Star Scientific, Reynolds Settle Patent Dispute

Agreement “is not an acknowledgment of liability of any party”
CSP Daily News | 

GLEN ALLEN, Va. & WINSTON-SALEM, N.C. — Star Scientific Inc. and R.J. Reynolds Tobacco Co. have settled their patent-infringement dispute over a way to reduce carcinogens in cigarettes, according to a Bloomberg report.

Financial terms were not disclosed in documents filed today in federal court in Greenbelt, Md., seeking dismissal of lawsuits. The companies said the agreement “is not an acknowledgment of liability of any party.”

A federal appeals court last year left two Star patents intact while upholding a jury verdict that R.J. Reynolds, a unit of Reynolds American Inc., did not infringe them during the 2001 and 2002 tobacco-growing seasons. A separate Star lawsuit accused Reynolds of infringing the patents during later growing seasons.

Reynolds said in the filings that it reserves the right to rely on the non-infringement finding in any future legal actions.

Reynolds was asking the U.S. Supreme Court to invalidate the two Star patents. The justices had been scheduled to consider that bid at their private conference today. Instead, the two companies on September 21 submitted a joint request that the appeal be dismissed, and the request was granted.

Reynolds had argued in its appeal that the Star patents are not specific enough. The patents cover a curing process that prevents “bacterial activity” in tobacco leaves, resulting in the lowest levels of cancer-causing nitrosamines, according to Star.

Star said Reynolds used the technology without permission because the larger company was unable to achieve similar nitrosamines reductions on its own. Reynolds denied the claim.

Winston-Salem, N.C.-based R.J. Reynolds makes Camel, Winston and Salem brand cigarettes.

Glen Allen, Va.-based Star Scientific is a technology company promoting maintenance of a healthy metabolism, as well as to reduce the harm associated with the use of tobacco. Through its wholly owned subsidiary, Rock Creek Pharmaceuticals, Star Scientific has been engaged in the manufacturing, sale and marketing of nutraceutical dietary supplements and the development of other nutraceuticals and pharmaceuticals. The company also has continued to pursue the development, implementation and licensing of the technology behind its proprietary StarCured tobacco curing process, which substantially prevents the formation of carcinogenic toxins present in tobacco and tobacco smoke, primarily the tobacco-specific nitrosamines (TSNAs) and related low-TSNA dissolvable tobacco products.

The case is Star Scientific Inc. v. R.J. Reynolds Tobacco Co., U.S. District Court for the District of Maryland (Greenbelt). The Supreme Court case is R.J. Reynolds v. Star Scientific.

Source: CSP Daily News
Supplier Focus: R.J. Reynolds Tobacco CompanyStar Scientific
Related Terms: TobaccoCigarettes

4 comments ↓

#1 Candy Girl on 09.30.12 at 7:05 PM

Interesting agreement. Star keeps its patents and RJR gets to say that they do not infringe and all other details are confidential. From the outside- it appears to be a small victory for Star and a bit of surrender for RJR- who spent a lot of corporate resources- specifically time and money- to invalidate the Star patents. Clearly, neither company was willing to let the SCOTUS rule on this matter.

#2 sdf@df.com on 10.01.12 at 7:02 AM

Real question is what does Star promise its starry eyed investors now that the “big pay day” is not?

#3 Copenhagen Charley on 10.05.12 at 2:23 PM

Neither of their products are doing very well.

#4 Lou Maiellano on 10.26.12 at 1:12 PM

http://www.businessweek.com/ap/2012-10-23/star-scientific-falls-as-settlement-disclosed

NEW YORK (AP) — Shares of Star Scientific fell 6 percent on Tuesday as investors likely viewed a $5 million payout in a patent dispute settlement as smaller than anticipated.

THE SPARK: Reynolds American Inc., the country’s second-largest tobacco company, disclosed in a filing with the Securities and Exchange Commission that it paid Star Scientific $5 million as part of a confidential settlement agreement. Star Scientific had filed two patent infringement actions against Reynolds American in 2001 and 2002 that were later consolidated. The company claimed that Reynolds infringed on certain claims of its tobacco-related patents during the 2001 and 2002 growing seasons. Star Scientific filed a follow-on lawsuit in 2009.

Reynolds American agreed to the settlement in September and the lawsuits were dismissed with prejudice.

THE BACKGROUND: In August Star Scientific Inc. changed its Nasdaq ticker symbol from CIGX to STSI. The Glen Allen, Va. company used to focus primarily on research of a tobacco curing process that would prevent the formation of carcinogenic toxins in tobacco smoke. It also worked on the development of “smokeless” tobacco products. Star Scientific has shifted its focus more toward the dietary supplements it sells through its subsidiary Rock Creek Pharmaceuticals, including its Antabloc product for anti-inflammatory support.

SHARE ACTION: Star Scientific’s stock declined 20 cents to $3.12 in afternoon trading. The shares have traded in a 52-week range of $2.10 to $5.05.

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