Altria can’t sell Iqos to US as Biden administration decides not to interfere in patent dispute

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

Fabrice Coffrini AFP | Getty Images

Altria in Philip Morris International they can no longer sell or import Iqos tobacco devices in the U.S. after the Biden administration decided not to take action on the ongoing patent dispute.

Rival RJ Reynolds, a subsidiary British American Tobacco, filed a claim with the U.S. Commission on International Trade. In late September, the ITC ruled that the Iqos device had infringed copyright on two Reynolds patents. As part of the process, Biden’s management conducted a 60-day administrative review and decided not to take action to overturn the ITC’s decision.

“Today’s announcement provides a benchmark for our enforcement of intellectual property rights to ensure we can continue to innovate, as is common practice among innovation-based industries,” said British American Tobacco Assistant General Counsel Gareth Cooper in a statement.

Altria launched the Iqos device in the United States two years ago, but began developing the product more than a decade before Philip Morris spun off the company. The device heats the tobacco without burning it, which is supposed to provide users with the same amount of nicotine without as many toxins as when smoking a cigarette.

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

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

“While this decision will cause short-term disruption, we continue to see a great opportunity for IQOS and other smoke-free products approved by the FDA in the U.S. in the coming years,” Philip Morris said in a statement.

Philip Morris also said his contingency plans to return to the U.S. are ongoing. Businesses could relocate production to the U.S. or change the design to avoid patent infringement claims.

Shares of British American Tobacco fell 1% in pre-sale trading on Tuesday, while shares of Altria and Philip Morris fell less than 1%.

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