Electronic Cigarette Lawsuit
When Imperial Tobacco Group paid $75 million last September for the electronic cigarette unit of Dragonite International this raised a number of eyebrows. There was confusion and amazement that the company paid so much money with many people struggling to see the value. However, six months later, Imperial Tobacco Group is now taking an array of the US electronic cigarette manufacturers to court alleging infringement of intellectual property rights.
While Lorillard Inc, NJOY and Vapor Corp are just three out of a total of 11 electronic cigarette companies taken to court by Imperial Tobacco Group, this looks like a court case which could drag on for some time. What ramifications could this have for the US electronic cigarette industry in the short to medium term?
Confusion and concern
When you bear in mind that the US electronic cigarette market is forecast to be worth around $5 billion by 2015, we have some serious money at stake. The fact that Imperial Tobacco Group, through its subsidiary Fontem Ventures BV, has introduced this court action to the mix, with the defendants yet to respond, should not be dismissed. Imperial Tobacco Group is asking for as yet unspecified damages in relation to alleged US patent infringements although this looks to be the starting shot of a long running battle.
There will be sceptics out there who might suggest that one of the largest tobacco cigarette companies in the world is causing mischief in the electronic cigarette industry which could impact short to medium-term growth. Whether this is the case or not remains to be seen, but dragging some of the largest US electronic cigarette makers to court is not helping the electronic cigarette industry.
Is this the tobacco cigarette industry replayed?
If you look back at the history of the tobacco cigarette industry you will see a multitude of long-running expensive court cases. We have seen governments dragged through the courts, we have seen tobacco cigarette companies fighting legal challenges and now we have the same again in the electronic cigarette industry. In many ways there is only one winner in this particular scenario, the lawyers!
When you also take into account the fact that many electronic cigarette companies are ready, willing and able to take the FDA to court in the event of overbearing regulations in the future, the industry could become something of a legal minefield. We also have an array of electronic cigarette and vaping supporters around the world putting together their own fighting fund to take on the might of the European Union. There are certainly similarities between the historic battles associated with the tobacco cigarette industry and the relatively new electronic cigarette sector.
When Imperial Tobacco Group acquired the electronic cigarette division of Dragonite International last September this did raise some eyebrows. The $75 million price tag was seen as relatively high although it is only just over the last few days that perhaps the long-term plans of Imperial Tobacco Group have been revealed. So far the defendants named by the tobacco giant have yet to respond to the allegations and we await further developments in due course.
Mark Benson is a contributing author for Spinfuel eMagazine. His continuing columns will bring a level headed approach to the dynamics involved in realizing a positive future for the e-cigarette industry. For more information on electronic cigarettes and the various products available please visit the OKCigs website