E-cigarette companies in China face a challenge in the fact that they are based in a nation where knockoff products are an everyday fact of life. This issue also affects consumers around the world, as manufacturers have created clones of popular designs such as the eGo and Lavatube that are virtually indistinguishable from the originals.
Dragonite International Limited, the Chinese company that invented the electronic cigarette, appears poised for an attempt to put a stop to this practice. The company — formerly known as the Ruyan Group — has filed suit in U.S. district courts alleging that ten companies are infringing on its patents.
The ten companies named in the lawsuit are Barjan LLC (Mistic E-Cigarettes), CB Distributors (21st Century Smoke), Finiti Branding Group (FIN E-Cigarettes), LOEC (Blu Cigs), Logic Technology Development (Logic E-Cigarette), Nicotek (Metro E-Cigarette), The Safe Cig, Sottera (NJOY), Spark Industries (Cig2o) and Vapor Corp (Fifty-One, Krave, Green Puffer and other brands).
Specifically, Dragonite alleges that the companies are violating U.S. Patent 8,156,944, which details an aerosol electronic cigarette including a battery assembly, atomizer and cartridge. The patent was granted on April 17, 2012. The fact that it describes a three-part electronic cigarette with a disposable cartridge could have something to do with the fact that large companies producing two-part e-cigarettes — such as V2 and Green Smoke — are not implicated in the lawsuits.
E-smokers and members of the e-cigarette industry will certainly be watching closely to see what transpires. It could turn out that these companies are forced to settle with Dragonite and license their technology, which could raise prices for consumers — at least until those vendors can begin selling non-infringing e-cigarettes.
Meanwhile, a post on the InvestorsHub forum suggests that Dragonite plans to raise HK$21.5 million ($2.77 million USD) to establish a wholly-owned subsidiary in southern California through which to market its e-cigarettes and defend its intellectual property rights in the United States. However, this information could not be independently confirmed at the time of writing.
Although the company invented the electronic cigarette, Dragonite/Ruyan has been something of an also-ran in the e-cigarette industry for nearly two year. However, between the lawsuits and potential opening of a subsidiary in California, they appear poised to come back in a very big way. The landscape of the e-cigarette industry could undergo some significant changes this year.