Cigarette Paper Patent Fight To Be Decided by U.S. Agency

Schweitzer-Mauduit International Inc. (SWM)’s efforts to block a German competitor from selling self- extinguishing cigarette papers in the U.S. were revived by a trade agency that can block imports of the rival products.

The U.S. International Trade Commission in Washington said yesterday it will review Judge James Gildea’s findings from February that Julius Glatz GmbH of Neidenfels, Germany, and its LIPtec unit didn’t violate Schweitzer-Mauduit’s patent rights. Notice of the commission’s decision was posted on the agency’s website.

The dispute is over so-called low-ignition proclivity papers, which have thick bands that act as buffers so a cigarette goes out if a smoker isn’t drawing air through it. All 50 U.S. states and the District of Columbia have passed laws requiring so-called fire-safe cigarettes.

While cooking is the leading cause of U.S. home fires, smoking is the top reason people die in home conflagrations, with an estimated 700 to 900 deaths each year, according to the National Fire Protection Association.

The fire association projected that, once the laws are fully implemented in every state, the number of smoking-related fire deaths will drop by as much as 77 percent.

Schweitzer-Mauduit, based in Alpharetta, Georgia, said in its complaint that it has about 23 percent of the global cigarette-paper market and supplies about 80 percent of the U.S. market for low-ignition proclivity papers. Schweitzer-Mauduit makes papers under the name Alginex, and has said in regulatory filings that it has additional patents protecting its flagship brand from competitors.

Fire-Safe Cigarettes

Glatz and its LIPtec make and import their own papers, which are sold through Charlotte, North Carolina-based KneX Worldwide LLC, according to documents in the case.

The company’s business is primarily in Europe, though it is expanding in the U.S. Its papers are used in the Signal and Skydancer brands, discount cigarettes produced by American Indian tribes and sold online.

Gildea said a patent issued in 1999 covering papers that have bands of a “film-forming composition” that’s fire-safe without changing the tobacco’s flavor wasn’t infringed. He said a second patent, issued in 2004 for a process to make the papers so the bands didn’t shrink more than the uncoated parts, was invalid even though Glatz was using the invention.

The six-member commission said it will consider whether the judge erred in his interpretation of key terms in the patents, as well validity issues of the 2004 patent. The agency is scheduled to announce its final decision on June 5, according to information on the agency’s website.

In October, Schweitzer-Mauduit said it had settled its dispute with one competitor, Germany-based Delfortgroup AG, and its distributor, Astra Tobacco Corp. of Chapel Hill, North Carolina. Under the terms of the agreement, Delfortgroup agreed to pay a minimum of $4 million a year for five years, with additional payments through the life of the patents, some of which last through 2023.

The case is In the Matter of Reduced Ignition Proclivity Cigarette Paper Wrappers, 337-756, U.S. International Trade Commission (Washington).

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net;

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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