Reports that Matter

United States v. Philip Morris USA Inc.: Amended Final Opinion

For Decades, Defendants Have Recognized that Controlling Nicotine

Section 58 of 129

For Decades, Defendants Have Recognized that Controlling Nicotine

Delivery, in Order to Create and Sustain Smokers' Addiction, Was Necessary to Ensure Commercial Success a. Defendants Recognized the Need to Determine "Minimum" and "Optimum" Nicotine Delivery Levels in Order to Provide Sufficient "Impact" and "Satisfaction" to Cigarette Smokers 1371. During years of research, cigarette company Defendants sought to identify what they

often referred to as an "optimum" amount of nicotine: one that would meet smokers' demand for lower nicotine and tar products, while still providing enough nicotine to create and sustain addiction. Defendants' efforts often centered on attempting to identify a particular dose of nicotine that would "satisfy" smokers' need for nicotine and thereby assure continued smoking.

  1. As Defendants' knowledge and understanding of nicotine delivery evolved, they identified and developed more sophisticated product design techniques that would assure the delivery of the minimum dose of nicotine to provide smokers with sufficient "impact" and "satisfaction," regardless of the type of cigarette.

  2. Defendants' internal documents demonstrate that, based on their knowledge of nicotine's pharmacological properties and addictive nature, they incorporated physical and chemical design techniques into their commercial products that would assure delivery of the precise levels of nicotine necessary to assure taste, impact, and satisfaction, i.e., to maintain addiction. Henningfield WD, 35:16-36:16, 41:18-42:7, 54:7-15, 66:23-67:12.

  3. In their research reports, studies, and memoranda, Defendants used different terms to describe or identify the attributes of nicotine which were so desirable to smokers. Those terms include the words "impact," "satisfaction," "hit," "optimum," "optimal," and "minimum." These terms were not used in a uniform or consistent manner, and were often used interchangeably.

548

  1. Based on thorough examination of the many documents discussed in this Section, and the context in which the terms in issue were used, the Court finds that, in most instances, the word "impact" has been used by Defendants to refer to the immediate sensory effect that the delivery of nicotine has on a smoker. This sensory response occurs through nicotine's stimulation of the afferent nerves in the back of the throat when cigarette smoke is first inhaled, causing a peripheral nerve effect that is recognized by the brain. Benowitz TT, 11/2/04, 4800:21-4801:19; Dixon WD, 11:7-18.

  2. Defendants' internal documents indicate that they were well aware that impact was significant to smokers, and that a particular cigarette's impact was a function of its nicotine delivery. For example, B&W defined impact to mean "[t]he sensory attribute most associated with nicotine," noting that "[t]he higher the nicotine delivery per puff of a product the higher the Impact felt by the inhaling smoker." 500104403-4425 at 4409 (US 47966).

  3. The Court also finds that, in most instances, the word "satisfaction" has been used by Defendants to refer to the pharmacological attributes associated with a cigarette's level of nicotine delivery. As found in industry documents, the word describes the "hit" of nicotine an individual receives when smoking a cigarette and the effect produced by that nicotine on the central nervouse system when it reaches the brain. Henningfield WD, 87:10-16, 96:17-97, 97:5, 97:13-20; TLT0730001-0850 at 0083 (US 77011).

  4. For example, Lorillard has stated that smokers "want some acceptable level of smoking satisfaction; which among other attributes means some acceptable level of nicotine delivery." 87410132-0144 at 0139 (US 88060). Reynolds also discussed "the minimum level of nicotine required for smoker satisfaction." 505243357-3365 at 3365 (US 86944); see also

549

51170312103124 (US 51575); 500994992-4941 at 4934 (US 85405); 504223322-3327 at 3322 (US 50614); 536000308-0507 at 0334 (US 85298); 602759-2759 (US 53297).

  1. Defendants have claimed that the terms "impact," "satisfaction," "hit," etc., as used in their internal documents, refer only to the taste characteristics of cigarettes. This claim is rejected because the documents themselves prove otherwise. Even though, as noted earlier, the scores of writers of these hundreds of documents do not always use the terms in a consistent manner, the numerous internal documents quoted and discussed infra, usually differentiate taste and impact from satisfaction or "hit," and the context makes clear when reference is being made to the taste and sensory attributes of nicotine as opposed to its physiological or addictive effects.

(1) Philip Morris 1380. Philip Morris has been aware of the need to effectively measure and control the

amount of nicotine in cigarettes since as early as the 1940s, when it first conducted studies on controlling nicotine in its Parliament cigarettes. In a 1954 document titled, "An Outline of Current and Proposed Quality Control, for example, Development and Research for Benson and Hedges," Philip Morris discussed its program to "ensur[e] the over-all quality and uniformity of the finished Parliament cigarette and thus maintain[] its appeal for discriminating smokers." The program was focused on "nicotine content, tar content, acid-base balance, and content of taste and aroma factors." The memorandum described Philip Morris's efforts to use "informally constituted smoking panels and the results of nicotine analyses performed on the blends . . . to establish a desirable level of nicotine concentration in the blend and hence also in the smoke." 1001761472-1484 at 1472-73 (US

550

  1. Philip Morris was concerned that complaints relating to smoking and health might pressure the tobacco industry to reduce levels of nicotine to such a low level that the smoking market might be eliminated. In 1961, Helmut Wakeham, Philip Morris's Director of Research, wrote: "Even though nicotine is believed essential to cigarette acceptability, a reduction in level may be desirable for medical reasons. . . . How much nicotine reduction will be acceptable to the smoker?" 1000277423-7447 at 7441 (US 20088).

  2. That same year, Wakeham conducted a seminar titled, "The Big Picture for 1961," in which "Aim 2" was described as: "Define the potential of nicotine control as a cigarette improvement. . . . Determine optimum levels of nicotine in smoke. . . . Perfect processes for controlling nicotine content of filler." 100277468-1000277482 at 7481 (US 35201).

  3. From the 1950s and 1960s through the 1980s and 1990s, the most senior levels of executive leadership at Philip Morris considered various mechanisms for controlling the amount of nicotine delivered to smokers, from determining the optimal level of nicotine delivery to the control of nicotine levels through leaf blending and increasing nicotine delivery to cigarette smoke. 1001896774-6776 at 6774 (US 20122); 1003294245-4261 at 4246 (US 20170); 2023186690-6690A at 6690A (US 20379); 511223463-3484 (US 20480); Henningfield WD, 94:6-13, 95:22-96:9; 98:4- 99:15.

