Cannabis vape tech maker accused of illegal monopoly tactics

Illegal monopoly tactics and “abusive litigation” are how a Chinese company became the world’s largest maker of vaporizer devices in the cannabis industry, according to federal court filings.

In a counterclaim filed June 14 in federal court in California, Seattle-based marijuana vape maker Next Level Ventures claims Shenzhen Smoore Technology Co. has been waging a “years-long battle to unlawfully restrain competition in … the closed cannabis vaporizer market” based on false patent claims.

Smoore, which markets vape devices under its CCell brand, has not yet responded to the claim, according to court records.

The saga began in 2021, when Smoore filed a complaint with the U.S. International Trade Commission (ITC), accusing 38 U.S.-based companies that it marketed vaporizer devices to -including Next Level – of violating trade law by importing products that infringed on its patents.

Smoore holds at least five patents, issued by the US Patent and Trade Office, that the Chinese company claims grants it intellectual-property rights over the basic elements of most typical vaporizer devices: a mouthpiece that attaches to a liquid reservoir and atomizer, which in turn connect to a battery.

Most companies named in that complaint settled or went out of business, according to Next Level’s counterclaim.

However, an administrative law judge ruled against Smoore last year.

In its counterclaim, Next Level pointed out that vaporizer technology claimed by Smoore was “displayed and offered for sale” as early as the 2016 Marijuana Business Conference & Expo (the predecessor to MJBiz’s MJBizCon). That happened before Smoore filed for patent protection.

What’s more, at least one patent Smoore is using to pursue claims was “fraudulently obtained,” Next Level alleges.

According to Next Level’s counterclaim, Smoore’s complaint to the ITC was motivated by flagging sales.

Smoore’s market share for products sold under the CCell brand fell from 80% of the market “to approximately 50-60%” by 2022, Next Level’s counterclaim alleges.

In addition to the legal tactics, Smoore imposes “collusive and/or coercive” terms on its partners and distributors, including exclusivity and noncompete agreements that violate federal antitrust law.

“Unable to compete on the merits, Smoore resorted to a variety of anticompetitive and illegal tactics in an effort to maintain its dominant share of the cannabis closed vaporizer market,” Next Level alleges.

The counterclaim asks a judge to dismiss all of Smoore’s claims against Next Level and to award damages.