Last fall, Imperial Tobacco announced their new plans to launch a presence in the electronic cigarette market. Rather than developing their own unique line of vaping gear, Imperial chose to acquire Dragonite, formerly known as Ruyan from China. The move was surprising as Dragonite had such a minor presence in the retail market and certainly didn’t seem to be worth the $75 million that Imperial paid for the acquisition. Some suggested that the buyout was a strategic move to take control of Dragonite’s original electronic cigarette patent.
As the original electronic cigarette manufacturer, Dragonite held a unique patent claim to the overall technology that powers e-cigs. Now that Imperial is holding the patent, a flurry of lawsuits is about to begin. On Wednesday, March 5, Imperial’s Dutch subsidiary named Fontem Ventures B.V. filed lawsuits in the Los Angeles federal courts against nine major e-cig companies in the United States.
The lawsuits allege that big e-cig players are infringing on patent rights with their products. So far, the lawsuits have been filed against NJOY, Spark Industries (Cig2O), Vapor Corp, Lorillard (Blu Cigs), FIN (Victory e-Cigs), 21st Century Smoke, Logic Technology, Ballantyne Brands (Mistic), and VMR (V2 Cigs and Vapor Couture).
Imperial’s Marc Michelson, director of communications and corporate ventures at Fontem Ventures said that the company will seek monetary compensation from the US companies. “The reason for filing this lawsuit is to protect our intellectual property and seek fair compensation from the infringements of our patents,” he said.
So far, none of the electronic cigarette companies involved have spoken to the press about the lawsuits. It is certainly a big deal and could have major fallout, particularly with those brands that account for the majority of America’s ecig revenue. Bloomberg analysts recently predicted that ecig sales could top $5 billion by next year. With that much revenue attached to these companies, this lawsuit could have extreme fiscal fallout.
We will keep you posted as the situation develops and report back on any changes or updates.