GLEN ALLEN, Va. -- An appeals court on Friday denied tobacco-products company Star Scientific Inc.'s patent infringement claims against Reynolds American Inc. and its motion for a new trial in a case involving lawsuits filed in 2001 and 2002, affirming a lower court ruling.
Shares of Star Scientific closed down 40% to $1.81, while Reynolds American ended the day up 0.9% to $36.57, according to a report in the Wall Street Journal.
The ruling by the U.S. Court of Appeals is a blow to Star Scientific, which had sought to reverse a jury verdict that ruled in favor of R.J. Reynolds Tobacco Co., a unit of Reynolds American.
In late 2009, a judge affirmed a federal jury's earlier ruling that R.J. Reynolds didn't infringe on Star Scientific's patent for a method of curing tobacco that reduces some toxins. In June of that year, a jury in Baltimore rejected Star Scientific's allegations that R.J. Reynolds encouraged its farmers to practice the company's curing invention without permission. The jurors also ruled that R.J. Reynolds didn't infringe on Star Scientific's patents and that the patent was invalid.
However, the appeals court on Friday reversed the lower court's denial of Star's motion involving the validity of the patents.
"We are gratified that the Federal Circuit Court of Appeals has affirmed the validity of the patents at issue in our prosecution of patent infringement against R.J. Reynolds,” Star Scientific said in a statement. “The court specifically rejected each of the four invalidity defenses raised by RJR, and the panel also reversed the district court's 2007 summary judgment ruling on priority date: the panel affirmed that the patents' claims deserve the September, 1998 priority date as originally claimed. We nonetheless are disappointed that the Federal Circuit did not reverse the jury trial verdict of noninfringement.”
The company added: "However, today's decision fully reestablishes and reinforces the company's rights to assert its patents against all prior and future infringers. In particular, we anticipate that our litigation against RJR for curing seasons after the two years addressed in this case now can move forward. That litigation had been stayed pending the outcome of the appeal."
Paul L. Perito, the company's chairman and president, stated, "Now that both the Federal Circuit Court of Appeals and the Patent and Trademark Office have affirmed the validity our patents' claims and 1998 priority date, we intend to vigorously protect our intellectual property, which we consider to be among our corporate crown jewels. At the same time, we currently are assessing options for further appellate review."
For RJR, Winston-Salem, N.C., the ruling was a continued victory. “We’re very pleased with the ruling,” August Borschke, chief patent counsel for R.J. Reynolds Tobacco Co., told CSP Daily News. “As we’ve stated before, R.J. Reynolds did not infringe Star’s patents and both the jury at the trial court level and now the appellate court have unanimously agreed.”
Glen Allen, Va.-based Star Scientific is a technology-oriented company with a mission to reduce the harm associated with tobacco at every level.
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