: This claimed assembly represents a complete structural configuration for a functional pod-based electronic vaping device, which the complaint alleges is embodied in commercially successful products (Compl. ¶49).

Key Claims at a Glance

  • The complaint asserts independent claim 1 (Compl. ¶68).
  • The essential elements of claim 1 are:
    • An electronic vaping device comprising a battery portion and a cartridge.
    • The battery portion includes a battery, an air-flow sensor, linked circuitry, and one or more electronic chips.
    • The cartridge is configured to couple with the battery portion and generate a vapor dispersion.
    • The cartridge includes a heating coil wrapped around a wick, an airflow tube, an outer housing, and is filled with liquid.
    • A mouthpiece is connected to the cartridge, is attached to an outer surface of the cartridge, and surrounds at least a portion of an end region of the cartridge.
  • The complaint also asserts dependent claims 2-6 and 8-9 (Compl. ¶68).

U.S. Patent No. 10,264,824 - “Cartridge Assembly for an Electronic Vaping Device”

The Invention Explained

  • Problem Addressed: Similar to the ’242 Patent, this patent aims to improve the electronic cigarette experience by focusing on the flavor and smell delivery mechanism (’824 Patent, col. 1:18-20).
  • The Patented Solution: The patent claims a specific cartridge assembly designed for coupling with a battery portion. The claimed assembly comprises a cartridge portion filled with liquid and containing a heating coil, wick, airflow tube, and outer housing. It also includes a mouthpiece that is connected to the cartridge portion's outer surface and extends over an end region of the cartridge, surrounding at least a part of it (’824 Patent, col. 9:4-21). This structure mirrors the cartridge-related limitations of the ’242 Patent.
  • Technical Importance: The patent claims a discrete, replaceable cartridge component, a key feature of modern "pod mod" e-vapor systems that allow users to easily swap flavors or replace depleted cartridges (’824 Patent, col. 4:30-33).

Key Claims at a Glance

  • The complaint asserts independent claim 1 (Compl. ¶91).
  • The essential elements of claim 1 are:
    • A cartridge assembly for coupling to a battery portion of an electronic vaping device.
    • The assembly comprises a cartridge portion configured to generate a vapor dispersion.
    • The cartridge portion includes a heating coil wrapped around a wick, an airflow tube, an outer housing, and is filled with a liquid.
    • The assembly also comprises a mouthpiece connected to the cartridge portion, attached to its outer surface, and surrounding at least a portion of an end region of the cartridge portion.
  • The complaint also asserts dependent claims 3-7, 9-10, 12-16, and 18 (Compl. ¶91).

U.S. Patent No. 10,299,517 - “Pod Assembly, Dispensing Body, and E-Vapor Apparatus Including the Same”

  • Technology Synopsis: This patent claims an e-vapor apparatus comprising a pod assembly and a device body. The pod assembly is defined by a specific arrangement of external surfaces and internal compartments, including a liquid compartment, a vaporizer compartment with a heater, and a vapor channel that extends through the center of the liquid compartment (’517 Patent, Abstract; col. 2:45-60). A key feature is that the liquid formulation is visible through a transparent portion of the pod's face.
  • Asserted Claims: Independent claim 10 is asserted (Compl. ¶113).
  • Accused Features: The VUSE ALTO products, including the power unit and liquid-filled pods, are accused of infringing (Compl. ¶113). The complaint alleges the VUSE ALTO pod contains the claimed liquid and vaporizer compartments and a central, visible vapor channel (Compl. ¶117, ¶118, ¶129, ¶130).

U.S. Patent No. 10,485,269 - “Pod Assembly, Dispensing Body, and E-Vapor Apparatus Including the Same”

  • Technology Synopsis: The patent claims a pod assembly for an e-vapor device. The technology involves a pod with two distinct compartments: a "vapor precursor compartment" containing the liquid, and a "device compartment" upstream from it that is configured to heat the precursor to produce vapor (’269 Patent, Abstract). The vapor channel is described as extending through the precursor compartment and being visible through its transparent portions.
  • Asserted Claims: Independent claim 19 is asserted (Compl. ¶147).
  • Accused Features: The VUSE ALTO pods are accused of having the claimed transparent vapor precursor compartment and upstream device compartment that heats the liquid to produce vapor (Compl. ¶151-156).

