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Last Updated: Oct 28th, 2008 - 17:57:18 |
CHICAGO (Reuters) - Star Scientific Inc won an appeal on Monday in its patent infringement lawsuit against R.J. Reynolds regarding a process to reduce cancer-causing toxins in tobacco, and Star Scientific shares rose 65 percent.
The U.S. Court of Appeals for the Federal Circuit overturned a ruling by a lower court that declared the patents invalid, according to the ruling.
The Federal Circuit, which hears patent appeals, sent the case back to the U.S. District Court for the District of Maryland for a rehearing.
Star Scientific had sued the maker of Camel and Salem cigarettes in 2001, saying Reynolds infringed patents related to a curing process that reduces the level of cancer-causing nitrosamines in tobacco.
In June 2007, U.S. District Judge Marvin Garbis in Maryland concluded that Star's patents were unenforceable by "virtue of inequitable conduct," agreeing with Reynolds' argument that Star was not forthcoming with the U.S. patent office when it applied for the patent.
Garbis had previously found that one of the scientific terms used in Star's patent application was "fatally indefinite" and therefore invalid.
Star's shares plummeted on that finding and the company reorganized itself before Garbis' final ruling into two units. One unit focuses on manufacturing tobacco products like its dissolvable Ariva and Stonewall tobacco lozenges, and another on intellectual property and new-product development, including pharmaceutical products that use a tobacco component.
A Reynolds spokesman said the company was still reviewing its legal options and noted that the case will now likely go to trial.
"R.J. Reynolds Tobacco Co continues to believe that we didn't infringe on the patents, the patents in question were invalid, and if and when the matter goes to trial, we are confident we will prevail," spokesman Jacob McConnico said.
Star shares rose as much as 78 percent to $2.98, the highest level since January 2007, before closing up $1.09, or 65.27 percent, at $2.76 on Nasdaq. R.J. Reynolds parent Reynolds American Inc fell 81 cents, or 1.48 percent, to $54.10 on the New York Stock Exchange.
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