IQOS Pauses U.S. Expansion After Patent Dispute Ruling
Philip Morris USA has paused the expansion of its IQOS heated tobacco products in the United States after an unfavorable ruling by the U.S. International Trade Commission (ITC), according to the company's second-quarter report cited by the Winston-Salem J
Philip Morris USA has paused its expansion of IQOS heated tobacco products in the U.S. following an unfavorable ruling from the U.S. International Trade Commission (ITC), as reported by Winston Salem Journal citing the company's second-quarter report.<\/span><\/div>
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In April 2020, British American Tobacco's subsidiary RJ Reynolds Tobacco Co., RAI Strategic Holdings, and RJ Reynolds Vapor Co. filed a patent infringement lawsuit against Philip Morris USA.<\/span><\/div>
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The complaint focused on three patents related to heated tobacco technology held by the company. The other two patents are involved in separate legal proceedings with the Patent and Trademark Office.<\/span><\/div>
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In May, an ITC administrative law judge found that the IQOS system infringed on two of the plaintiffs' patents and recommended a ban on the importation of the IQOS system.<\/span><\/div>
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On July 27, the ITC accepted the administrative law judge's findings and recommendations for review, including issues related to patent infringement claims and potential remedies, including a ban on the importation of IQOS electronic devices, Marlboro HeatSticks, and components into the U.S., as well as the sale of any such products previously imported into the U.S.<\/span><\/div>
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The ITC's final order is subject to review by the U.S. Trade Representative and federal courts. Due to this uncertainty, PM USA has delayed further expansion of IQOS and Marlboro HeatSticks.<\/span><\/div>
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IQOS is the only heated tobacco product authorized for sale in the U.S., marketed by Altria. Last year, the FDA allowed the company to sell IQOS to reduce consumer exposure to harmful chemicals found in cigarettes.<\/span><\/div>
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IQOS products were first introduced in test markets in Atlanta and Richmond, Virginia, in October and November 2019, respectively.<\/span><\/div>
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In the second quarter, PM USA expanded the retail distribution of Marlboro HeatSticks to the Triad and other metropolitan areas in North Carolina, as well as Northern Virginia and Georgia.<\/span><\/div>
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This expansion led to nearly a 40% increase in retail sales of Marlboro, with heated tobacco reaching 0.8% of the overall cigarette market share in Atlanta and 0.5% in Charlotte.<\/span><\/div>