U.S. Patent No. 10,492,541 - “Pod Assembly, Dispensing Body, and E-Vapor Apparatus Including the Same”

  • Technology Synopsis: This patent claims a pod assembly comprising a "pre-vapor formulation compartment" configured to hold a liquid such that it is visible through at least the front face. It further requires a "device compartment" upstream from the formulation compartment that heats the liquid to produce a vapor (’541 Patent, Abstract; col. 2:49-67). A vapor channel extends through the pre-vapor formulation compartment and is also visible.
  • Asserted Claims: Independent claim 24 is asserted (Compl. ¶164).
  • Accused Features: The VUSE ALTO pods are alleged to contain the claimed visible pre-vapor formulation, an upstream device compartment for heating, and a visible vapor channel extending through the formulation (Compl. ¶169-173).

U.S. Patent No. 10,588,357 - “Pod Assembly, Dispensing Body, and E-Vapor Apparatus Including the Same”

  • Technology Synopsis: The patent claims an e-vapor apparatus that combines a pod assembly with a device body. A key feature is the use of a magnet in the device body that interacts with the pod assembly to produce an "audible click" upon insertion (’357 Patent, col. 2:49-67). The pod assembly itself includes a liquid compartment, a vaporizer compartment, and a visible vapor channel surrounded by the liquid.
  • Asserted Claims: Independent claim 10 is asserted (Compl. ¶181).
  • Accused Features: The combination of the VUSE ALTO power unit and pod is accused of infringement. The complaint alleges the power unit includes magnets and is configured to receive the pod assembly and produce an audible click (Compl. ¶192-193).

U.S. Patent No. 7,798,319 - “Container Device for Tobacco Articles”

  • Technology Synopsis: The patent claims a tobacco product package with a container and a lid that form a "non-hermetic seal." This seal is created by a resilient gasket that acts as a moisture barrier to inhibit moisture migration but is also designed to permit gas exchange between the container's interior and the ambient air (’319 Patent, Abstract; col. 2:13-22). This allows byproduct gases from the tobacco product to vent.
  • Asserted Claims: Independent claim 17 is asserted (Compl. ¶201).
  • Accused Features: The Accused VELO Products are packaged in a container alleged to have the claimed container, lid, and a resilient gasket that provides a moisture barrier and a non-hermetic seal (Compl. ¶204-210).

U.S. Patent No. 8,458,996 - “Container Device for Tobacco Articles”

  • Technology Synopsis: This patent claims a method of packaging a tobacco product. The method involves forming a container, forming a lid with a skirt, affixing a resilient gasket to the lid, depositing tobacco product into the container, and securing the lid to form a moisture barrier and a "non-hermetic seal" that permits venting of byproduct gases (’996 Patent, Abstract).
  • Asserted Claims: Independent claim 1 is asserted (Compl. ¶218).
  • Accused Features: The Defendants are accused of performing the claimed method by making the Accused VELO Products, which involves forming the container and lid, depositing the pouches, and securing the lid to create the non-hermetic seal (Compl. ¶220-226).

U.S. Patent No. 8,556,070 - “Container Device for Tobacco Articles”

  • Technology Synopsis: This patent claims a tobacco product package device with specific geometric features. The container has a side wall with "at least a portion...being outwardly convexly curved away from the interior space." The device includes a metallic lid with a resilient gasket that provides a moisture barrier and a non-hermetic seal (’070 Patent, Abstract).
  • Asserted Claims: Independent claim 1 is asserted (Compl. ¶233).
  • Accused Features: The Accused VELO Products container is alleged to have the claimed outwardly convexly curved side wall, a metallic lid, and a resilient gasket providing a non-hermetic seal (Compl. ¶236-245).

III. The Accused Instrumentality

Product Identification

  • The accused instrumentalities are (1) the Accused VUSE Vapor Products, which include at least the VUSE ALTO and VUSE VIBE models and their associated liquid-filled "Flavor Pack" pods or tanks, and (2) the Accused VELO Products, which are smokeless nicotine pouches sold in containers (Compl. ¶38-39, ¶57).