  4. An October 19, 1977 report titled, "Smoker Psychology Program Review," postulated the following questions: (1) what is the optimum nicotine/tar ratio? (2) given a fixed quantity of nicotine in tobacco, what factors in the cigarette design determine its availability for delivery to the smoker? and (3) how important is the form of the delivered nicotine? 1000046538-6546 at 6543

551
  1. In 1990, Philip Morris researchers explained in an inter-office memorandum that the question of whether there was an optimal amount of nicotine to be delivered to the smoker had been answered by Philip Morris's Electrophysiological Studies Research Group, which explored and measured the brain effects of nicotine. Listed among the various achievements of the group was that it had "shown that there are optimal cigarette nicotine deliveries for producing the most favorable physiological and behavioral responses." 2028813366-3368 at 3366 (US 20430), (no bates) (US 76179); Henningfield WD, 102:2-10.

(2) R.J. Reynolds 1386. By 1971, Reynolds also was studying the optimal amount of nicotine to deliver to

smokers. 504210018-0018 (US 50577).

  1. In a February 2, 1973 research and planning memorandum, titled "Some Thoughts about New Brands of Cigarettes for Youth," scientist Claude Teague recommended that "[n]icotine should be delivered at about 1.0-1.3 mg/cigarette, the minimum for confirmed smokers." 502987357-7368 at 7361 (US 21475).

  2. A November 9, 1976 memorandum from W.M. Henley to D.H. Piehl on the subject of "Nicotine Research" reviewed discussions among Reynolds's scientists concerning the physiological action of nicotine in the body and the factors that influence the presence of nicotine in the tobacco leaf and in tobacco smoke. The memorandum also identified issues for further research:

C.R. Green and D. Lynm raised the questions concerning the minimum level of nicotine required for smoker satisfaction. R.L. Rowland asked if every possible variable had been investigated for its effect upon nicotine delivery to the smoker. It may be

552

generally accepted that the delivery of nicotine is changed by changing the type of tobacco leaf which is used in the cigarette. But, holding constant the tobacco which makes up the cigarette, are we cognizant of all other factors in cigarette manufacture which would change the nicotine delivery, particularly any factors which would allow a decrease in tar delivery without the accompanying proportional decrease in nicotine delivery.

505243357-3365 at 3357, 3359, 3360, 3362 and 3365 (US 86944).

  1. A July 1977 report by A.H. Laurene emphasized Reynolds's concerns regarding its ability to keep smokers using cigarettes with reduced tar levels, stating:

Faced with gravitation of most of our products to the low tar or very low tar category, the problem of keeping in our products those desirable attributes which keep our smokers smoking becomes a matter both difficult and important.

Laurene described Reynolds's strategies of maintaining "physiological satisfaction" in low tar cigarettes as follows:

-- Develop means to increase the nicotine content in the smoke of our lowered tar products through agricultural methods, selective leaf purchasing, blending and casing techniques, process improvements, and increased transfer efficiency of nicotine from tobacco into smoke.

-- Improve method to control pH and free nicotine in smoke.

Laurene reported that "efforts are already underway on each of these approaches to improve nicotine delivery and impact." 500884922-4941 at 4933-34 (US 85405); see also 502314530-4547 at 4538

(US 21917); 502967936-7944 at 7944 (US 76188).

  1. In a memorandum dated January 4, 1978, titled "Nicotine and Smoker Satisfaction,"

D.H. Piehl wrote to Alan Rodgman that an objective of the 1977-1978 research was to "[d]efine the optimum nicotine level in cigarette smoke required to maximize smoker satisfaction. Determine the existence of a minimum or threshold value of nicotine required for satisfaction." 504423322-3327 at 3322 (US 50614) (emphasis in original). In addition, the document clearly distinguished between taste and satisfaction. Id.

553

  1. From 1978 to 1984, R. J. Reynolds had a "nicotine optimization" program. 507028876-8876 (US 20771). During this time, potential optimum levels of nicotine were identified and circulated among company scientists. In 1978, the "optimum 'nicotine strength'" for Winston filters was identified as smoke pH 6.2-6.3 and 0.12-0.13 milligrams of nicotine per puff. 504462513-2513 (US 20728). In 1979, the "maximum satisfaction" for Winston King Size was believed to be delivered at 1.0 milligrams of nicotine per cigarette. 503851759-1759 (US 21508). In 1980, R. J. Reynolds reported data from a fuller-flavor low tar consumer satisfaction study, which concluded that there was both an "optimum and minimum nicotine level required to maximize smoking satisfaction. . . . Camel Lights is in the optimum range. Merit 85 is just above the minimum." 500250599-0599 (US 20621).

  2. RJR's efforts to identify an optimal amount of nicotine focused not only on its own products, but also involved evaluating other manufacturers' brands. A September 20, 1979 memorandum from W.J. Casey to R.A. Lloyd discussed the findings of RJR's in-house studies regarding the nicotine content in Philip Morris cigarettes. The studies produced a "striking" conclusion -- that even though Philip Morris brand cigarettes contained significantly less nicotine in the smoke than the RJR brands, Philip Morris was somehow able to maintain more constant nicotine levels in their products. 517701734-1735 (US 85407). A 1980 competitive brand analysis found that Philip Morris's full-flavor brands were delivering close to 1.0 milligram of nicotine per cigarette. This amount approximated the "optimum nicotine level in that 'tar' range" indicated by RJR's own research studies. 504675253-5282 at 5257 (US 20734).

554

  1. A March 31, 1989 report prepared by Calvin L. Neumann, an employee in the Cigarette Technology Division, reviewed the consumer studies conducted by RJR between 1979 and 1984 in which nicotine was a major variable. In the consumer studies reviewed by Neumann, "nicotine, or nicotine and 'tar,' was varied in a systematic controlled manner. . . ." Neumann concluded that "[t]he studies show that as nicotine was lowered from optimum values, key consumer attribute ratings for satisfaction . . . were lowered significantly." 508282165-2191 at 2165 (US 51362).

