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Philip Morris, Altria banned from selling Iqos tobacco device in the U.S.

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Philip Morris International shows an iQOS electronic cigarette, which heats tobacco sticks but does not burn them.

Fabrice Cofrini | AFP | Getty Images

The U.S. International Trade Commission ruled Wednesday that Philip Morris International and Altria must stop the sale and import of the Iqos tobacco device.

It is the result of an R.J. Reynolds patent lawsuit. Two patents of Reynolds were found to have been infringed upon by the trade agency.

The import and sales ban will take effect in two months after an administrative review that requires President Joe Biden’s signature. Philip Morris stated that it will appeal the decision of the trade agency. An Altria spokesperson claimed that both companies were working on contingency planning.

Altria spokesperson told CNBC that “We believe RJR’s patents to be invalid” and said that IQOS did not violate those patents.

Altria introduced the Iqos product in America two years ago. However, the device was developed more than a decade before Philip Morris International was spun out of the company. It heats tobacco instead of burning it. This device is intended to provide the same high-quality nicotine rush as smoking cigarettes but without the toxins.

Philip Morris has the license for Altria to market the product in the U.S. Iqos isn’t a significant part of Altria U.S. operations yet. However, the device forms part of Altria’s transition away from traditional tobacco products which are in declining demand.

In a statement, Kaelan Hollon, a Reynolds American spokesperson said that infringement of intellectual property can hinder our ability to innovate and invest in the business. This will have a negative impact on our health. We will defend IP vigorously around the world.

British American TobaccoReynolds American has taken similar legal actions against Philip Morris in some international markets. The United Kingdom and Greece courts sided in favor of Philip Morris in these cases. Lisa Lewandowski from Bank of America Securities wrote that Philip Morris or Altria won’t settle with British American Tobacco because of Philip Morris’ previous successes against these claims.

The shares of these three tobacco companies fell 1% in premarket trade on Thursday.

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