High-Stakes Tobacco-Patent Lawsuit Heads To Jury Next Week
June 12 2009 - 11:32AM
Dow Jones News
The fortunes of aspiring tobacco company Star Scientific Inc.
(STSI) could hinge on a high-stakes patent-infringement case that
goes to a federal jury in Baltimore next week.
Star, a small tobacco company with a big patent claim, says it
has invented a method of curing tobacco that prevents the formation
of certain cancer-causing toxins.
The Virginia-based company sued R.J. Reynolds Tobacco Co., a
unit of Reynolds American Inc. (RAI), alleging that the nation's
second-biggest tobacco company encouraged its tobacco farmers to
practice Star's patented curing method.
Star is seeking several hundred million dollars in damages and
hopes a court win could lead to lucrative licensing agreements with
other tobacco companies.
RJR says it didn't infringe the Star patents, and it believes
the patents are invalid. In separate proceedings, RJR has asked the
U.S. Patent and Trademark Office to re-examine the validity of the
patents. That process could take two or more years to resolve.
After several years of pre-trial legal wrangling, a
patent-infringement trial began May 18. Closing arguments are
likely to wrap up Monday, and then the case will be submitted to
the jury for deliberations.
If the jury decides that RJR infringed Star's patents, the case
will proceed to a second trial phase to determine how much RJR owes
in damages.
Star's stock price spiked during the trial, hitting a four-year
high of $5.89 as some observers interpreted comments made by the
judge during the proceedings as favorable to Star's case. Star's
shares recently traded at $4.34, down 32 cents, or 6.7%, while
Reynolds' shares were at $37.56, up 21 cents, or 0.6%.
While the jury verdict will be an important marker in the
long-running case, it will be far from the last word in the
dispute. Whichever company loses at trial is almost certain to
appeal.
-By Brent Kendall, Dow Jones Newswires; 202-862-9222;
brent.kendall@dowjones.com