Star Scientific Patents in Reynolds Case Ruled Valid by U.S.

Star Scientific Inc. (CIGX), the tobacco company appealing the loss of an intellectual-property lawsuit brought against Reynolds American Inc. (RAI), said a U.S. government reexamination has affirmed two patents central to the case.

Star’s so-called ’649 and ’401 patents for reducing carcinogens in cigarettes are valid, according to documents from the U.S. Patent and Trademark Office. The determination conflicts with a 2009 verdict by a federal jury in Baltimore, which rejected Star’s efforts to seek hundreds of millions of dollars from Reynolds for infringing the patents.

The U.S. Court of Appeals for the Federal Circuit in Washington, which heard arguments on the appeal in January, has not ruled on Star’s challenge to that verdict. The patent office reexamination, which had been requested by Winston-Salem, North Carolina-based Reynolds, rejects the prior-art challenges of the “StarCured” curing process and can’t be appealed, Glen Allen, Virginia-based Star said in a statement.

“We have believed from the beginning in what the StarCured process achieves, and in its potential to significantly reduce tobacco users’ exposure to tobacco toxins,” Jonnie Williams, Star’s chief executive officer, said in a statement.

Star, which plunged 73 percent the day after the 2009 ruling, rose 58 cents today, or 24 percent, to $2.95 at 5:20 p.m. New York time in Nasdaq Stock Market trading.

The patents cover a curing process that prevents “bacterial activity” in the tobacco leaf, according to Star. The technology results in the lowest levels of tobacco-specific nitrosamines, the company said.

Reynolds, maker of Camel and Pall Mall cigarettes, is the second-largest U.S. tobacco company, trailing Altria Group Inc. (MO) in sales.

The case is Star Scientific v. RJ Reynolds, 2010-1183, U.S. Court of Appeals for the Federal Circuit (Washington).

To contact the reporter on this story: William McQuillen in Washington at bmcquillen@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net.

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