Functionality and Market Context

  • The VUSE products are battery-powered electronic vaporizing devices that heat a proprietary liquid to produce an aerosol (Compl. ¶38, p. 26). The VUSE VIBE is a more traditional pen-style device, while the VUSE ALTO is a "pod mod" e-vapor device with a flattened form factor, similar to the Juul device (Compl. ¶46). The complaint alleges the VUSE ALTO was a commercial success that "doubled Reynolds Vapor's market share in just three months" after its July 2018 introduction (Compl. ¶47).
  • The VELO products are pouches containing nicotine extracted from tobacco plants, which are held in a container with a non-hermetic seal (Compl. ¶59). The complaint alleges the VELO products, launched in July 2019, were the "fastest growing brand in the United States" and are a "high margin business" for Defendants (Compl. ¶60, ¶62). An image provided in the complaint shows the Accused VELO Products in their container, which is a key instrumentality for the packaging patents (Compl. p. 16).

IV. Analysis of Infringement Allegations

’242 Patent Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
a battery portion, the battery portion including a battery configured to provide power to the electronic vaping device, The Accused VUSE VIBE Products include a "Power Unit" with a battery, identified as a "long-lasting 600mAh battery." ¶71 col. 4:1-2
the battery portion including an air-flow sensor, The Accused VUSE VIBE Products' battery portion is alleged to contain an air-flow sensor, supported by a teardown photograph. ¶72 col. 4:18-20
a cartridge configured to be coupled with the battery portion, The Accused VUSE VIBE Products include a cartridge (or "Flavor Pack" tank) that is configured to couple with the battery portion (or "Power Unit"). ¶75 col. 4:9-13
the cartridge including a heating coil wrapped around a wick, The cartridge includes a heating coil wrapped around a wick, as shown in a teardown photograph. ¶77 col. 3:44-49
a mouthpiece connected to the cartridge, the mouthpiece being attached to an outer surface of the cartridge, The VUSE VIBE cartridge includes an integral mouthpiece that is attached to the outer surface of the cartridge. A photograph shows the mouthpiece connected to the cartridge (Compl. p. 30). ¶81, ¶82 col. 8:3-7
and an end region of the cartridge extending into the mouthpiece such that the mouthpiece surrounds at least a portion of the end region of the cartridge. A cross-section photograph is provided to show that the mouthpiece surrounds a portion of the end region of the cartridge. ¶83 col. 9:43-46
  • Identified Points of Contention:
    • Scope Questions: The patent is titled "Cartomizer Flavor Enhancement" and its specification describes adding flavor via stickers or shells. A question for the court is whether the scope of Claim 1, which recites a general e-vapor device structure without any explicit flavor-enhancing element beyond the base e-liquid, should be interpreted in light of the patent's title and descriptive focus. Furthermore, as noted in Section I, the subsequent cancellation of all asserted claims in an IPR proceeding raises a dispositive question regarding the validity and enforceability of the claim.
    • Technical Questions: The complaint provides teardown photographs to identify internal components, such as the "air-flow sensor" (Compl. p. 23). An evidentiary question is whether the component identified by the plaintiff is, in fact, an air-flow sensor that operates in the manner contemplated by the patent, or another type of sensor (e.g., a pressure differential sensor).

’824 Patent Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
A cartridge assembly for coupling to a battery portion of an electronic vaping device, The Accused VUSE VIBE Products comprise a cartridge assembly ("Flavor Pack") that couples to a battery portion ("Power Unit"). ¶93, ¶95 col. 4:34-41
a cartridge portion, the cartridge portion being configured to generate a dispersion that is added to air flow through the cartridge, The VUSE VIBE cartridge portion heats proprietary liquids to produce an aerosol, which is a vapor-like mist added to the airflow. ¶96, ¶97 col. 4:14-18
the cartridge portion including a heating coil wrapped around a wick, Teardown photographs show the cartridge portion includes a heating coil wrapped around a wick. ¶98 col. 4:1-3
a mouthpiece connected to the cartridge portion, the mouthpiece being attached to an outer surface of the cartridge portion, A mouthpiece is connected to and attached to the outer surface of the cartridge portion. A cross-section photograph shows this connection (Compl. p. 43). ¶103, ¶104 col. 8:3-7
an end region of the cartridge portion extending into the mouthpiece such that the mouthpiece surrounds at least a portion of the end region of the cartridge portion. A cross-section photograph of the mouthpiece and cartridge is provided to allege that the mouthpiece surrounds at least a portion of the end region of the cartridge. ¶105 col. 9:18-21
  • Identified Points of Contention:
    • Scope Questions: As with the ’242 Patent, all claims of the ’824 Patent were subsequently cancelled in an IPR proceeding, which presents a fundamental challenge to the infringement allegation. A potential point of dispute during claim construction would be the meaning of a mouthpiece being "attached to an outer surface," and whether that reads on designs where the mouthpiece and cartridge housing are a single, integrally formed component.
    • Technical Questions: The infringement allegation relies on visual interpretation of photographs showing how the mouthpiece and cartridge interact (Compl. p. 44). A technical question will be what the terms "end region" and "surrounds" mean in the context of the device's physical geometry and whether the alleged interface meets those limitations.

