High-Stakes Tobacco-Patent Lawsuit Heads To Jury Next Week

The fortunes of aspiring tobacco company Star Scientific Inc. (STSI) could hinge on a high-stakes patent-infringement case that goes to a federal jury in Baltimore next week.

Star, a small tobacco company with a big patent claim, says it has invented a method of curing tobacco that prevents the formation of certain cancer-causing toxins.

The Virginia-based company sued R.J. Reynolds Tobacco Co., a unit of Reynolds American Inc. (RAI), alleging that the nation's second-biggest tobacco company encouraged its tobacco farmers to practice Star's patented curing method.

Star is seeking several hundred million dollars in damages and hopes a court win could lead to lucrative licensing agreements with other tobacco companies.

RJR says it didn't infringe the Star patents, and it believes the patents are invalid. In separate proceedings, RJR has asked the U.S. Patent and Trademark Office to re-examine the validity of the patents. That process could take two or more years to resolve.

After several years of pre-trial legal wrangling, a patent-infringement trial began May 18. Closing arguments are likely to wrap up Monday, and then the case will be submitted to the jury for deliberations.

If the jury decides that RJR infringed Star's patents, the case will proceed to a second trial phase to determine how much RJR owes in damages.

Star's stock price spiked during the trial, hitting a four-year high of $5.89 as some observers interpreted comments made by the judge during the proceedings as favorable to Star's case. Star's shares recently traded at $4.34, down 32 cents, or 6.7%, while Reynolds' shares were at $37.56, up 21 cents, or 0.6%.

While the jury verdict will be an important marker in the long-running case, it will be far from the last word in the dispute. Whichever company loses at trial is almost certain to appeal.

-By Brent Kendall, Dow Jones Newswires; 202-862-9222; [e-mail]