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ITC Agrees To Probe Juul's E-Cig Rivals For Infringement

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By Kevin Penton

Law360 (December 11, 2018, 4:41 PM EST) -- The U.S. International Trade Commission has agreed to investigate whether the importation into the U.S. and the sales of certain electronic cigarette delivery systems by 21 companies violate federal tariff regulations and whether the devices should be barred from entry.

At the request of e-cigarette company Juul Labs Inc., the ITC will initiate a probe into whether the companies with offices in the U.S., China, France or Uruguay are violating Section 337 of the Tariff Act of 1930 by importing delivery systems for the e-cigarettes that infringe the asserted claims of five patents covering the technology, the commission announced Monday.

Should the ITC find violations by the companies, Juul asked that the commission issue limited exclusion and cease-and-desist orders for the products, according to an amended complaint the company filed in late October.

The patents at issue relate to electronic nicotine delivery systems, or ENDS, containing liquid nicotine pods, which purport to be a safer alternative to regular cigarettes.

Juul alleges that its competitors are linked to liquid nicotine manufacturing and pod filling operations in China that likely do not comply with U.S. Food and Drug Administration regulations, according to the amended complaint.

"Respondents' products are inferior copies of the domestic articles," the company wrote. "Respondents market these [Juul] look-alike devices — often at a fraction of a price of the Juul system — without the same attention to quality control that [Juul] employs."

Juul also contends that it has worked harder than its rivals to limit underage use of its products. While Juul uses an age verification service to ensure that its products are sold online to people 21 and over, the company claims that its competitors make their products more readily available online.

The FDA in November proposed new restrictions on the sales of flavored e-cigarettes — except for mint and menthol, tobacco or unflavored products — that would limit their physical sales to locations where minors may not enter and that would set additional age verification practices for online sales

In November Juul filed a related complaint with the ITC, focusing on the cartridges that are used as part of its e-cigarette systems.

"We are pleased with the ITC's decision to institute the investigation into the alleged infringements," Gerald Masoudi, Juul's chief legal officer, said in a statement Monday. "We will continue to defend our intellectual property to protect our business, providing an alternative to adult smokers who want to switch from combustible cigarettes."

The patents at issue are U.S. Patent Nos. 10,070,669; 10,076,139; 10,045,568; 10,058,130; and 10,104,915.

Juul is represented by Daniel E. Yonan, Michael E. Joffre, Nirav N. Desai, Paul A. Ainsworth and Uma N. Everett of Sterne Kessler Goldstein & Fox PLLC.

Counsel information for the respondents was not immediately available Tuesday.

The investigation is In the Matter of: Certain Electronic Nicotine Delivery Systems For Electronic Nicotine Delivery Systems and Components Thereof, investigation number 337-TA-3354, before the U.S. International Trade Commission.

--Additional reporting by Tiffany Hu and Emily Field. Editing by Alyssa Miller.

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