Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-23-01546/USCOURTS-ca13-23-01546-0/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 

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NOTE: This disposition is nonprecedential.

United States Court of Appeals 

for the Federal Circuit

______________________

ALTRIA CLIENT SERVICES LLC,

Plaintiff-Appellee

v.

R.J. REYNOLDS VAPOR COMPANY,

Defendant-Appellant

______________________

2023-1546

______________________

Appeal from the United States District Court for the 

Middle District of North Carolina in No. 1:20-cv-00472-

NCT-JLW, Senior Judge N. Carlton Tilley, Jr.

______________________

Decided: December 19, 2024

______________________

MARK ANDREW PERRY, Weil, Gotshal & Manges LLP, 

Washington, DC, argued for plaintiff-appellee. Also 

represented by WILLIAM SUTTON ANSLEY, PRIYATA PATEL; 

ANISH R. DESAI, DANIEL LIFTON, ROBERT NILES-WEED,

ELIZABETH WEISWASSER, New York, NY. 

 JASON BURNETTE, Jones Day, Atlanta, GA, argued for 

defendant-appellant. Also represented by LAURA 

KANOUSE; AMELIA A. DEGORY, Washington, DC; JOHN 

MARLOTT, Chicago, IL; ALEXIS ADIAN SMITH, Los Angeles, 

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CA; JOHN FRANKLIN MORROW, JR., Womble Bond Dickinson 

LLP, Winston-Salem, NC. 

 ______________________

Before PROST, BRYSON, and REYNA, Circuit Judges.

Opinion for the court filed by Circuit Judge PROST.

Opinion concurring in part and dissenting in part filed by 

Circuit Judge BRYSON.

PROST, Circuit Judge.

Altria Client Services LLC (“Altria”) sued R.J. 

Reynolds Vapor Co. (“Reynolds”) for infringement of U.S. 

Patent Nos. 10,299,517 (“the ’517 patent”), 10,485,269 (“the 

’269 patent”), and 10,492,541 (“the ’541 patent”). At trial, 

the jury found that Reynolds infringed Altria’s patents and 

awarded Altria over $95 million in damages. The jury also 

rejected Reynolds’s invalidity defense. The district court 

denied Reynolds’s post-trial motions for judgment as a 

matter of law (“JMOL”) on infringement and damages and 

a new trial on the issues of infringement, invalidity, and 

damages. Altria Client Servs. LLC v. R.J. Reynolds Vapor 

Co., 650 F. Supp. 3d 375 (M.D.N.C. 2023) (“Post-Trial 

Opinion”). Reynolds appeals, and we affirm.

BACKGROUND

I

Altria’s patents, which have similar specifications,

“relate[] to electronic vapor devices including selfcontained articles including vapor precursors.” ’517 patent 

col. 1 ll. 20–21.1 These electronic vapor devices are, at a 

high level, electronic alternatives to cigarettes. Claim 1 of 

the ’517 patent is illustrative and recites:

1 The ’541 patent’s specification has additional 

disclosures not relevant here.

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A pod assembly for an e-vapor apparatus, 

comprising:

a plurality of external surfaces including a front 

face, a rear face opposite the front face, a first side 

face between the front face and the rear face, a 

second side face opposite the first side face, a 

downstream end face, and an upstream end face 

opposite the downstream end face, a portion of at 

least the front face or the rear face being 

transparent, the downstream end face defining an 

outlet;

a liquid compartment configured to hold a liquid 

formulation such that the liquid formulation is 

visible through at least the front face or the rear 

face;

a vaporizer compartment in fluidic communication 

with the liquid compartment, the vaporizer 

compartment being adjacent to the upstream end 

face, the vaporizer compartment configured to heat 

the liquid formulation, the vaporizer compartment 

including a heater and a wick;

a vapor channel extending from the vaporizer 

compartment, through a center of the liquid 

compartment, and to the outlet, the vapor channel 

being visible through at least the front face or the 

rear face; and

a plurality of electrical contacts having respective 

planar surfaces at the upstream end face and 

electrically connected to the heater in the vaporizer 

compartment, the vapor channel being between the 

outlet and the plurality of electrical contacts.

