HEALTHIER CHOICES MANAGEMENT CORP. V. PHILIP MORRIS USA, INC.
Before Taranto, Stoll, and Cunningham. Appeal from the United States District Court for the Northern District of Georgia.
Summary: A plaintiff can sufficiently disavow statements contained in attachments to a complaint by making specific, targeted contentions in the complaint to contradict such statements.
Healthier Choices Management Corp. (“HCM”) sued Philip Morris, alleging that Philip Morris’ IQOS system, an electronic nicotine delivery system, infringed its patent for an electronic nicotine delivery device and method of partial combustion. The IQOS system is marketed as a “heat-not-burn” system, whereby tobacco is heated at a low enough temperature to avoid combustion. HCM alleged that the IQOS system does in fact initiate combustion.
HCM attached Philip Morris’ Modified Risk Tobacco Product Application (MRTPA) as an exhibit to its complaint. Philip Morris moved to dismiss, arguing that the MRTPA contradicted HCM’s infringement claims by demonstrating that the accused IQOS system did not initiate a combustion reaction. The district court granted Philip Morris’ motion, and HCM moved for leave to file an amended complaint. The district court denied HCM’s motion, finding neither the original complaint nor the amended complaint plausibly alleged that the IQOS system initiated a combustion reaction, thus, HCM had no claim for infringement. The district court also granted Philip Morris’ motion for attorneys’ fees. HCM appealed.
The Federal Circuit reversed the district court’s decision, vacated the award of attorneys’ fees, and remanded the case. The Federal Circuit acknowledged that if a complaint contains conclusory allegations that are contradicted by concrete statements in an exhibit, the statements in the exhibit control. However, HCM’s original complaint disavowed the statements contained in the MRTPA by making specific contentions contradicting the MRTPA’s claims. The Federal Circuit held that “no magic words” were required to disavow exhibits, and HCM’s detailed allegations, including discussions of Philip Morris’ testing process and the presence of combustion markers, were sufficient to contradict contrary statements in the MRTPA. The Court also held that HCM’s amended complaint presented an even stronger case, as all citations to the MRTPA were removed, the MRTPA was removed as an exhibit, and the amended complaint was supported by a declaration from HCM’s technical expert. By including specific statements disavowing the MRTPA, the Federal Circuit concluded that HCM’s original and amended complaints were sufficient to state a claim for patent infringement.
The Federal Circuit also advised the district court to conduct a Markman hearing and obtain briefing on the definition of “combustion” on remand, noting that such steps could result in resolving the issue of infringement on summary judgment.
Editor: Paul Stewart
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