Juul gains initial advantage in patent dispute with Altria, NJoy (2024)

The fractured relationship between Altria Group Inc. and Juul Labs Inc. has extended into the regulatory side involving the U.S. International Trade Commission and Altria’s NJoy subsidiary.

Juul is the No. 2 U.S. e-cigarette product, while NJoy is a distant third.

In June 2023, Altria paid $2.75 billion for full ownership of NJoy. Altria cleared the way for the NJoy purchase by exiting its minority stake in Juul while acquiring certain and limited global licensing rights.

The latest update on Juul’s June 2023 complaint to the ITC involves an initial patent infringement determination last week from an administrative law judge.

The judge supports Juul’s recommendation of an exclusion order and a cease-and-desist order that prohibits the importation of NJoy’s Ace devices into the United States, including the sale of certain vaporizer devices, cartridges and components that Juul claims infringes its patents.

Juul said in a statement that “while we welcome fair competition in the race to switch adult smokers away from combustible cigarettes, in this instance we were compelled to take action to prevent the deliberate infringement of our intellectual property.”

Altria and NJoy said Tuesday they disagree with the judge’s initial determination. The companies will make a presentation later this year to the full ITC board. A final decision is expected by Dec. 23.

NJoy said its Ace device is the first pod-based e-vapor product and the only pod-based menthol e-vapor product authorized by the Food and Drug Administration as appropriate for the protection of public health.

In April 2022, the FDA authorized NJoy Ace styles through its premarket tobacco product application pathway: its closed e-cigarette device and three accompanying tobacco-flavored e-liquid pods — Classic Tobacco 2.4%, Classic Tobacco 5% and Rich Tobacco 5%. Altria said Ace styles represent 85% of NJoy’s 2022 total retail shipments.

“An exclusion order banning the importation of Ace would severely limit FDA-authorized choices for adults and undermine public health,” the companies said.

The Juul complaint follows a NJoy patent infringement complaint filed in August 2023 against Juul with the ITC.

NJoy is requesting the ITC ban on the importation and sale of Juul products. A hearing was held in June before the ITC with an initial determination projected as early as September.

Altria cautioned that “a positive outcome in this case would not preclude an exclusion order against Ace from taking effect.”

“We continue to work to bring this issue to resolution. The parties have engaged with a mediator to attempt to negotiate a resolution of these disputes.”

In another development, NJoy has filed a request with the FDA for a substantial equivalence authorization that would allow the company to market an already-developed Ace product with minor modifications “that we believe avoid three of the four Juul patent claims at issue in the case.”

Altria and Juul have had a complicated relationship the past six years.

Juul held a dominant U.S. market share of more than 70% when Altria paid $12.8 billion in December 2018 to acquire a 35% ownership stake.

As part of the investment, Altria discontinued production of its electronic cigarette NuMark, which had struggled to gain traction among vapers. Altria agreed to not develop and market its own e-cigarettes products for up to six years as long as Altria is providing services to Juul Labs.

In January 2020, Altria reduced its investment value to $4.2 billion as of Dec. 31, 2019.

In July 2022, Altria disclosed it had written down its investment value in Juul Labs to an estimated fair value of just $450 million. At $450 million, the investment value is just 3.5% of the original Altria expenditure.

In March 2023, Altria announced it had exchanged our entire minority (35%) economic investment in Juul Labs Inc. for a non-exclusive, irrevocable global license to certain of Juul’s heated tobacco intellectual property.