In this video, I will share with you, what you need to know about the latest news on the Healthier Choices Management, ticker symbol HCMC, and the Philip Morris Lawsuit. Also, I’ll share details of a legal win that lawyers will likely be able to leverage as precedence against Philip Morris! I’ll also share how the lawsuit is affecting the stock, and share key levels of support and resistance in the stock chart.
I did spend hours poring through articles and HCMC’s legal filing, to aid in a decision whether it made sense to sell or buy more shares of this stock. Especially, to hold for the long-term, and that potential big run-up in price.
In the past I worked for years with Fortune 500 CFOs and financial consulting teams, to help companies determine where they were making money. Now I use this expertise to dig into HCMC’s details.
But this is not financial advice, and for entertainment only.
Hi this is Lynn, and welcome back. I’m definitely not a lawyer, and took only one business law class in college, but I’ll do my best to share the key points with you regarding HCMC’s legal filings.
You can see here per this Microcap daily article that HCMC is getting noticed as they pursue a patent infringement lawsuit against billion-dollar conglomerate Philip Morris USA, Inc. and Philip Morris Products S.A. A settlement or licensing deal could drive HCMC into a whole new stratosphere. The patent infringement lawsuit against Philip Morris USA, Inc. is moving forward and gaining steam. Representing HCMC is Cozen O’Connor ranked among the top 100 law firms in the country and employing more than 775 attorneys in 29 cities across two continents. The firm’s diverse client list includes global Fortune 500 companies, middle-market firms poised for growth, high-profile individuals and HCMC who must have a seriously solid case against PMI with outstanding chances.
Philip Morris claims that it is currently approaching 14 million users of its IQOS® product and has reportedly invested over $3 billion in their smokeless tobacco products. Philip Morris has been very open about their ongoing transition from traditional fully combustible cigarettes to their modified risk tobacco products, including IQOS®. The Philip Morris IQOS® product is currently the subject of two other patent infringement proceedings filed by RJ Reynolds Tobacco Company.
In its patent infringement lawsuit against Philip Morris, Cozen O’Connor is representing HCMC; Cozen O’Connor is ranked among the top 100 law firms in the country and employs more than 775 attorneys in 29 cities across two continents. Cozen O’Connor is a full-service firm with nationally recognized practices in litigation, business law, and government relations, and its attorneys have experience operating in all sectors of the economy. The firm’s diverse client list includes global Fortune 500 companies, middle-market firms poised for growth, high-profile individuals and ambitious upstarts like HCMC. Cozen O’Connor has been awarded as the #1 law firm of the year several times, amongst dozens of other awards and would not take on a giant such as Philip Morris unless they knew for sure they have a very strong case and excellent chances. This is important to notice as there was a mistake made by HCMC including an attachment J in their filing, which caused huge problems with the case, that I will review shortly.
The Philip Morris IQOS® product is currently the subject of two other patent infringement proceedings filed by RJ Reynolds Tobacco Company. One proceeding is before the International Trade Commission and seeks to stop the importation of the IQOS® product into the United States; the other is a patent infringement action currently pending in the Eastern District of Virginia. RJ Reynolds’ patents are unrelated and not affiliated with the patents asserted in the HCMC case.
The following is information I gathered from HCMC’s Form 8-K Philip Morris Inter Partes Review:
If Philip Morris’ IPR petition is accepted by the PTAB, the Company will have three months to file a preliminary response. Within three months of the Company’s preliminary response, or six months from acceptance of Philip Morris’ IPR petition, the PTAB will decide whether to institute or deny the IPR proceedings. If the PTAB institutes IPR proceedings, then within one year of institution the PTAB will issue a final written decision as to the validity of some or all of the claims in the Patent.
In their civil action case against Philip Morris, the following was described:
THE ’170 PATENT 22. The ’170 patent is entitled “Electronic Pipe,” and was duly and legally issued by the United States Patent & Trademark Office on February 18, 2020. 1. An electronic pipe, comprising: a battery, an electronic module, a combustible material reservoir, and a heating element fixed in the combustible material reservoir; combustible material loaded into the combustible material reservoir; wherein the pipe is structured to transmit an electric current from the battery to the heating element, the heating element initiating a combustion reaction in the combustible material reservoir.
You can see HCMC’s case number on the screen here: 1:20-cv-04816-TCB Document 1, which was originally filed on 11/30/20. They state the issue, that activating the electronic pipe such that electric current is transmitted from the battery to the heating element; initiating, by way of the heating element, a combustion reaction in the combustible material reservoir, the combustion reaction at least partially combusting the combustible material. Regarding the DEFENDANTS’ INFRINGING IQOS® PRODUCT
The Defendants, Philip Morris, develop, manufacture, import, sell, and instruct customers how to use a “heat-not-burn” tobacco system that is sold in this District and elsewhere in the United States of America ,and overseas, under the trade name IQOS®. On information and belief, the IQOS® system (the “Accused Infringing Product”) includes three main components: (1) a Tobacco Stick that is “designed to function with the holder”; (2) a Holder into which the Tobacco Stick is inserted and heated; and (3) a Charger that is used to recharge the Holder after each use as shown here, the Holder includes a Case, Rechargeable Battery, Control Electronics, and Heating Blade
This case is being tried in the State of Georgia.
Philip Morris’ motion to dismiss the case was granted on July 23rdh giving HCMC 14 days, through the end-of-day on August 6th, to file a motion for leave to file a further amended complaint.