  2. In a November 26, 1990 document on the subject of "Project XB," one of Reynolds's projects devoted to the study of nicotine control (discussed in Section V(D)(4)(b)(2)((b)), infra.), an employee with the initials GRD identified a series of questions to be answered by Project XB. These questions included:

  1. How much nicotine do we need in a 5± mg product to satisfy normal smokers? 2. How much free nicotine of the total do we need to get the proper organoleptic [sensory] feel? 3. What are the limits round the amount of free nicotine before the product is either to harsh or too smooth -- ±mg? *** 6. How good do we feel that legal group will allow us to sell product we visualize -- i.e., take out tar vs. add nicotine? 7. Should we look at using tobacco high in nicotine, remove, treat, add back?
555

511703121-3121 (US 51575). See also 511223463-3484 (US 20840).

(3) Brown & Williamson and BATCo 1395. BATCo began research on nicotine levels at least as early as the 1950s. 100099115-

9117 (US 20112). By the early 1960s, BATCo and B&W scientists were confident that they could design cigarettes to deliver optimum doses of nicotine. A September 16, 1963 letter to BATCo from Robert Griffith, Director of Research and Development at B&W, discussed "optimum levels" for nicotine and correlated the nicotine level in cigarettes with consumer acceptance. The letter recognized that the nicotine levels of B&W cigarettes were not obtained "by accident" and admitted that "we have a research program in progress to obtain . . . any level of nicotine desired." 102630333-0336 at 0334, 0335-0336 (US 23000).

  1. Reports, memoranda, and other documents from BATCo throughout the 1970s and 1980s confirm that the company's goal was to establish and deliver "the optimal levels of nicotine [to] smokers." 100051935-1948 (US 34587); 660913609-3633 (US 22763); 110069974-9982 at 9975 (US 20268); 400993160-3215 (US 75975*).

  2. On June 6-8, 1984, BATCo held a comprehensive conference on nicotine. 101234971-5018 (US 21645). Topics at the conference included "Nicotine Dose Requirements," "Nicotine Dose Estimation," and "Product modification for maximal nicotine effects." Id. at 4974- 4975; 512106427-6437 at 6428-9 (US 20846). BATCo concluded that if nicotine delivery fell below a certain level (believed at that time to be 0.4 mg nicotine), the cigarette would fail to "satisfy" the smoker. 101234971-5018 at 4978, 4981 (US 21645). BATCo also believed that it was important "to enhance our ability to maximise nicotine effects from a lower delivery base." 101234971-5018 at 4978 at 5013 (US 21645). Finally, BATCo concluded the conference with sessions on product modifications that could be made to produce optimal nicotine effects. Id. at 4974-5. The primary objectives of these sessions were to: (a) identify the extent to which nicotine contributes to product satisfaction; (b) understand the "significance of [] different levels of nicotine interaction with the body to smoking behavior and product satisfaction"; and (c) identify a "research programme to meet the criteria for maximising nicotine effects to satisfy consumer needs from a minimum dose of nicotine." 512106427-6437 at 6435 (US 20846).

556

  1. At a 1984 Smoking Behavior-Marketing Conference in Montreal attended by representatives of BATCo affiliates from the U.S., the U.K., Australia, and Germany, a presentation claimed that individuals who smoked required twelve to fourteen milligrams of nicotine a day, and at least .7 milligrams of nicotine in a cigarette in order for it to provide "satisfaction." 536000308- 0507 at 0334 (US 85298); 682637850-7928 (US 88063).

  2. A document recording the "conclusions" of the 1984 conference refers to the concepts of "satisfaction" and "impact." The conclusions included that "'satisfaction' must be related to nicotine. Many people believe it a 'whole body response' and involves the action of nicotine in the brain." They also stated:

If we are to make better use in product terms of the levels of nicotine in smoke currently available -- and even more so if we are forced to market cigarettes with reduced levels of nicotine -- then it is important to significantly increase our understanding of impact/satisfaction.

602759-2759 (US 53297).

(4) Lorillard 1400. Lorillard pursued research seeking to identify an optimal range of nicotine delivery

throughout the 1970s. As part of its Nicotine Augmentation Project, Lorillard conducted an extensive review of the literature on the "pharmacology of smoke-dose nicotine with the goal of discovering some indications of threshold dose and optimum doses of nicotine in average cigarette smokers." In a December 10, 1976 report relating to the project, H.S. Tong, a scientist at the Lorillard Research Center, recommended that, in light of Lorillard's knowledge of smoker compensation,"[i]t would seem desirable to have a low tar cigarette with a nicotine content between the threshold and optimum doses level." Tong also set forth the results of Lorillard's extensive review of scientific literature on the subject of determining the optimum nicotine dose and summarized, "[n]o single parameter appears to offer a reliable handle for measuring optimum satisfaction dose of nicotine at the present time. . . . In a subjective study, test subjects reported that they found cigarettes of 0.8 mg to be acceptable." 00045061-5071 at 5061, 5063, 5068 (US 34210); Henningfield WD, 94:6-8, 97:6-12; Farone WD, 132:18-133:12.

557
  1. Like the other manufacturers, Lorillard's search for the best way to ensure effective and adequate nicotine delivery evolved through the years, but always had the same goal -- determine the amount of nicotine delivery necessary to sustain addiction and produce cigarettes that ensure such delivery. A February 13, 1980 internal memorandum from Richard E. Smith described how Lorillard undertook an internal project to "[d]etermine the minimum level of nicotine that will allow continued smoking." Company scientists hypothesized that there was a nicotine threshold below which "smokers will quit, or return to higher T&N brands." 526321269-1270 at 1269 (US 85323).

(5) Liggett 1402. An April 30, 1985 memorandum from J.C. Turner to R.L Kersey reporting on

Liggett's various ongoing research and product development projects reported that "[w]e are making progress in adjusting tar and nicotine yields where necessary on brands utilizing the consolidated blend," and "[w]e are still working with paper suppliers to find an appropriate paper to put us exactly on target on Full Flavor Generic tar and nicotine delivery." LWDOJ9272790-1791 at 2790 (US 86947) (Confidential).

