British American Tobacco & Philip Morris International Settle Patent Dispute

LONDON — British American Tobacco (BAT) and Philip Morris International Inc. (PMI) have resolved a years-long dispute over heat-not-burn tobacco technology. 

The companies announced Feb. 2 that a global settlement was reached that resolves all ongoing patent infringement litigation between the parties related to their heated tobacco and vapor products.

"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," said Tadeu Marroco, chief executive of BAT. "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. By doing so, we will help build a smokeless world for the benefit of consumers, investors and society as a whole."

[Read more: British American Tobacco to Accelerate Transformation Amid Cigarette Challenges]

BAT, parent company to Reynolds American Inc., filed suit for patent infringement in Spring 2020. It alleged that the heating blade technology used in the IQOS heat-not-burn tobacco product was an earlier version of the technology used in BAT's glo tobacco heating devices.

More than a year later, the U.S. International Trade Commission ruled that PMI and Altria Group Inc. had to stop selling and importing IQOS following a finding that the product infringed on two BAT patents, as Convenience Store News previously reported. Altria later sold its U.S. rights to IQOS to PMI, ending their pact.

Both BAT and PMI stated that patent protection is a critical component of the innovation driving their strategies, and that they welcome this settlement as the best path forward for their business plans.

Terms of the BAT-PMI settlement include nonmonetary provisions between the companies that resolve all ongoing global patent infringement litigation, encompassing all related injunctions and exclusion orders, and prevent future claims against current heated tobacco and vapor products.

The settlement also allows each party to innovate and introduce product iterations. BAT and PMI are both committed to continued innovation in reduced risk products to further advance tobacco harm reduction, the companies said.

"We are pleased that this matter has been resolved to the mutual satisfaction of both parties," said Jjacek Olczak, CEO of PMI. "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."