Id. at claim 1 (emphasis added).

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II

Altria sued Reynolds for infringing the ’517, ’269, and 

’541 patents. The accused product is Reynolds’s VUSE 

Alto, a pod-style device. At the claim-construction stage of 

this case, Reynolds argued that “the front and rear faces” 

present in each claim “are distinct surfaces, which are each 

bounded by one or more edges.” J.A. 1749. Altria proposed 

a plain-and-ordinary-meaning construction, arguing that 

the patents “use the term ‘face’ consistent with its ordinary 

meaning—the surface of an object.” J.A. 1803. The district 

court agreed with Reynolds, concluding that “there must be 

an edge between the front face and side faces, and the rear 

face and side faces.” J.A. 4033.

The case proceeded to trial, and the jury found that 

Reynolds infringed claims 1, 9, and 10 of the ’517 patent, 

claim 19 of the ’269 patent, and claim 24 of the ’541 patent. 

J.A. 111. The jury also found that Reynolds did not show 

that any of the asserted claims are invalid. J.A. 112. The 

jury awarded $95,233,292 in damages “for past 

infringement through June 30, 2022.” J.A. 113.

Reynolds moved for JMOL, arguing that substantial 

evidence did not support the finding that the VUSE Alto 

had the requisite edge between its faces and that there was 

not substantial evidence to support the jury’s damages 

award. Post-Trial Opinion, 650 F. Supp. 3d at 385. 

Reynolds also moved for a new trial on invalidity based on

“erroneous evidentiary rulings” and a new trial on 

damages, contending “that the jury’s damages award stems 

from legal error.” Id. at 401. The district court denied 

Reynolds’s motions for JMOL and a new trial, id. at 412,

and entered final judgment, J.A. 105–08.

Reynolds appeals, and we have jurisdiction under 28 

U.S.C. § 1295(a)(1).

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DISCUSSION

Reynolds raises four issues on appeal. First, Reynolds 

argues that the district court erred in denying its motion 

for JMOL or a new trial on infringement. Second, Reynolds 

argues that the district court improperly excluded evidence 

of its invalidity defense and that a new trial on invalidity 

is warranted. Third, Reynolds argues that, given its 

challenge to the calculation of a per-unit royalty rate from 

a comparable license, the district court improperly denied 

its motion for JMOL or a new trial on damages. Fourth, 

Reynolds argues that the district court improperly allowed 

the jury to hear testimony from Altria’s damages expert on 

apportionment and that this error requires JMOL or a new 

trial. We address each issue in turn.

We review a district court’s procedural rulings under 

the standard of the regional circuit. MLC Intell. Prop., LLC 

v. Micron Tech., Inc., 10 F.4th 1358, 1367 (Fed. Cir. 2021). 

The Fourth Circuit reviews a district court’s denial of a 

motion for JMOL de novo. Sardis v. Overhead Door Corp., 

10 F.4th 268, 279 (4th Cir. 2021). The Fourth Circuit 

reviews a district court’s decision on whether to grant a 

new trial for abuse of discretion. Mountain Valley Pipeline, 

LLC v. 8.37 Acres of Land by Terry, 101 F.4th 350, 358 (4th

Cir. 2024).

I

We begin with Reynolds’s challenge to the infringement 

verdict. Reynolds argues that the evidence presented at 

trial does not support the jury’s finding that the accused 

VUSE Alto has the requisite edge between the claimed 

faces. We disagree.

Altria presented ample evidence that Reynolds’s VUSE 

Alto meets this limitation. As Altria’s infringement expert 

explained:

But if—but if you just take the pod and hold it in 

your hands, . . . and just rotate it between my 

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fingers, you can easily see, as you traverse from a 

front face to a side face, to a rear face, to a side face, 

to a front face, you can feel the edges. You can feel 

the transition between the different faces. And not 

only can you feel it, but you can see it. I mean, 

there is clearly edges. And they’re rounded edges 

going from one face to the next.