558

b. Defendants Have Long Recognized that Controlling the Nicotine to Tar Ratio Would Enable Them to Meet Minimum and Optimum Nicotine Delivery Levels (1) Philip Morris 1403. Philip Morris understood more than forty years ago that a high nicotine to tar ratio

was important in formulating a successful cigarette strategy. A February 9, 1960 memorandum from L.L. Long, Research and Development Engineer, to A.B. Clarke, Research and Development Scientist, and copied to Robert Seligman, who became Vice President of Research and Development, discussed Philip Morris's ongoing efforts to control the amount of nicotine received by a smoker through concentration of nicotine in tobacco smoke while maintaining lower levels of tar. Long wrote:

One of the objectives of the 1960 cigarette project is the control of TPM ["total particulate matter," or tar] at a low level while maintaining the nicotine level in the smoke at its current level of about 1 mg/cigt. Several years ago some work was conducted along these lines. Nicotine Maleate was added to a low nicotine filler with a resulting increase in nicotine in the smoke. It would be most helpful if you could conduct some investigation in this area along with your work on nicotine control through extraction.

1001919958-9958 (US 85460). This issue received further attention throughout 1960. 1001919941- 9941 (US 21753).

  1. In 1962, Philip Morris President Hugh Cullman instructed Helmut Wakeham, Vice President and Director of Research and Development, to evaluate Reynolds's processing methods because Cullman had determined that Reynolds's cigarettes were "significantly lower in TPM [tar] for a given [n]icotine level than all other cigarettes tested, including those of Philip Morris." Cullman had also concluded that Reynolds's method of controlling TPM did not involve "any of the variables generally tested," was likely not "accomplished through leaf selection," but rather was most likely "the result of a method of tobacco processing, or the use of certain additives, not yet generally known to the rest of the industry." Cullman instructed Wakeham to research the issue further. 1000235191-5193 at 5191 (US 20082). Philip Morris scientists conducted that research and concluded, among other things, that to match the "high nicotine to T.P.M. ratio" found in RJR's brands, "[i]t would be possible to control the necessary variables through blending." 2022241584- 1587 at 1584 (US 36850).
559

  1. On March 26, 1964, Philip Morris scientists provided an outline of their work on a "1965 Cigarette" that would have lower tar amounts but that would still contain at least 7 milligrams of nicotine per cigarette. The scientists focused on the question, "Can we transfer nicotine from filter to smoke?" The same outline set forth goals for a "1966 Cigarette" that would provide "optimum nicotine in relation to flavor and impact." 1001901299-1310 at 1301, 1309 (US 35573).

  2. A March 24, 1969 Philip Morris memorandum' demonstrates that the company had considered several different filters, air dilution, and improved internal filtration, and had determined the effects that these methods would have on the nicotine to tar ratio measurements using the FTC method. The memorandum states that "[t]here does appear to be a definite increase in nicotine concentration as the percentage dilution increases." 1001883866-3870 at 3866 (US 35572); Farone

560

  1. Philip Morris's Cathy Ellis, a research scientist, stated that, during the 1970s, Philip Morris looked into increasing the nicotine delivery in its cigarettes while at the same time decreasing tar levels. Ellis explained that one method of achieving the higher nicotine delivery level was through selective tobacco blending. Ellis PD, Mississippi, 3/20/97, 92:21-93:18.

  2. Philip Morris often used actual smokers to provide results for different tests it ran regarding nicotine delivery. The company sometimes sent samples to identified smokers, and sometimes used its own employees as subjects. Philip Morris then analyzed the results in order to inform not only its research but also the production and marketing of its product. 2025986931-6935 (US 37314); 1000408760-8809 at 8771 (US 35272).

  3. Philip Morris conducted multiple consumer research studies to determine the acceptability of various nicotine to tar ratios. Studies conducted in the early- and mid-1970s tested smokers' reactions to "low tar, high nicotine" cigarettes. These studies showed that consumers preferred nicotine to tar ratios that were higher than those that occur naturally in tobacco. 1000351570-1595 (US 85423); 1003288950-8967 (US 20166); 1003288934-8949 (US 20165); 2024545758-5773 (US 20402); 1000048633-8654 (US 20075); 1000350159-0186 (US 35241).

  4. In a January 18, 1971 memorandum from psychologist Thomas Schori, to L.L. Long, Research and Development Engineer, Schori described a human smoking survey in which Philip Morris would mail to 600 Marlboro smokers ten experimental packs of four cigarettes each, with each pack having varying tar and nicotine levels. The nicotine levels ranged between .33 mg to 1.3 mg of nicotine per cigarette. The memorandum plainly stated, "Nicotine will be added as needed."

561

  1. In 1971, Philip Morris asked some of its own employees to participate in a smoking study in order to "find out how the nicotine and tar levels of cigarettes affected their acceptability and consumption." One of the conclusions of the study was that the number of cigarettes the employees smoked per day was directly correlated to the nicotine levels, but not to the tar levels. 1003285443-5443 (US 85421).

  2. In November 1971, Philip Morris issued a special report on "Tar, Nicotine and Smoking Behavior," written by Schori and approved by William Dunn, Associate Principal Scientist. The report, which involved analyses of the results of tests involving human smokers, concluded that "tar deliveries of the currently best selling cigarettes might be reduced somewhat, leaving nicotine as it is, without any significant overall decrease in the cigarettes' acceptability." The study also found that because of compensation, test subjects received similar amounts of nicotine and tar each day, regardless of the levels available in the cigarettes they were smoking. 1000350158-0188 at 0161 (US 20176); Henningfield WD, 94:6-13; Farone WD, 110:6-9, 110:15-111:4.

  3. On September 8, 1971, company R&D scientists, including Dunn, wrote to Paul Eichorn, then Manager of Technical Planning and Information Development, stating their intent to "concentrate upon the nicotine/tar ratio as a factor in determining cigarette acceptability." The goal was to determine the "optimum" nicotine/tar ratio levels. The plans for 1972 included a focus on nicotine delivery between .3 and 1.2 mg of nicotine per cigarette "with a systematic manipulation of the nicotine/tar ratio at incremental nicotine levels within this range." 1003289951-9954 at 9951 (US 85422); see also 1000351570-1595 (US 85423); 1003288521-8545 (US 35683) (US 35719).

