Reynolds Section 337 case roundup: ITC may launch investigation after November 13

Two Supremes has compiled information from multiple sources regarding the companies involved in Reynolds’ Section 337 case, the progress of the case, lawyers’ views, and company responses.

Breaking news on October 13: Reynolds Tobacco filed a petition with the U.S. International Trade Commission (ITC) requesting an investigation (a Section 337 investigation), accusing 26 Chinese and U.S. e-cigarette manufacturers and distributors of unfair import practices. 

Reynolds asked the ITC to investigate and issue exclusion orders to block further imports of disposable e-cigarette products into the United States. If the ITC agrees to Reynolds’ request, all flavored disposable vaping devices without marketing authorization could be stopped at the border from entering the U.S. market. 

In its complaint, Reynolds stated that if illegal products are removed, it has the capacity to fill any gap in the market. 

Based on the above information, Two Supremes has organized details on the companies involved, case progress, legal opinions, and corporate responses. 

Launch timeline: expected to begin after November 13 

As of now, the ITC has not yet made a decision on Reynolds’ complaint. However, U.S. attorney Grace said that Section 337 investigations move very quickly. Generally, the ITC decides within 30 days after a complaint is filed whether to initiate an investigation, and in the vast majority of cases it does. 

According to Grace, if the ITC decides to open the investigation, it is expected to begin after November 13. 

Companies involved: 13 Chinese companies including Sikary, Dawson, and I Miracle 

Among the 26 companies involved in this case, 13 are Chinese companies and 13 are U.S. companies. The Chinese companies are mainly manufacturers and brand owners, while the U.S. companies are primarily distributors. 

The Chinese companies include: Shenzhen Sikary Technology Co., Ltd., Guangdong Qisi Intelligent Manufacturing Co., Ltd., Shenzhen Dawson Vapor Technology Co., Ltd., Shenzhen Fumot Technology Co., Ltd., Shenzhen Fangying Electronic Technology Co., Ltd., Shenzhen Hehan Technology Co., Ltd., Shenzhen Smoore Technology Co., Ltd., Shenzhen Iwipis Technology Co., Ltd., Shenzhen Nuoriyang Technology Co., Ltd., Shenzhen Pinrui Technology Co., Ltd., Shenzhen Weiboli Technology Co., Ltd., Shenzhen I Miracle Technology Co., Ltd., and Vapeonly Technology Co. Ltd. 

Reason for complaint: three major types of unfair competition 

In this case, Reynolds Tobacco alleges that all or some of the defendants engaged in three categories of unfair competition:
 
First, false and misleading advertising, such as falsely claiming products were “authorized” by the U.S. FDA when they were not, claiming products were unflavored (“Clear”) when they were in fact flavored, and using misleading or false country-of-origin designations;
 
Second, some defendants allegedly violated U.S. laws and regulations related to electronic nicotine delivery systems (“ENDS”);
 
Third, some defendants allegedly used incorrect customs classification codes. 

FDA position: hopes the ITC will reject Reynolds Tobacco’s petition 

On November 1, Two Supremes learned that the FDA sent a letter to the ITC urging the Commission not to initiate an investigation into certain allegations in the Reynolds complaint, while emphasizing that Reynolds Tobacco has no standing to ask the ITC to investigate 26 e-cigarette companies. 

Attorney Tang believes that due to FDA intervention, the ITC may ultimately be excluded from jurisdiction, which could create some obstacles for Reynolds’ Section 337 case, though Reynolds may still appeal to the courts. 

Company responses: some companies are already preparing to respond 

On October 24, Smoore responded to an inquiry from Two Supremes regarding the matter. Smoore said it had been listed as an investigation target as the manufacturer for the U.S. e-cigarette brand ESCOBAR. However, in fact, Smoore’s cooperation with ESCOBAR had already ended long ago, and the two parties no longer have any relationship. Reynolds included Smoore on the investigation list without conducting proper inquiry or verifying the facts with the company, which Smoore said lacks factual basis. Although the Section 337 process is underway and the ITC has not yet formally instituted the case, Smoore has already prepared its defense. 

In addition, Two Supremes previously sent inquiries to Dawson and I Miracle regarding the matter, but as of publication had not received their replies. #p#Page Title#e#

Lawyer’s view: Chinese companies are not advised to respond individually 

Chinese e-cigarette legal expert attorney Tang Shunliang believes that this case does not accuse defendants of infringing a specific patent, but rather alleges broad unfair competition, and the outcome could affect the entire industry, so relevant government departments will likely pay close attention. Judging from Reynolds Tobacco’s filing, the company made extensive preparations, and the legal workload is substantial. For the accused companies, preparing evidence and precedents is more wide-ranging than in a patent infringement response. It is more troublesome than responding to a patent-based Section 337 investigation, and both the prosecution and defense involve greater subjectivity and controversy.

Attorney Tang also said that he does not recommend Chinese companies fight the case alone. If they do, differences in the professional ability of separately retained lawyers could lead to inconsistent or even conflicting defense arguments, exposing companies to the risk of being defeated one by one or forced into high-value settlements, while also increasing coordination and communication costs.