J.A. 28141 (255:17–25). A photograph of the accused 

product itself clearly shows an edge between the different 

faces. J.A. 29493. The jury was even given physical 

samples of the VUSE Alto where they could feel the edge. 

J.A. 28133. And if that were not enough, Reynolds’s expert 

admitted that a rounded edge, like the edges on the VUSE 

Alto, would constitute an edge between faces. J.A. 28767 

(777:6–7) (“[E]very edge is rounded at some degree.”); see 

also J.A. 28767 (777:13–15) (“In a practical world, yes. 

There’s no way you can get something perfectly—I mean, 

at some—it’s always rounded. But it doesn’t matter for a 

lot of products, obviously.”).

On this record, there is “no reason why jurors would 

have been unable to determine for themselves” that Altria 

established that the VUSE Alto meets the edge limitation, 

especially where “the technology at issue [is] easily 

understandable,” as it is here. Ironburg Inventions Ltd. v. 

Valve Corp., 64 F.4th 1274, 1292 (Fed. Cir. 2023). We thus 

affirm the district court’s order denying Reynolds’s motions 

for JMOL of noninfringement and a new trial on 

infringement.

II

We next proceed to Reynolds’s challenge to the district 

court’s exclusion of its invalidity evidence.

Reynolds offered several invalidity theories at trial. 

One sought to establish, using a JUUL electronic cigarette 

device, that “the claimed invention was . . . in public use 

. . . before the effective filing date of the claimed invention.” 

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35 U.S.C. § 102(a)(1). Before trial, the district court 

excluded much of Reynolds’s evidence on hearsay grounds, 

a ruling that Reynolds does not challenge on appeal. After 

excluding that evidence as hearsay, the district court was 

left with a muted video that Reynolds purports shows the 

JUUL product. The district court also excluded this video, 

stating:

Again, if you just—I mean, it’s set up to suggest 

that it is the [JUUL] device, but then the next thing 

you see is somebody holding it in profile, and you 

can’t identify from that profile whether it’s the 

[JUUL] device or not. I cannot find it sufficiently 

suggestive to come into evidence.

J.A. 27611 (80:10–15).

Reynolds challenges the district court’s exclusion of the 

video. We review this ruling for abuse of discretion. Mathis 

v. Terra Renewal Servs., Inc., 69 F.4th 236, 246 (4th Cir. 

2023). One prerequisite for admissibility is that “the 

proponent must produce evidence sufficient to support a 

finding that the item is what the proponent claims it is.” 

Fed. R. Evid. 901(a). Here, all Reynolds has shown is that 

a video contains some opaque, rectangular device that can 

be used as an electronic cigarette. Reynolds identifies 

nothing in the video itself showing that the device is a 

JUUL device. With nothing more in the record to explain 

what appears in this video (as Reynolds did not challenge 

the exclusion of other potentially informative evidence on 

appeal), we cannot say that the district court abused its 

discretion in excluding the video.

III

We now turn to Reynolds’s challenge to the calculation 

of a per-unit royalty rate from comparable licenses. 

Reynolds argues that the jury lacked sufficient evidence to 

conclude that the licenses at issue used a 5.25% royalty 

rate.

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We first note that Reynolds did not challenge this 

portion of Altria’s damages expert’s testimony under 

Federal Rule of Evidence 702. Thus, we do not view 

Reynolds as challenging the particular methodology 

Altria’s expert employed. Instead, we simply review this 

as a challenge to the evidentiary basis of the 5.25% royalty 

rate. “A jury’s damages award must be upheld unless the 

amount is grossly excessive or monstrous, clearly not 

supported by the evidence, or based only on speculation or 

guesswork.” Bio-Rad Labs., Inc. v. 10X Genomics Inc., 967 

F.3d 1353, 1373 (Fed. Cir. 2020) (cleaned up).

