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

We review the High Court’s decision in Philip Morris Products, SA & Philip Morris Limited v Rai Strategic Holdings, Inc & Nicoventures Trading Limited [2021] EWHC 537 (Pat). The court conducted an assessment of the validity of two patents held by British American Tobacco for heat-not-burn (“HNB”) tobacco products. The court held that the patents were invalid both for lack of inventive step and for added matter. 

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 production of the Accord device it was not obvious to develop the third design.

Decision of the High Court 

Mr Justice Meade, giving judgment for the court, held that both patents were invalid for added matter and for lack of inventive step.

Regarding added matter, the court found as follows:

  • It is only upon reviewing the patent as granted that the skilled reader would appreciate that there was any interaction between the elongated heater and the specified type of tobacco sheet. The patent application set out a long list of types of tobacco which could work in the device and stated that ‘cut-filler’ (which is distinct from ‘gathered sheet’) was preferable. Further, BAT’s own expert concluded that the ‘gathered sheet’ tobacco specified in the patent functioned synergistically with the elongated heating element. The combination of these two elements was important and was therefore added matter.
  • Intermediate generalisation may be resisted where the element which is extracted is explained in the patent application to be separate and distinct and not dependent on the other features present in the original embodiment. Whilst some features of the original embodiment had been labelled as optional, there was insufficient clarity to determine that extracting the elongated heating element did not amount to intermediate generalisation. Therefore, this constituted added matter.

Regarding the inventive step, the court identified that the difference between Morgan and BAT’s patents was the special type of tobacco specified in the latter – ‘gathered sheet’ tobacco. However, the court outlined five reasons why using this type of tobacco was obvious and therefore not an inventive step. Primarily, the skilled team would not want to use the type of extruded foam tobacco proposed in the Morgan patent. The main alternative to the foam tobacco proposed for use in the Morgan patent was reconstituted tobacco in sheet form, such as ‘gathered sheet’. This, combined with other features of ‘gathered sheet’ tobacco, would lead a skilled team to incorporate ‘gathered sheet’ tobacco into a new design of HNB device. In finding for Philip Morris, the court cited Pozzoli SPA v BDMO SA [2007] EWCA Civ 558 in which it was held that re-working a previous patent which was thought to be impractical did not constitute an inventive step.

The court considered BAT’s argument that the Accord device had been such a commercial failure that a skilled team would not use it as a basis on which to develop new HNB devices. However, the court again found against BAT:  even though commercially unsuccessful, a skilled team would still be interested in understanding the ideas in Morgan. Further, it did not follow that because the Accord device drew from the first design in Morgan that a skilled team would not be interested in the third design. Given the Accord device’s commercial failure it was not imaginative to examine alternative designs. 

The court found that, had the patents been valid, they would have been infringed by Philip Morris’ IQOS device.

Why is this decision important?

This is obviously an important decision for the parties – there are parallel proceedings between them in numerous jurisdictions and at the European Patent Office and this trial was expedited in part because of those proceedings as well as the commercial situation. 

A point of wider interest is in the slightly unusual defence to the obviousness attack, being reliant on the commercial failure of a product similar to an embodiment in a prior art patent.  The argument that it would therefore not be obvious to progress the embodiment which most closely resembled the implementation potentially had some substance, although it was ultimately unsuccessful.