V. Key Claim Terms for Construction

The Term: "non-hermetic seal" (’319 Patent, Claim 17; ’996 Patent, Claim 1)

  • Context and Importance: This term is central to the patents asserted against the VELO products. The invention's purported novelty lies in a seal that is good enough to be a "moisture barrier" but intentionally imperfect enough to be "non-hermetic," allowing byproduct gases to vent. Infringement will turn on whether the VELO container's seal can be proven to perform this specific dual function.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The specification states that the non-hermetic seal "permits gas exchange between ambient air and the interior space" (’319 Patent, col. 2:19-22). This language could support an argument that any seal that is not perfectly airtight meets the "non-hermetic" limitation.
    • Evidence for a Narrower Interpretation: The patent explains the purpose is to permit "venting of byproduct gases from the container" and to allow the product to "breath" (’319 Patent, col. 3:41-54). A defendant may argue this requires a specific design feature intended for venting, not merely an imperfect or leaky manufacturing tolerance. The specification's disclosure of dedicated "vent structures" as one embodiment could be cited to support a narrower interpretation requiring a feature designed for this purpose (’319 Patent, col. 7:20-24).

The Term: "mouthpiece surrounds at least a portion of the end region of the cartridge" (’242 Patent, Claim 1; ’824 Patent, Claim 1)

  • Context and Importance: This limitation defines the physical interface between the mouthpiece and the cartridge, a key structural aspect of the claimed device and cartridge assembly. The scope of "surrounds" and "end region" will be critical, as many pod-based systems involve some form of overlapping or nested connection between these parts.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The patents' general descriptions and figures, such as Figure 8 showing an "Add-on Mouthpiece," suggest a broad scope covering various ways a mouthpiece can fit over the end of a cartomizer (’242 Patent, Fig. 8; col. 8:3-7). This could encompass any design where one part sleeves over another, even partially.
    • Evidence for a Narrower Interpretation: The detailed description explains that the mouthpiece may have a recess (906) that "fits over the cartomizer" to "create a firm hold" (’242 Patent, col. 8:25-29). This language, tied to a specific figure, may support a narrower construction requiring a distinct recess designed to receive and envelop the cartridge end, rather than any incidental overlap.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges both induced and contributory infringement. Inducement is based on allegations that Defendants encourage and instruct customers on how to use the accused products in an infringing manner through instructions on packaging and websites (Compl. ¶85, ¶107, ¶141). Contributory infringement is based on allegations that the accused products, particularly the disposable pods and cartridges, have no substantial non-infringing uses and are especially made or adapted for use in an infringing manner (Compl. ¶86, ¶108, ¶142).
  • Willful Infringement: Willfulness is alleged based on knowledge of the patents since at least the filing of the lawsuit (Compl. ¶87). The complaint further alleges pre-suit knowledge "upon information and belief," asserting that Defendants regularly survey patent literature and that the asserted patents or their family members were cited during the prosecution of patents belonging to Defendants or their affiliates (Compl. ¶64).

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

  • A central issue is one of viability and mootness: given that all asserted claims of the two lead e-vapor patents (’242 and ’824) were cancelled in inter partes review proceedings subsequent to the complaint's filing, a threshold question is whether the infringement counts based on these patents can proceed.
  • A key question for the patents asserted against the VELO products will be one of definitional scope: can the term "non-hermetic seal" be construed to read on the accused product's packaging, which would require demonstrating that the seal is simultaneously robust enough to function as a "moisture barrier" yet porous enough to permit the "venting of byproduct gases" as claimed?
  • For the remaining e-vapor patents asserted against the VUSE ALTO, a primary evidentiary question will be one of structural and functional correspondence: does the accused pod's physical construction—with its specific arrangement of liquid and device compartments, visible liquid, and central vapor channel—map onto the precise configurations required by the claims, and does the magnetic docking mechanism produce the claimed "audible click"?