Altria offered several theories supporting the 

proposition that a comparable license used a 5.25% royalty 

rate, and it suffices for our purposes to identify one 

supported by the evidence. Altria sought to use a 

comparable license to prove its damages. One was a license 

between two companies, Fontem and Nu Mark. One part 

of this license is a lump-sum payment from Nu Mark to 

Fontem of $43 million granting Nu Mark the right to 

practice Fontem’s patents in the United States until at 

least 2030. To calculate the effective per-unit royalty rate 

from this lump-sum payment, Altria’s damages expert 

relied on a projection made by Nu Mark. This projection 

applied a 5.25% royalty to sales from 2017 to 2023 and 

resulted in $44 million of estimated royalties. J.A. 28365–

66. Thus, Altria’s expert, noting the similarity between the 

$43 million lump-sum payment and the $44 million in 

projected sales, concluded that the $43 million lump-sum 

payment in the Fontem-Nu Mark license was calculated 

using a 5.25% per-unit royalty rate.

Reynolds offers two principal arguments for why

sufficient evidence does not support the finding that the 

$43 million lump-sum payment reflects a 5.25% per-unit 

royalty rate. We find neither persuasive.

First, Reynolds contends that Altria’s expert relied on 

the wrong projection, instead asserting that Altria’s expert 

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should have used a different sales projection to arrive at a 

potential per-unit royalty rate. In the absence of a 

challenge to the methodology employed by Altria’s expert

in calculating the per-unit royalty rate, however, we 

confine ourselves to examining whether the jury had 

sufficient facts “with which to recalculate in a meaningful 

way the value of any of the [lump-sum] agreements to 

arrive at the . . . damage award.” Lucent Techs., Inc. v. 

Gateway, Inc., 580 F.3d 1301, 1330 (Fed. Cir. 2009). The 

jury was presented with expert testimony explaining 

multiple different sales projections that the jury could use 

to “deriv[e] a [per-unit] rate from the lump-sum payments 

and projected sales.” MLC Intell. Prop., 10 F.4th at 1368. 

Given that Reynolds did not object to the admission or use 

of these projections, “[t]he jury was entitled to hear the 

expert testimony and decide for itself what to accept or 

reject.” i4i Ltd. P’Ship v. Microsoft Corp., 598 F.3d 831, 856 

(Fed. Cir. 2010), aff’d, 564 U.S. 91 (2011). We conclude that 

Altria’s projection-based theory provides a sufficient 

evidentiary basis for a 5.25% per-unit royalty rate. As 

such, we need not reach Altria’s other theories, including 

its contentions that the Fontem-Nu Mark license reflects a 

5.25% per-unit royalty rate on its face and in several 

clauses, and that an additional license between two 

companies, Fontem and Reynolds, also supports a 5.25% 

per-unit royalty rate. See J.A. 29385–439; J.A. 29667–841. 

Second, Reynolds argues that the maximum per-unit 

royalty rate the jury could calculate from the licenses in

this record was 3.6%, or perhaps 2.1%. Reynolds and Altria 

presented the jury with several different per-unit royalty 

rates likely supportable on this record—5.25%, 3.6%, 2.1%, 

and 0.21%. In the face of this competing testimony, and 

again in the absence of an objection from Reynolds on the 

methodology that Altria’s expert used to calculate a perunit rate in a comparable license, we conclude that the jury 

could decide for itself which royalty rate best fit the facts of 

this case. We thus affirm the district court’s denial of 

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JMOL and denial of a motion for a new trial on damages 

based on the per-unit royalty rate.

IV

We finally address Reynolds’s challenges to 

apportionment. Reynolds argues that Altria’s damages 

expert offered unreliable apportionment testimony and 

thus that the district court erred by not excluding it under 

Federal Rule of Evidence 702, by not granting Reynolds’s 

motion for a new trial on damages, and by not granting 

Reynolds’s motion for JMOL.

