NOTE: This disposition is nonprecedential.

 

United States Court of Appeals 

for the Federal Circuit ______________________ 

PHILIP MORRIS PRODUCTS S.A.,

Appellant

v.

RAI STRATEGIC HOLDINGS, INC.,

Appellee

______________________ 

2022-1846

______________________ 

Appeal from the United States Patent and Trademark 

Office, Patent Trial and Appeal Board in No. IPR2020-

01602.

______________________ 

Decided: September 14, 2023

______________________ 

GABRIEL K. BELL, Latham & Watkins LLP, Washington, DC, argued for appellant. Also represented by 

MAXIMILIAN A. GRANT, JONATHAN M. STRANG, DAVID 

ZUCKER; TAKASHI OKUDA, New York, NY; GREGORY 

SOBOLSKI, San Francisco, CA.

 GREGORY A. CASTANIAS, Jones Day, Washington, DC, 

argued for appellee. Also represented by AMELIA A.

DEGORY; ROBERT BREETZ, DAVID B. COCHRAN, KENNETH 

Case: 22-1846 Document: 38 Page: 1 Filed: 09/14/2023
PHILIP MORRIS PRODUCTS S.A. v.

RAI STRATEGIC HOLDINGS, INC. 

2

LUCHESI, DAVID MICHAEL MAIORANA, Cleveland, OH; 

JOSHUA R. NIGHTINGALE, Pittsburgh, PA.

______________________ 

Before CHEN, STOLL, and CUNNINGHAM, Circuit Judges. 

CHEN, Circuit Judge.

Philip Morris Products, S.A. (Philip Morris) appeals an 

inter partes review (IPR) final written decision of the Patent Trial and Appeal Board determining Philip Morris did 

not meet its burden of proving certain claims of U.S. Patent 

No. 9,901,123 (’123 patent) unpatentable under 35 

U.S.C. § 103. See Philip Morris Prods., S.A. v. RAI Strategic Holdings, Inc., No. IPR2020-01602, 2022 WL 1022576

(P.T.A.B. Mar. 30, 2022) (Board Decision). Contrary to 

Philip Morris’s arguments, the Board’s decision in this case

did not contradict its findings in a prior Board decision, nor 

did the Board legally err in its motivation to combine analysis. Because substantial evidence otherwise supports the 

Board’s findings, we affirm. 

BACKGROUND

The ’123 patent, assigned to RAI Strategic Holdings, 

Inc. (Reynolds), generally relates to tobacco smoking devices, including electronic cigarettes. ’123 patent col 4 

ll. 42–45, col. 5 ll. 7–10. In 2016, before the present IPR 

proceeding for the ’123 patent was initiated, R.J. Reynolds 

Vapor Company (Reynolds VC), a sister corporation of 

Reynolds, filed an IPR petition against another company’s 

electronic cigarette patent, U.S. Patent No. 8,365,742 (’742 

patent), challenging several claims over a combination of 

Hon1 and Whittemore.2 Specifically, Reynolds VC argued 

that a skilled artisan would have replaced Hon’s heating 

element with Whittemore’s wick and heating wire. The 

1 Chinese Patent No. CN 2719043. 2 U.S. Patent No. 2,057,353. 

Case: 22-1846 Document: 38 Page: 2 Filed: 09/14/2023
PHILIP MORRIS PRODUCTS S.A. v.

RAI STRATEGIC HOLDINGS, INC. 

3

Board disagreed and upheld the claims, concluding that 

Reynolds VC had failed to show Hon’s heating efficiency 

needed improvement. The Board also found that a comparatively more plausible substitution would have been to replace Hon’s entire atomizer, as opposed to Reynolds VC’s 

proposal to replace only Hon’s heating element. 

In the present case, Philip Morris filed an IPR petition

against several claims of Reynolds’s ’123 patent. While 

Philip Morris’s petition, like Reynolds VC’s above-described IPR, argued that a skilled artisan would have been 

motivated to combine Hon and Whittemore, Philip Morris 

proposed a different combination of these references, by replacing Hon’s entire atomizer with Whittemore’s wick and 

heating wire. The Board, however, found unpersuasive

Philip Morris’s argument that a skilled artisan would have

been motivated to simplify Hon in the manner Phillip Morris proposed. 

Philip Morris timely appealed the Board’s decision to 

this court, arguing that the decision was arbitrary and capricious because (1) it contradicts the reasoning in the ’742 

patent IPR decision, (2) there was legal error in the Board’s 

motivation to combine analysis, and (3) the decision was

otherwise not supported by substantial evidence. We have 

jurisdiction under 28 U.S.C. § 1295(a)(4)(A). 

DISCUSSION 

As to Philip Morris’s first argument, we see no contradiction between the Board’s analysis of Hon and Whittemore and its earlier decision on the ’742 patent. In the 

prior IPR, the issue before the Board was whether a skilled 

artisan would have replaced Hon’s heating element with 

Whittemore’s wick and heating wire. The patent owner’s 

overarching argument there was that a skilled artisan 

would not have combined Hon and Whittemore at all. See 

J.A. 2801 (patent owner arguing that Hon and Whittemore 

“have different modes of operation, and in at least some 

ways, Hon[] is more thermally efficient.”). In this context, 

Case: 22-1846 Document: 38 Page: 3 Filed: 09/14/2023
PHILIP MORRIS PRODUCTS S.A. v.

