The International Trade Commission has launched an investigation in the first of two Juul Labs Inc.’s suits seeking to exclude dozens of global competitors from marketing e-cigarettes in the United States.
Backed by Sterne, Kessler, Goldstein & Fox, Juul charges 21 companies with infringing its cartridge-based system for delivering nicotine vapor. Now, In the Matter of Certain Electronic Nicotine Delivery Systems and Components Thereof, the ITC has ordered investigation into whether five different patents were infringed.
According to Juul’s Oct. 26 amended complaint, James Monsees and Adam Bowen came up with a simpler and more convenient electronic nicotine delivery systems [ENDS] while graduate students in Stanford University’s Product Design program. Those inventions have helped propel Juul Labs and its pod-based system to some 70 percent of the fast-growing e-cigarette market.
Less than two years old, Juul has been valued as high as $15 billion. Critics say it’s contributed to rampant underage vaping, but the company insists its product is a healthful alternative for adults who want to quit cigarette smoking.
Juul alleges in its complaint that its success has attracted “copyists” whose liquid nicotine and pod-filling operations are based in China. They “hope to profit by stealing [Juul's] intellectual property,” specifically targeting the manufacturers and distributors behind the Bo One, Eonsmoke, Ziip, Xfire Flair Xtreme, Myle and Pulse devices.
However, three respondents have argued that it would not be in the public interest to exclude their products.
“Juul is the undisputed market leader in attracting youth to electronic cigarettes,” Adduci, Mastriani & Schaumberg partner Evan Langdon wrote to the commission last month on behalf of Myle Vape Inc. and Shenzhen Joecig Technology Co. Ltd. He notes that though Juul might have cleaned up its social media campaign under pressure from the Food and Drug Administration, it’s still targeting teenage audiences in radio ads.
“Myle, on the other hand, has not marketed to underage users” and uses online age verification techniques to exclude them, he adds.
Proposed respondent Eonsmoke, which is represented by Husch Blackwell, adds that the ITC should simply defer to the Food and Drug Administration, which is cracking down on e-cigarette makers and has promised to seize unlawfully marketed products.
Sterne Kessler partner Daniel Yonan replied in a filing that Juul “does not market to minors and uses strict age-gating on its e-commerce website. Yet many in the industry—including the respondents—sell ENDS products with child-friendly flavors and without meaningful age restrictions on their sales.”
In addition to the infringement issues, the ITC instructed Administrative Law Judge David Shaw to take evidence and hear arguments on the public interest and provide the commission with findings of fact and a recommended determination on the issue.
Sterne Kessler’s team also also includes partners Michael Joffre, Paul Ainsworth, Uma Everett, Nirav Desai and Jonathan Tuminaro. The firm filed an additional complaint against many of the same respondents, and others, over a newer set of patents in November. The ITC hasn’t announced yet whether it will launch an investigation into those allegations.