  4. Correspondence between the Marketing Department and the Research Center at Philip Morris in 1972 demonstrates the company's desire to increase its share of the menthol cigarette market, then dominated by Brown & Williamson's Kool cigarettes, by altering the nicotine to tar ratio and overall nicotine levels in Philip Morris's own menthol cigarettes, such as Alpine. 2022244795-4801 (US 85424).

562
  1. In a July 8, 1974 letter from Philip Morris's Helmut Wakeham to Max Hausermann of Philip Morris Europe, Wakeham acknowledged receipt of a Research Progress Report from Hausermann. Wakeham responded to studies highlighted in the report that had found discrepancies between the way that humans smoke cigarettes as compared with the operation of the FTC smoking machine. Wakeham agreed that Philip Morris had found evidence of the same phenomenon. He advised Hausermann not to publicly share this information:

There is concern that if in the light of new findings, we are too strong in denunciation of the present test as being unrealistic, then some advocates might claim the advertised numbers are false and misleading. . . . I am not suggesting we defer the research or neglect to apply it to our product problems. We should by all means use it to the best of our advantage. On the other hand, I would propose deferring publication or presentations to committees or conferences, particularly those attended by our competitors, for obvious reasons. Let us pursue the research and hold back on the publicity until we can agree on some pro-industry approach to the problem.

1004863921-9975 at 3921-3922 (US 35921); 1000356550-6576 (US 85425); 0000258064-8064 (US 85426).

  1. An additional study, titled "Low Delivery Cigarettes and Increased Nicotine/Tar Ratios, III," was conducted in 1976 and concluded that many smokers preferred a cigarette with a higher nicotine/tar ratio, which was accomplished by adding nicotine citrate to the cigarette.
563

1003288934-8949 at 8943 (US 20165). Studies involving nicotine citrate continued into 1977. 1003285418-5418 (US 85427); 2081925847-5856 at 5851 (US 88784).

  1. A March 21, 1978 memorandum from scientists J.I. Seeman, Carolyn Levy, and E.B. Sanders to Thomas Osdene outlined Philip Morris's "Nicotine Program," which was "aimed at elucidating the basic mechanisms of action of nicotine with a major goal of understanding and controlling the physiological effects of 'smoke.'" 1000128638-8644 at 8638 (US 86949); Levy WD, 5:5-6:31; see also 2031436002-6002 (US 20433).

  2. A December 6, 1978 memorandum from William Dunn to Thomas Osdene, titled "Plans and Objectives 1979," stated:

To what extent does the presence of detectably more or detectably less nicotine in smoke affect the acceptability of low-delivery cigarettes. This question is related to the optimal nicotine/tar ratio, a problem we have addressed before at higher delivery levels.

2022150943-0951 at 0947 (US 85254). Dr. Jerry Whidby, Philip Morris scientist from 1972 to 1998 and presently a paid consultant for Philip Morris, who held the title of Senior Fellow, the highest non-management scientific position at Philip Morris, acknowledged that nicotine deliveries identified in this memorandum "show[] almost uniformly that the brands with the lower FTC tar deliveries actually have higher nicotine to tar ratios." Whidby TT, 2/22/05, 14015:8-14016:14.

  1. An April 17, 1980 Philip Morris USA memorandum from P.A. Eichorn to R.B. Seligman, titled "Reynolds' Proposal to Lower Nicotine in the New Flue-Cured Varieties," indicates Philip Morris's control over the nicotine levels of its cigarettes. In response to a proposal by RJR that the companies lower the nicotine content of their cigarettes, Mr. Eichorn of Philip Morris wrote: "From our viewpoint, I don't think lowering of standards to be desirable. To do so would put us in a position of minimal control of nicotine levels which we are able to adjust as needed with present technology." 1000779209-9209 (US 90178); Whidby TT, 2/22/05, 14019:2-14021:1, 14021:22- 14022:5.
564

  1. Philip Morris scientist Frank Gullotta conducted research for the company in the early 1980s, including human smoking studies, that involved holding tar levels constant and varying nicotine levels, in order to discover human smoking reaction to increased levels of nicotine delivery. This research informed his search for the optimal nicotine delivery level. 2025986350-6401 at 6393 (US 87080); 2023105617-5623 (US 85464).

  2. In a November 8, 1990 memorandum, Philip Morris scientists Frank Gullotta, Cynthia Hayes, and Bobby R. Martin wrote to Cathy Ellis, then Manager of the Biochemical Research Division and later Senior Vice President, Worldwide Scientific Affairs for Philip Morris, regarding "past, present and future" contributions of "Electrophysiological Studies to P.M. USA." The scientists reported that:

Experiments conducted in our laboratory led us to the idea of how to produce an acceptable low tar cigarette. It was our work which led to the development of cigarettes with altered tar/nicotine ratios. The tobacco blend which we advocated . . . is now being used in Project Bold and may soon find its way to the marketplace.

Another accomplishment they described was research showing that "there are optimal cigarette nicotine deliveries for producing the most favorable physiological and behavioral responses," and that "all forms of nicotine are not behaviorally or physiologically equal." 2028813366-3368 at 3366, 3367-3368 (US 20430); Henningfield WD, 102:2-10.

  1. Philip Morris continued to study various nicotine delivery levels while holding tar levels constant in the 1990s. In some of these studies, Philip Morris also examined the interactions between menthol, nicotine, and tar levels in cigarettes, determining how menthol levels in cigarettes with different levels of nicotine affected smoker impact. These studies included human smoker studies. 2028813366-3368 (US 20430).
565

  1. Dr. Jerry Whidby admitted that, "[f]rom the 1970s until today, Philip Morris has . . . used computer models that predict tar and nicotine delivery according to the FTC Method based upon the design of the cigarette that you put into the program." Whidby WD, 16:13-16. These computer models were used by Philip Morris to adjust, among other things, the nicotine delivery of commercial cigarettes to the target level desired by Philip Morris. Farone WD, 47:7-18, 53:4-9.

  2. Dr. Whidby also admitted that Philip Morris's low tar Merit Ultima cigarette has a higher nicotine to tar ratio than full flavor cigarettes, and that this cannot be explained solely by "filtration efficiency." He further stated that Philip Morris's Merit Ultima cigarettes use a "higher nicotine blend" of tobacco. Whidby TT, 2/22/05, 14056:19-25; 14110:24-14111:14.