RAI STRATEGIC HOLDINGS, INC. 

4

we view the Board in that case as agreeing with the patent 

owner’s expert testimony that a more plausible “simple 

substitution,” compared to the petitioner’s proposed substitution, would be to replace Hon’s entire atomizer (because 

replacing only Hon’s heating element would lead to a redundant design). See J.A. 2806–07. But the Board there 

did not go so far as to find that replacing Hon’s entire atomizer with Whittemore’s wick and heating wire would 

have been an obvious simple substitution under KSR International Co. v. Teleflex, Inc., 550 U.S. 398 (2007). Moreover, that particular combination theory was not before the 

Board in the prior IPR, as no party made that argument. 

In re Magnum Oil Tools Int’l, Ltd., 829 F. 3d 1364, 1381 

(Fed. Cir. 2016) (holding that the PTO does not have authority to “raise, address, and decide unpatentability theories never presented by the petitioner”). 

In contrast, in the presently appealed IPR, the issue 

before the Board was whether a skilled artisan would have

replaced Hon’s entire atomizer with Whittemore’s wick and 

heating wire. The Board thus analyzed a different combination theory, with expert testimony3 specifically directed

to this combination. Because the Board did not conclude in

the prior IPR that replacing Hon’s atomizer would have 

been obvious, it was not arbitrary and capricious for the 

Board to conclude that Philip Morris did not meet its burden here. 

3 We similarly find no abuse of discretion by the 

Board in relying on Reynolds’s expert in the presently appealed IPR. Even considering the statements made by 

Reynolds VC’s expert in the prior IPR, it is evident that 

each expert was testifying about a distinct modification of 

Hon (i.e., replacing Hon’s heating element versus replacing 

Hon’s entire atomizer), and thus the respective expert 

statements must be understood to be referring to the specific combination at issue. 

Case: 22-1846 Document: 38 Page: 4 Filed: 09/14/2023
PHILIP MORRIS PRODUCTS S.A. v.

RAI STRATEGIC HOLDINGS, INC. 

5

Philip Morris also argues, separate and apart from the 

prior IPR decision, the Board’s finding of no motivation to 

combine Hon and Whittemore is based on legal error and 

the decision otherwise lacks substantial evidence. We disagree. Philip Morris claims the Board allegedly required it 

to prove that its proposed combination was superior to

other prior art combinations. We do not think that is a fair 

reading of the Board’s decision. Philip Morris argued to the 

Board that a skilled artisan would be motivated to first remove Hon’s piezoelectric element, a simplification Hon 

teaches. But Philip Morris further asserted that once the 

piezoelectric element was removed, there would be difficulty in forming an aerosol and thus a skilled artisan would 

further “simplify” Hon by removing Hon’s entire atomizer 

and replacing it with Whittemore’s wick and heater. Since 

the proposed combination was based on a purported simplification of Hon beyond what Hon itself teaches, we interpret the Board’s statement that “Petitioner does not show 

persuasively that replacing Hon’s atomizer with Whittemore’s wick and heater would have simplified the device as 

compared with the modifications Hon expressly teaches” as

determining Philip Morris had not proven the obviousness 

theory that it had advanced. Board Decision, 2022 WL 

1022576, at *12. We do not view the Board’s statement as 

a rejection of the combination merely because Hon itself 

teaches other simplifications distinct from the proposed 

combination. 

We also conclude that substantial evidence supports 

the Board’s decision to reject Philip Morris’s proposed combination, because the Board reasonably relied on expert 

testimony and its own analysis of the R.J. Reynolds Tobacco Co. (RJR) teardown report.4 Specifically, the Board 

4 The RJR teardown report documents a disassembling of a Ruyan device, which is an implementation of 

Hon. 

Case: 22-1846 Document: 38 Page: 5 Filed: 09/14/2023
PHILIP MORRIS PRODUCTS S.A. v.

RAI STRATEGIC HOLDINGS, INC. 

6

relied on expert testimony to find that Hon’s heater produces more aerosol at a higher efficiency while using less 

power than Whittemore’s wick and heater design, and 

found that nothing in the RJR teardown report supports a 

view that the Ruyan device (an implementation of Hon) 

failed to produce sufficient aerosol that would warrant replacement of the atomizer. See Board Decision, 2022 WL 

1022576, at *12–14. This is substantial evidence. To the 

extent Philip Morris argues that the Board failed to consider record evidence of the alleged cost and simplicity of 

Whittemore’s wick and heater or testimony regarding reasonable expectation of success, we do not believe the Board 

erred in dismissing these arguments as conclusory and 

lacking factual substantiation. 

We have considered Philip Morris’s remaining arguments and find them unpersuasive. For the foregoing reasons, we affirm. 

AFFIRMED

Case: 22-1846 Document: 38 Page: 6 Filed: 09/14/2023