Lee International

British American Tobacco (BAT) filed a patent infringement suit against Philip Morris International Inc. (PMI) with the Seoul District Court on March 3, 2021. BAT requested suspending the production and the import of HEETS, which is a heated tobacco unit that is exclusively used for the holder of IQOS, PMI’s Heat-Not-Burn tobacco device, alleging that the tobacco heating technology used in HEETS infringed BAT’s patents.

With the growing interest in health worldwide, the number of traditional tobacco smokers has decreased. In this regard, global tobacco companies invested billions of dollars in product development as they regard Heat-Not-Burn tobacco products as their future source of revenue.

The Korean market is mostly shared by PMI’s IQOS, Korea Tobacco & Ginseng Corporation (KT&G)’s lil, and BAT’s Glo in 2017. PMI’s IQOS is the leading product in the Heat-Not-Burn tobacco market in Korea with about 60% market share. According to the market research, although the Korean tobacco market growth stagnated during the period of 2019 to 2020 at KRW 17 trillion, the Heat-Not-Burn tobacco sector has increased from KRW 1.87 trillion to KRW 2.02 trillion. The Korean market is globally garnering attention due to its rapid growth despite its relatively smaller size compared to the U.S. and European market.

The Heat-Not-Burn tobacco devices of PMI and BAT use a similar heating mechanism, and thus, a patent dispute between these two companies has long been expected since the launch of their products. In addition to the lawsuit that BAT filed in March 2021 in Korea, PMI filed an infringement suit against BAT’s Glo with the Japanese Court in 2018, claiming infringement of the IQOS technology. BAT filed patent lawsuits with the US International Trade Commission (USITC) and the German Court in May 2020.

The Heat-Not-Burn type products are relatively new in the tobacco industry. However, considering the escalating demand, the prevalence of patent lawsuits with regards to the Heat-Not-Burn tobacco technology is highly likely to increase depending on the result of the current lawsuit filed by BAT. Therefore, the tobacco companies should make efforts to secure a diverse patent portfolio.