“No matter what the form of the royalty, a patentee 

must take care to seek only those damages attributable to 

the infringing features.” VirnetX, Inc. v. Cisco Sys., Inc., 

767 F.3d 1308, 1326 (Fed. Cir. 2014). A common model, the 

one Altria used in this case, “begins with rates from 

comparable licenses and then accounts for the differences 

in the technologies and economic circumstances of the 

contracting parties” to value the asserted patents. 

Commonwealth Sci. & Indus. Rsch. Org. v. Cisco Sys., Inc., 

809 F.3d 1295, 1303 (Fed. Cir. 2015) (cleaned up). 

Here, Altria offered a detailed accounting for 

differences in the economic and technological

circumstances of the contracting parties and explained how 

it valued Altria’s patents. Altria’s technical expert began 

by looking at the licensed technology in the Fontem-Nu 

Mark license and separating it into thirteen groups of 

patents. J.A. 28185. The technical expert gave four groups 

of these patents zero value because they reflected 

abandoned patent applications. J.A. 28185. He gave three 

other groups only nominal value because they were 

directed to small components of an e-cigarette device. 

J.A. 28185–86. He also gave a family of design patents 

nominal value as trivial to design around. J.A. 28186. For 

the remaining five patent families, Altria’s technical expert 

examined the importance of the patents to the e-cigarette 

device licensed in the Fontem-Nu Mark license and 

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concluded that, because the five patent families covered the 

key features of an e-cigarette device, selling an e-cigarette 

device would necessarily require practicing Fontem’s 

patents. J.A. 28188–92. Altria’s technical expert also 

testified that Altria’s patents covered the key features of a 

pod vapor device and thus that selling a pod vapor device 

would necessarily require practicing Altria’s patents. 

J.A. 28192. Thus, Altria’s technical expert concluded that 

the importance of the licensed patents to the Fontem-Nu 

Mark license were similar to the importance of Altria’s 

patents to the hypothetical negotiation. 

Altria’s damages expert considered this testimony and 

then accounted for how the similarities and differences in 

licensed products and economic circumstances between the 

Fontem-Nu Mark license and the hypothetical negotiation

to value Altria’s patents. The damages expert accounted 

for similar markets between the licensed e-cigarette device 

in the Fontem-Nu Mark license and Reynolds’s VUSE Alto, 

noting that the VUSE Alto was “a relatively significant 

success” and that “the sales of the prior products actually 

declined.” J.A. 28358 (434:19–22). Altria’s expert also, 

based on the technical expert’s testimony, concluded that 

the importance of the patented features to Nu Mark was 

similar to the technical importance of the patented features 

from Altria’s patents to the VUSE Alto. Altria’s damages 

expert then accounted for these similarities and differences 

and ended at a damages amount that would reflect “the 

contributions that are made by Altria” (i.e., the patented 

features) and would leave Reynolds the rest of the value, 

including the value from unpatented features and 

Reynolds’s business contributions. J.A. 28371–72 (447:15–

448:2).

Reynolds presents several challenges to the 

methodology and evidentiary basis for Altria’s damages 

expert’s apportionment testimony. What Reynolds’s 

challenges amount to, though, are disagreements with the 

particular adjustments that Altria’s damages expert made 

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to the royalty rate in the Fontem-Nu Mark license. While

our law requires Altria to “account for differences in the 

technologies and economic circumstances of the 

contracting parties,” Finjan, Inc. v. Secure Computing 

Corp., 626 F.3d 1197, 1211 (Fed. Cir. 2010), we do not 

require any specific adjustment to a royalty rate based on 

those differences. Rather, what matters is that Altria’s 

damages expert employed “reliable principles and 

methods,” Fed. R. Evid. 702(c), that were “based on 

sufficient facts or data,” id. 702(b), and that the expert’s 

opinion “reflects a reliable application of principles and 

methods to the facts of the case,” id. 702(d). Reynolds has 

not shown that the district court abused its discretion in 

concluding that Altria’s damages expert employed a 

reliable methodology based on sufficient facts and data in 

presenting an ultimate damages amount that “reflect[s] 

the value attributable to the infringing features of the

product, and no more.” See Ericsson, Inc. v. D-Link Sys., 

Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014). 