(2) R.J. Reynolds 1425. No later than 1972, RJR recognized an urgent need to develop a lower tar cigarette

that would deliver a high level of nicotine, in order to have a competitive advantage in the marketplace. In a May 19, 1972 internal memorandum to Claude Teague from Frank G. Colby, Manager of Scientific Information, Colby recounted a conversation he had with an employee of Imperial Tobacco Company while preparing for an industry-wide conference:

He explained in some detail how desirable it would be to have a high nicotine tar ratio cigarette, but said that unfortunately he did not have any idea how to realize this technologically. Naturally, I did not mention in any way our interest in this subject.

566

Colby also reported his suspicion that Philip Morris already was developing a high nicotine cigarette. Colby concluded: "I feel these two incidents prove that the high nicotine tar ratio cigarette is a concept which is 'very much in the air.' We should definitely make an effort to be first." 500790798-0798 (US 20651); see also 500901543-1545 (US 85428).

  1. In a March 28, 1972 paper from Claude Teague to E.A. Vassallo and Murray Senkus, who became Vice President of Research and Development, Teague noted that he believed Reynolds had identified the minimum nicotine delivery required to make a cigarette "acceptable" to a smoker as 1.3 milligrams. Teague's paper, titled "A Gap In Present Cigarette Product Lines And An Opportunity To Market A New Type Of Product," advocated that Reynolds take advantage of the so-called gap in product lines by developing a cigarette that would deliver 1.3 milligrams of nicotine while delivering less tar than any current product:

[A]t the desired nicotine delivery, calculated to be 1.3 mg., the smoker will chose [sic] the cigarette offering the lowest T/N Ratio, if other qualities are satisfactory. With current brands at or even near the desired nicotine level, the smoker is offered no brand with a T/N Ratio below 13. Indeed, of all 121 brands tested by the FTC, the only one with a T/N Ratio less than 13 is Carlton, and it delivers only 0.4 mg. of nicotine.

500790776-0784 at 0776-0777 (US 29473) (emphasis in original).

  1. An undated RJR document setting forth the objectives and strategies of its Tobacco Development Department identified the "need for increased smoker satisfaction" as a key issue. Reynolds's strategies for maintaining and improving smoker satisfaction included "proceed[ing] with tar reduction programs maintaining maximum nicotine deliveries in the smoke" and "study[ing] all means to maximize nicotine content of tobaccos and delivery to the cigarette smoke . . . [including] agricultural practices, leaf purchase program, blending, processing, nicotine transfer efficiency, casing levels, added nicotine, selective filtration, effect of wrapping materials." 504658762-8769
567
  1. Frank G. Colby, Manager of Scientific Information, wrote in a December 4, 1973 memorandum to R.A. Blevins, Jr., about the importance of assuring that the new product delivered sufficient nicotine:

In my judgment, for public relations reasons it would be impossible to go back all the way to the 1955 type cigarettes. As far as tar and nicotine in the smoke are concerned, I believe it should be possible to achieve the desired effect by going to a tar level of today's Pall Mall (non-filter type) of about 29 mg of tar and 1.8 mg nicotine. Still, with an old-style filter, any desired additional nicotine 'kick' could be easily obtained through pH regulation.

501166152-6153 at 6152 (US 23051) (emphasis in original); Henningfield WD, 75:22-76:1, 78:1,

79:16-20.

  1. On June 5, 1974, individuals from RJR's research department and RJR's advertising agency, Tatham-Laird & Kudner, Inc., met "to review a selected group of technical developments in the cigarette category . . . [and] to determine whether any of the technical developments to date could, at this time, be utilized in the development of new brands for marketing." One of the technical developments discussed was a high nicotine/low tar cigarette:

Until this development, tar and nicotine went either up or down in a cigarette simultaneously; the technical development here has enabled RJR to deal with these two elements separately and therefore each can be controlled at virtually any given level desired.

568
  1. In May 1976, Reynolds's Research Department prepared a document titled "Planning Assumptions and Forecast for the Period 1977-1986+ for R.J. Reynolds Tobacco Company." Envisioning cigarettes delivering less than 0.8 milligrams of nicotine, RJR acknowledged that:

[I]t is essential that we are fully aware that, at these nicotine levels, smoking cessation will be very much facilitated. Some "farmed out" or in house research on determining the minimum nicotine level (at the highest "acceptable" pH) for providing "satisfaction" should be considered.

500884613-4638 at 4619-4620 (US 85430); see also 504707350-7372 at 7365 (US 86950); 504424968-4976 (US 86951).

  1. According to an August 19, 1976 report, titled "New Product/Merchandising Directions A Three Year Action Plan," R.J. Reynolds's "top priority [was] to develop and market low 'tar' brands . . . that: [m]aximize the physiological satisfaction per puff -- the single most important need of smokers." Reynolds was not content with the proportionate nicotine reductions which were believed to follow tar reductions. Instead, the report stated, "[i]t would be more desirable from our standpoint, i.e. providing satisfaction to the smoker and maintaining his allegiance to smoking if we could reduce 'tar' to whatever target we choose without a proportionate drop in nicotine." The report also outlined Reynolds's "approaches to decreased T/N ratio," including the development and commercialization of high nicotine tobacco, the development of "means to supplement nicotine" in tobacco, and the development of "means to increase nicotine transfer in smoke." 500672011-2172 at 2054, 2111-2112 (US 20645) (emphasis in original).

  2. An August 23, 1976 document, titled "MBO Performance Report," outlined the objectives and activities of "Project 1250," a research project carried out by RJR's Chemical Research Division for the purpose of "search[ing] for fundamental information which will lead to new techniques and methods of altering and controlling nicotine/ 'tar' ratio, which will define important factors related to optimum nicotine level and smoker satisfaction." The report defined Reynolds's objectives for 1977: (1) "Identify factors influencing nicotine delivery efficiency, and determine means to increase nicotine to 'tar' ratio"; (2) "Determine minimum 'tar'-nicotine levels for smoker satisfaction through panel testing and study effect of varying nicotine levels on low 'tar' blends"; (3) "Evaluate existing competitive brand data and crop analyses to determine factors related to nicotine and 'tar' delivery"; (4) "Evaluate various experimental and foreign tobaccos to determine the effect of these materials on 'tar' and nicotine delivery"; and (5) "Continue casing studies, particularly the effect of sugar on nicotine delivery." 511526479-6481 at 6479 (US 85431); see also 502966364-6374 at 6364-6367 (US 85432).

