British American Tobacco burnt by Patents Court judgment on heat-not-burn devices

Factual background

HNB tobacco products are an innovation in tobacco products which enable production of a nicotine-containing vapour at lower temperatures than traditional cigarettes. Whilst traditional cigarettes burn tobacco and produce smoke, products which employ an HNB system need only be heated in a specially designed chamber and produce a nicotine-containing vapour. By merely heating the tobacco, manufacturers claim that the user may experience less exposure to harmful toxins inherent in smoke inhalation with traditional cigarettes.

The concept of HNB has been around for several decades. However, it is not until recently that companies such as Philip Morris and British American Tobacco have been able to produce devices which are successfully marketable to consumers. The device at the centre of this dispute, Philip Morris’ IQOS device, is the only HNB product on the market in the UK.

The legal arguments 

Philip Morris sought revocation of two HNB patents held by two companies in the British American Tobacco (“BAT”) group: Rai Strategic Holdings and Nicoventures Trading Limited (as exclusive licensee of the patents). Philip Morris argued that the patents were invalid on two grounds: first, that the patents contained added matter and second that the patents lacked any inventive step. BAT sought to establish both the validity of their patents and that Philip Morris’ IQOS device infringed those patents.

Added Matter

A patent may be revoked if it is found that the specification of the patent extends beyond the matters disclosed in the application for the patent. Here, both patents derived from the same PCT patent application (PCT Application WO 2008/108889); the claims had been filed after the IQOS product had been launched.

Several elements of the granted patent were pointed to by Philip Morris as constituting added matter. Primarily, these were that:

• The patent as granted combined two elements which had been disclosed only individually in the patent application: an elongated heating element and a specific type of tobacco sheet called ‘gathered sheet’. 
  
  
• The patent had added matter by way of intermediate generalisation. Intermediate generalisation is when a feature which has been disclosed as part of a larger embodiment in the patent application and is not said to have any inventive significance is extracted and inserted into a different embodiment in the claim. Here, Philip Morris argued that the elongated heating element had been extracted from a figure in the application without the other features within the original embodiment (including a puff-actuated controller and an upstream air heater).

Inventive Step

In order to constitute a valid patent, an invention must involve an inventive step, i.e. it is not obvious to the skilled person. 

Philip Morris argued that BAT’s patents were similar to a 1993 patent held by Philip Morris referred to as ‘Morgan’. The Morgan patent outlined a device into which a cigarette could be inserted and heated by an electric power source (embodied in three different designs). The first and second of those designs resembled in some ways a product released by Philip Morris called the Accord. Philip Morris argued that BAT’s patent was an obvious development of a third design in the Morgan patent.

BAT presented two arguments in its defence. First, that the Accord device had been such a commercial failure that a person skilled in the art would discard the Morgan patent entirely. Therefore, a skilled team would not choose to develop the Morgan patent at all and BAT’s designs, even if similar to Morgan, were therefore not obvious. Second, the Accord device was similar to the first two of the three designs in the Morgan patent whilst BAT’s patents were most like the third design. Even if it was obvious to develop the first or second design following…