We likewise reject Reynolds’s challenge to the 

apportionment jury instruction. The district court did not 

misstate the law but rather properly instructed the jury 

that it must account for the differences between the 

Fontem-Nu Mark license and the hypothetical negotiation 

between Altria and Reynolds. And the district court did 

not err in instructing the jury that, if it found that Altria 

demonstrated sufficient comparability between the 

circumstances of the Fontem-Nu Mark license and the 

hypothetical negotiation, the jury could accept Altria’s 

damages expert’s proposed adjustments to the royalty rate. 

We thus affirm the district court’s denial of Reynolds’s 

motion to exclude the apportionment testimony under Rule 

702, motion for a new trial, and motion for JMOL on 

damages.

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CONCLUSION

We have considered Reynolds’s remaining arguments 

and find them unpersuasive. For the foregoing reasons, we 

affirm the district court’s order denying Reynolds its 

requested post-trial relief.

AFFIRMED

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NOTE: This disposition is nonprecedential.

United States Court of Appeals 

for the Federal Circuit

______________________

ALTRIA CLIENT SERVICES LLC,

Plaintiff-Appellee

v.

R.J. REYNOLDS VAPOR COMPANY,

Defendant-Appellant

______________________

2023-1546

______________________

Appeal from the United States District Court for the 

Middle District of North Carolina in No. 1:20-cv-00472-

NCT-JLW, Senior Judge N. Carlton Tilley, Jr.

______________________

BRYSON, Circuit Judge, concurring in part and dissenting 

in part.

I join parts I, II, and IV of the court’s opinion. With 

respect to part III of the opinion, however, I respectfully 

dissent.

The court’s opinion relies on the Fontem-Nu Mark 

license, under which Nu Mark paid Fontem a lump sum of 

$43 million for the right to practice Fontem’s patents until 

at least 2030. Altria’s expert noted that Nu Mark prepared 

a number of projections. One projected a level of sales 

under that license between 2017 and 2023 that would yield 

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a total royalty payment of $44 million at a royalty rate of 

5.25%. Altria’s expert testified that the similarity between 

the $43 million actually paid under the Fontem-Nu Mark 

license and the $44 million expected to be paid at a royalty 

rate of 5.25% for the years 2017 through 2023 gave him 

“great confidence” that the 5.25% rate “was the real 

benchmark.” App. 28366.

The problem with that line of analysis is that the $44 

million projected royalty payment was based on projected 

sales only through 2023, while the $43 million actually 

paid for the license was for rights extending all the way to 

2030, seven more years than the 2017–2023 period. What 

that means is that if the projected sales for 2024 through 

2030 were similar to the projected sales from 2017 through 

2023, the $43 million paid for the license would represent 

a royalty rate of only about half the 5.25% claimed by 

Altria. See App. 28403. Put another way, Altria’s expert 

attributed the entire $43 million in royalties to the first 

seven years of projected sales, rather than spreading out 

the royalties over the entire Fontem license period.1 Altria 

pointed to no basis in the record to ignore the years 

between 2024 and 2030, so the expert’s testimony on the 

Fontem-Nu Mark license provides no support for the 5.25% 

royalty figure adopted by the jury.

Altria identifies various other pieces of evidence that it 

argues support the 5.25% royalty rate. Like the majority, 

however, I view the Nu Mark projections as the strongest 

piece of evidence as to the proper royalty rate. The 

1 The fact that Nu Mark prematurely withdrew from 

the market after entering into the agreement does not 

change the relevant timeframe for evaluating the 

agreement, as the parties have identified no evidence 

suggesting that Nu Mark’s later decision to withdraw 

factored into the negotiations over the terms of the 

agreement. 

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remaining pieces of evidence are not sufficient to support 

the jury’s verdict. 

I would therefore grant a new trial to Reynolds on 

the damages issue unless Altria agreed to a remittitur of 

approximately half of the $95.3 million award.

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