In September 2013, a UK newspaper announced that Imperial Tobacco was entering the e-cig market by purchasing Chinese company Dragonite. This acquisition raised a lot of eyebrows as Dragonite had very little retail value. However, there was some suspicion that the buy-out was more about patents than actual e-cigarette revenue. Dragonite, formerly known as Ruyan, was the original e-cig manufacturer and as such, the company held the official patent for electronic cigarette technology. As Imperial bought out Dragonite, they became the legal owners of the patent.
It turns out that the acquisition was a strategic maneuver to gain control over that patent rights. Now Imperial’s Dutch subsidiary, Fontem Ventures B.V., is suing multiple United States electronic cigarette brands for patent infringement.
On Wednesday, March 5, Imperial filed an official lawsuit in the federal court of Los Angeles against nine companies: NJOY, Spark Industries (Cig2O), Vapor Corp, Lorillard (Blu Cigs), FIN (Victory e-Cigs), 21st Century Smoke, Logic Technology, Ballantyne Brands (Mistic), and VMR (V2 Cigs and Vapor Couture).
The lawsuit accuses these companies of infringing on the intellectual property protected by a valid patent. Marc Michelson, director of communications and corporate ventures at Fontem Ventures in Amsterdam told the press that they planned to seek compensation from the US companies. “The reason for filing this lawsuit is to protect our intellectual property and seek fair compensation from the infringements of our patents,” he said.
The e-cigarette companies involved in the lawsuit have not yet issued any statements about the situation. There is certainly a lot hanging on the court’s decision with US e-cig sales projected to reach $5 billion by 2015, according to analysts at Bloomberg. America’s top three ecig sellers are involved in the lawsuit so it could make a significant difference in revenue for these companies if they are forced to pay up or change their designs to avoid further patent infringement.
We will continue to watch this lawsuit as it develops and keep you posted on the news as it becomes available.