Imperial Tobacco Goes after E-Cigarette Competitors

Source from:  bdaily‎ 03/28/2014

Imperial Tobacco, Europe's second-largest tobacco company, has decided to take on three of the most powerful e-cigarette heavyweights in America by way of a lawsuit alleging patent infringement. A lawsuit has been filed against manufacturers Blu, NJoy, and Logic. The three combined hold approximately 80% of the American market share.

According to sources, the lawsuit is the direct result of Imperial Tobacco purchasing a Chinese company, known as Dragonite, last year. Dragonite is the company founded and formerly owned by Chinese pharmacist Hon Lik, the inventor of the modern electronic cigarette. Despite the industry now being worth upwards of USD $1.5 billion around the world, Lik made very little money from his invention prior to selling Dragonite.

Now that Dragonite has the power of Imperial Tobacco behind it, Lik stands to make a nice profit from his e-cigarette. Imperial also stands to position itself as a worldwide leader if it can manage to win its case against its American competitors. Moreover, should they win that case then you could expect them to turn their attentions toward Europe.

Alleged Infringements Undisclosed

As of this time, specific patent infringements have not been disclosed by Imperial or other companies considering similar action. Nevertheless, it's hard to see how any lawsuits of this nature could succeed, given the fact that so many companies claim secure patents. As a matter of example, Hon Lik's device is not the first patented electronic cigarette ever created. That honour goes to an American inventor who patented a device in the 1960s.

As a piece of technology, the modern electronic cigarette consists of three components: nicotine liquid cartridge, a lithium-ion battery, and an electronic atomiser. It is technology that has been around for decades. It seems that any alleged infringements would have to do with body or cartridge design, airflow design or charging technology rather than the atomiser or the battery. However, that remains to be seen.

If Imperial Tobacco were successful, they would stand to reap a huge financial windfall. A judgment in their favour would also likely force guilty manufacturers to change their designs in order to end the infringement. That could put Imperial in a superior position moving forward.

Electronic Cigarette Distributors

It should be noted that Imperial's lawsuit only applies to companies manufacturing their own electronic cigarette devices. It does not apply directly to distributors who may purchase from any of those channels, and it does not apply at all to those distributors who use Dragonite as their main supplier of white label products. Nonetheless, a shakeup among those other manufacturers could put their distributors at risk.

Any distributors finding themselves in a bad financial position could always switch to Dragonite as their main supplier. Alternatively, they can ride it out with their current manufacturer and see how things go. Unfortunately, until the lawsuit is settled there is really no way to know what will happen. What we can say is that the eventual outcome of the suit will have a definite impact on the future of the industry.

Still a Safe Investment

Despite the current environment, it appears as though electronic cigarettes are still a safe investment for the time being. However, the lawsuit, or future regulation, could change things rather quickly. Of course, there is always the question of whether electronic cigarettes are safe to use over long term or not. As clinical evidence comes in one way or the other, that will affect the market as well.

Investors in the UK have a number of companies to choose from for investment purposes. For example, US-based Victory recently acquired the UK's VAPESTICK for nearly US $70 million in cash and stock shares. The combined company now offers a great investment opportunity for those who want to get into the e-cig industry. Vapestick is one of the leading brands in the UK and poised to only get stronger in the months and years ahead.

There is no doubt that the e-cigarette industry is a financial powerhouse with a very bright future. Even in the midst of lawsuit threats and pending regulation, it is now pretty much agreed that e-cigarettes are here to stay. It is just a matter of sorting out who will survive among all of the current players on the market. Enditem