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  1. In a January 5, 1977 memorandum on the subject of "Nicotine-Related Research," D.H. Piehl, Manager of Reynolds's Chemical Research Division, informed a large group of RJR employees that "[i]n 1977 we will be increasingly concerned with discovering new means for control of nicotine, tar to nicotine ratio and satisfaction in our products." 502740087-0087 (US 85433).

  2. On May 19, 1977, W.M. Henley sent a memorandum to Dr. D.H. Piehl, an RJR scientist, outlining the research activities undertaken in Reynolds's "Project 1250: Methods of Controlling Tar, Nicotine and Satisfaction." The objective of Project 1250 was to "[i]dentify factors influencing nicotine delivery efficiency and determine means to manipulate nicotine/tar ratio to provide a more satisfying smoke." 504476706-6706 (US 85434).

  3. In a January 4, 1978 memorandum, titled "Nicotine and Smoker Satisfaction," Piehl wrote to Alan Rodgman, RJR scientist, that an objective of the 1977-1978 research was to "[d]etermine the means to alter and control 'tar'/nicotine ratio and increase nicotine transfer efficiency" with the objective of maximizing smoker satisfaction. 504423322-3327 (US 50614) (emphasis in original).

570

  1. Piehl's 1979 work plan, which set forth the objectives and the results achieved by the Chemical Research Division, indicated that Reynolds had identified the "optimum and minimum nicotine deliveries that maximize satisfaction" for full flavor cigarettes; established the "optimum T/N for . . . low 'tar' cigarettes in house"; and demonstrated through research that "nicotine can be substantially relocated from one blend component to another, without affecting smoke delivery in blended cigarette." 502972546-2579 at 2547-2550 (US 85436).

  2. A document setting forth the mission and goals of Reynolds's "Tobacco Development Department" for 1980, 1981, and 1982 indicates that as part of Reynolds's "action plan" it intended to "[d]etermine means to optimize tobacco density and puff count on lights brands" by 1981, and, "[i]n cooperation with Research, establish appropriate T/N ratio, absolute nicotine and strength index for each brand" by 1982. 500545614-5644 at 5627 (US 86953).

  3. In the early 1980s, with knowledge that FTC testing did not accurately measure the amount of nicotine inhaled by a smoker, see Section V(E)(2)(a-b), infra, Reynolds developed a human mimic smoking machine, or "HMSM," in order to obtain a more accurate picture of how much nicotine and other materials in cigarette smoke a human smoker would inhale on a puff-by- puff basis from smoking its products. 500952551-2551 (US 88068). Reynolds used the human mimic smoking machine in its product development research throughout the 1980s and 1990s to replicate observed human smoking patterns, thereby enabling "the determination of the effect of individual human smoking behaviors on yields of mainstream smoke components" for any cigarette tested with the machine. 508187782-7803 at 7785 (US 88069).

571

  1. A January 10, 1983 internal memorandum to W.M. Henley from C.L. Neumann and Thomas A. Perfetti summarized Reynolds's research activities "directed toward the development of information relating consumer perceptions to cigarette parameters." The memorandum indicates that Reynolds had conducted several consumer studies in which nicotine and/or smoke pH were controlled variables and that Reynolds reached conclusions about optimum nicotine deliveries and tar-to-nicotine ratios based on the studies. USX3621341-1345 at 1341,1343-44 (US 77401).

  2. An internal RJR memorandum dated February 18, 1984, from Charles Green, Principal Scientist, stated that the purpose of one experiment was to manipulate particular variables of filter design, including length and chemical composition, in order "to find maximum nicotine delivery." The memorandum also indicated that the results of the experiment "show that nicotine and glycerine deliveries can be greatly altered by the manipulation of variable[s]" in filter design, and that RJR was in the process of designing additional experiments to "optimize" nicotine delivery. 505006266-6276 at 6274, 6275, 6276 (US 85499); see also 506339873-9880 (US 85500).

  3. In 1989, Reynolds formed its "Intra-Company Nicotine Review Committee (INRC)," an "interacting group comprised of representatives from Research and Development, Marketing and Marketing Research whose goal . . . [was to] develop a strategic plan that provides resources which will satisfy consumer wants and company needs related to nicotine." 507063957-3960 at 3957 (US 86955). Under the heading "Nicotine Strategic Plan," a document setting forth the INRC's priorities stated that "[b]y building our knowledge base with respect to nicotine, as a key design parameter, R&D can place the company in a more responsive position to act on identified consumer wants and product ideas to maximize volume and share growth." 507904528-4535 at 4530 (US 86956*). The INRC recommended that, in order to maintain its "technical leadership," Reynolds must "[m]eet existing and emerging consumer wants via new products or enhancements to current products that employ nicotine as a key design parameter." Id.

572
  1. In the late 1980s, RJR began experimentation with preparing tobaccos using the

"REST" [Reestablishment of Solubles in Tobacco] process. A December 11, 1989 internal memorandum from Rhenda H. Steele to Barry S. Fagg explained the purpose of REST processing as follows: "Using this process, all variables [in tobacco] are held constant except nicotine, the concentration of which can be controlled." 509887264-7264 (US 85437). A May 3,1991 to 1995. This program studied the correlation between lifestyle and environmental exposures and major chronic illnesses, and the role of diet in cancers of the lung, oral cavity and bladder. 2046988683-8683 (US 85673); 2021630974-0975 (US 87371); 2046988682-8682 (US 85674). -1358- report titled "REST Program Review" explained Reynolds's goal for use of REST processing to control nicotine delivery in its products:

To develop a viable process for the total control of nicotine in product, in conjunction with the "REST" process without affecting smoke performance other than attributes connected to nicotine. Basic development and process specifications are to be completed by the end of 1991. . . . We are basically in the nicotine business. It is in the best long term interest for RJR to be able to control and effectively utilize every pound of nicotine we purchase. Effective control of nicotine in our products should equate to a significant product performance and cost advantage.

509479574-9587 at 9854 (US 20829); Henningfield WD, 102:2-4, 102:11-12.