HCMC attached an exhibit J to its pleading conflicted with their general allegations. The court treated this as overriding their original pleading – HCMC had to now show proof that their product combusts, and their request to extend their response date beyond 8/6 was denied. They have to file a motion and further amended plea.
Now here is really good news that you will want to learn about. In May, a British American Tobacco PLC received a preliminary US legal victory in its patent-infringement lawsuit against rival Philip Morris international inc.
This important article by Richard Craver published by the Winston Salem Journal, shares how another important trial against Phillip Morris’ heat-not-burn traditional cigarettes have gained a preliminary legal victory
British American Tobacco Plc received a preliminary U.S. legal victory Friday in its patent-infringement lawsuit against rival Philip Morris International Inc.
An administrative law judge at the U.S. International Trade Commission issued an initial determination that PMI’s IQOS products infringe on patents owned by the BAT Group.
A patent-infringement lawsuit was filed in April 2020 by three Reynolds American Inc. business units focused on the technology involved in making heat-not-burn traditional cigarettes.
The groups are R.J. Reynolds Tobacco Co., RAI Strategic Holdings Inc. and R.J. Reynolds Vapor Co.
The Reynolds affiliates are requesting a temporary and a permanent injunction against the importation, sale and distribution of PMI’s IQOS products, as well as “enhanced damages,” alleging “defendants’ infringement has been and continues to be deliberate, willful and unlicensed.”
Besides PMI, those being sued include Altria and U.S. subsidiary Philip Morris USA Inc.
The complaint focuses on three heat-not-burn technology patents held by the company. The patents were issued by the U.S. Patent and Trademark office between November 2012 and December 2019.
An additional two patents are involved in a separate legal proceeding before the patent and trademark office.
Philip Morris is being accused of infringing on those patents with IQOS products that are branded as Marlboro HeatSticks.
Judge Clark Cheney ruled there has been a violation of the Tariff Act of 1930 involving two patents.
The violations affect “the importation into the United States, the sale for importation, or the sale within the United States after importation of certain tobacco heating articles and components.”
According to Bloomberg News, Cheney’s findings are subject to review by the full commission. The investigation is scheduled to be completed by Sept. 15.
To me this is important, as I’ve had lawyer friends mention that if a precedence is set by a ruling on a similar case. It makes it often makes it the similar case easier to win, due to this precedent. For HCMC’s battle against the Philip Morris patent infringement, I certainly hope this is true.
Do notice that the court case for the three Reynolds businesses against Philip Morris has been going on for more than a year! So, likely HCMC’s case will also take quite a while yet. But as progress comes out for this case, it will likely have a big effect on HCMC’s stock price!
One more item. As usual, HCMC has been getting lots of interest from investors and those with the Reddit forums. Per this graph I grabbed from docoh.com that HCMC has been mentioned quite a bit over the recent past. Per the green graph, the comments have all been positive, and 75% of the comments are coming from WallSTreet BetsNew
Regarding the recent filing HCMC made on Friday, August 6th, you can see here their filing asking the court leave to file an amended complaint. I’ll do my best to give my opinion of these filings.
If this leave is granted, HCMC gets to file the complaint that they attached. The memorandum is their argument for why this motion should be granted, and why they should be able to file. There are two parts: the actual argument – this is the one they want to file.
There is an amended, red-lined version, here showing the changes from the original complaint to the new complaint. Here you can see that they got rid of any references to an exhibit J, that caused issues in the former complaint. In the former exhibit’s place they have instead included marketing material like you see here.
HCMC also included a proposed order which is what they want the judge to sign, and confirm that HCMC is granted to refile the Amended Complaint. This means, that we will have a motion to move forward once this paperwork is signed and dated by the judge. We hope to see this signed and dated by the judge at some point over the next month, or possibly several months.
They also added an important document from HCMC, which is a rebuttal about from HCMC’s CFO against Philip Morris’ claims that HCMC has been doing insider trading, with detailed evidence to the contrary. HCMC provided evidence that everything they did was done legitimately. They appear to have done a good job including this detail in a legal document to push back against Philip Morris. HCMC specifically mentions the IQOS and the “heatstick”, a lot more in this amended document. To pinpoint Philip Morris’ infringing document. HCMC wants to make it very clear that it is Philip Morris’ IQOS system that is the problem.
They are including an expert, Dr. Michael Deible, who will explain the actuality of what combustion means, versus PM’s former statements. HCMC is trying to say how wrong Philip Morris is. Statements here are to show that Philip Morris read statements in a self-serving way, and that their claims of what combustion is are too narrow.
This is important as HCMC had not formerly come back with a detailed explanation of what combustion means. Now HCMC is leveraging an expert to explain this. They are also explaining that HCMC has a definition of combustion from an engineering standpoint versus PM’s marketing type claims.
This screenshot explains here in details what combustion is and the related patents. This appears to be excellent detail.
HCMC also explains that doing a specific test on PM’s heatstick proves that combustion is happening.
So in summary, HCMC is asking to refile, and they give very clear arguments, leveraging the expert Dr. Deible as to why this should be granted. Their arguments included a combustion definition to combat Philip Morris’ claims. Now out next actions are to wait for the judge to sign HCMC’s document enabling them to file and reinstate their claim against Philip Morris.
HCMC also included the document which they will file, once they receive the signed approval from the judge.
Once HCMC receives the approval, I will share these details with you as well.
I always love hearing from you, so please let me know in the comments below, what your thoughts are about HCMC, or if there is anything I missed. I’d also love to hear about any other stocks that you are excited about right now.