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Star Scientific, AŞ Message Board

  • repo_man_one repo_man_one Aug 12, 2013 5:49 PM Flag

    Outside Tobacco Counsel Agreement

    From SEC filing

    "In July 2013 outside counsel and the Company reached an agreement whereby this amount would only be paid in the event the Company receives royalty payment from the licensing of the two patents at issue in the R.J. Reynolds litigation between the date of the agreement and the expiration of the patents, and then only from royalty payments actually received by the Company on those patents. At this time the Company does not have any such license agreement in place.”

    So whatever the reason or the motive of outside counsel to agree with those terms, it is clear the terms for obtaining additional payments are contingent on future licensing of the two tobacco patents in the RJR case, but those royalties do not necessarily have to come from RJR licensing. My assumption is RJR has a fully paid up license, but other tobacco companies obviously do not.

    So why would other tobacco companies consider or need to take a license?

    I would guess the FDA's forced mandate of reporting harmful constituents, including TSNA levels, would be the primary motivation for any tobacco company to use the best tobacco curing process possible, because the tobacco companies will be forced to report those harmful constituents to the public in the future.

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    • Guess you missed prior discussions. The settlement gave RJR the right to use Star's curing process. IF RJR does so, then for liability's sake as well as other considerations (if FDA dragarses ever require TSNA listing) the other tobacco cos would have to also ... thus they would need to license the process from Star.

      • 1 Reply to izof_texas
      • I agree the settlement gave RJR the right to use Star's curing process if they want to. The part of your statement I partially disagree with is the following, "IF RJR does so, then..."

        Why does it take RJR to start using Star's tobacco curing process before other tobacco companies feel the need to seek a license or feel the pressure to do so?

        If Star's tobacco curing process delivers the lowest TSNA number's, which have to be reported via FDA law, why not sign a license for that reason, regardless what RJR does.

        What I am trying to say is, the FDA Harmful Constituent disclosure law is more of a driver for Star licensing than what RJR does imo.