Tobacco David Wins a Ruling Against a Goliath: Petersburg Company Wins Over Reynolds in Part of Pate

Source from:  istockanalyst.com By: iStockAnalyst Tuesday, August 26, 2008 08/28/2008

A Petersburg-based company has won an appeal in a lengthy legal battle with R.J. Reynolds Tobacco Co. over patents covering a process to reduce some cancer-causing toxins in tobacco. The ruling yesterday by a three-judge panel of the U.S. Appeals Court for the Federal Circuit in Washington means the lawsuit brought by Star Scientific Inc. against the nation's second-largest cigarette maker is likely to go to trial, a Reynolds spokesman said. Star, which sells smokeless tobacco products, sought millions of dollars in damages in the lawsuit, filed in 2001. It claimed that Winston-Salem, N.C.-based Reynolds had infringed Star's patents for a method designed to reduce carcinogens called tobacco-specific nitrosamines, which form during the curing of tobacco leaves. The appeals court yesterday overturned a lower-court ruling in 2007 that declared the patents invalid. The appeals court sent the case back to U.S. District Court in Maryland. R.J. Reynolds spokesman Jacob McConnico said yesterday that the company was reviewing the decision and considering its options, though he said the ruling "simply means the matter will now likely go to trial." "Really, the bottom line is that R.J. Reynolds continues to believe that we didn't infringe the patents," McConnico said. "The patents in question are invalid, and if and when the matter goes to trial, we are confident we will prevail." R.J. Reynolds, a subsidiary of Reynolds American Inc., makes cigarette brands such as Camel and Salem. Reynolds-American had about $9 billion of revenue in 2007. Its stock was down 1.5 percent, or 81 cents, to $54.10 on the New York Stock Exchange yesterday. "Our company really believes that we ultimately will be successful" in the lawsuit, said Sara Machir, Star's vice president of communications and investor relations. The company's stock rose 65 percent, or $1.09, to $2.76 on the Nasdaq stock exchange yesterday. Star employs 39 people at a production plant in Chase City and offices in Petersburg and Bethesda, Md. It had $482,000 of revenue in 2007. Enditem