  1. REST processing was a vital part of Reynolds's "Nicotine Control Program" which began no later than 1990. The Nicotine Control Program included at least three distinct studies of methods for the control of nicotine delivery:

-- Project "LN," the objective of which was to "[o]ptimize products with extremely low smoke nicotine yields" using, among other things, REST technology;

-- Project "GTX," the objective of which was to "[d]evelop basic information on how the design variables of nicotine, 'tar' yield and draft interact physicochemically;"

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-- Project "Nicotine RSM," the objective of which was to "[e]xplore effects (independently and interactively) of nicotine, 'tar', and draft on smoker perceptions, behavior and acceptance" using, among other things, REST technology.

508112783-2807 at 2788, 2790, 2792, 2794 (US 85438). An August 22, 1990 report on REST technology stated that Reynolds had "achieved on a development scale a practical process for selectively adjusting the nicotine content in a tobacco extract and, therefore, in the tobacco blend after REST processing" and that Reynolds intended to use REST technology to "[i]ndependently control nicotine delivery, from very low to elevated levels." 509479574-9587 at 9576, 9577 (US 20829); see also 509479799-9799 (US 86958); 508099588-9588 (US 86959); 507051133-1136 (US 86960); 512331601-1601 (US 86961*).

  1. A document prepared for an August 6, 1990 meeting regarding the Nicotine Control Project's "Nicotine RSM Study" explained the benefit of REST processing: "A new process (REST) makes possible for the first time independent manipulation of three key product development variables (nicotine, 'tar', draft)." 507523433-3477 at 3441 (US 85439). Reynolds's Biobehavioral Research Division also saw significant benefits from the use of REST technology in the Nicotine Control Program, as expressed in an April 9, 1990 memorandum from J.H. Reynolds to Mari-Jo Dryden: "For the first time 'tar' and nicotine can be independently varied without excessive changes in blend. This has been a 'dream goal' of developers and researchers for years." 510961941-1941 (US 85440); see also 509347328-7336 (US 85441); 507973629-7348 (US 86962).

  2. In another consumer study relating to REST-processed tobacco, Reynolds endeavored "to assess the pharmacological component of smoking satisfaction by attempting to experimentally control the level of nicotine absorbed by smokers under normal smoking conditions." In a memorandum describing the experiment, Walter S. Pritchard and John H. Robinson explained that"

574

[t]he nicotine yields of the experimental cigarettes will be controlled using the R.E.S.T. (Re-Establishment of Soluble Tobacco) process, with target nicotine yields of 0.06, 0.2, 0.4, and 0.8 mg. The target "tar" yield of the experimental cigarettes will be 10 mg.

525246100-6103 at 6100 (US 85442).

  1. An RJR document, titled "Nicotine Strategic Plan September 26, 1990" reflects a presentation given by Reynolds scientists, including A. Wallace Hayes, Mari-Jo Dryden, John Robinson, Tom Perfetti and Pat Lippiello, concerning several of their ongoing nicotine research projects. Regarding the "Nicotine RSM Study," the document described nicotine as a "critical variable[] for product development" and noted that "independent manipulation of nicotine will result in a better understanding than ever before of satisfaction." The document stated that the Nicotine RSM study would "result in definition of optimal combination of tar, nicotine, and draft to maximize acceptance among one or more smoker groups/mindsets." In addition, the document confirmed that the goals of Reynolds's Projects XGT and GTX, which involved adding Nicotine Levulinate (salt form) to NOW and Winston cigarettes, were to"explore alternate methods/sources for enhancing nicotine yields of low 'tar' products." The document also identified as a "key issue" the "[o]ptimization of nicotine's sensory properties in smoking products." 514106716-6809 at 6737, 6781, 6803 (US 51775); see also 514940099-0120 (US 51894).

  2. A November 15, 1990 facsimile from Emily Etzel to Donna Wilson hypothesized about the "several reasons why Philip Morris would find it strategically advantageous to master nicotine manipulation." Etzel wrote that:

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Nicotine manipulation involves the changing of nicotine levels in their products other than by buying tobacco with high or low nicotine levels. The extraction of nicotine for such products as NEXT and Merit De-Nic results in an [sic] surplus of nicotine. This nicotine can be added to other products. . . . PM has successfully raised the nicotine levels on all their products (across the line) by using high nicotine tobaccos. Thus, they already have a better T/N ratio than their competitors. Adding nicotine could further improve that ratio.

509348227-8229 at 8228 (US 88072).

  1. In a detailed April 1, 1992 report, Barry S. Fagg detailed RJR's continued investigation and progress in the use of REST technology in product development. Fagg described the rationale and strategy of the continued investigation:

Previous development of the REST processing techniques has indicated that tobacco material can be disassembled into essentially water insoluble and water soluble portions, followed by controlled reassembly. . . . When coupled with the technology for denicotinization of aqueous tobacco extracts, the expanded process provides the power to produce a variety of "engineered" tobacco laminas in which the nicotine level is manipulated while other "non- nicotine" compounds are effected [sic] to a minimum degree.

Fagg concluded that "[t]he overall process has demonstrated the ability to start with lamina cut filler and produce processed tobacco cut filler in which the nicotine level within the tobacco can be controlled," and that "[c]ontrolled nicotine materials allow novel manipulations of tar to nicotine ratios which significantly alter smoking sensations. Product opportunities are apparent and consumer testing has been included in the Winston and Vantage brand families." 508380001-0027 at 0008, 0014-0015 (US 85443).

  1. RJR continued its research into changing the nicotine to tar ratio throughout the

1990s. The company concentrated on research that would allow it to create an ultra low tar product that provided nicotine delivery similar to full-flavor products. 509308455-8459 (US 20827).

576
  1. An April 6, 1998 memorandum circulated among RJR's employees listed "the locations where nicotine is currently measured on a regular basis in the domestic tobacco company." "Attachment B" to the document indicates that Reynolds regularly measured nicotine levels at twenty different stages of the tobacco manufacturing process. 523196492-6499 at 6492, 6493-6495 (US 88062).

(3) Brown & Williamson and BATCo 1451. Hugh Honeycutt, B&W's Director of Research Services and Analytical Research

admitted that B&W "absolutely" had the ability to manipulate the nicotine to tar ratio of its products. Honeycutt PD, United States v. Philip Morris, 4/23/02, 160:15-19.

  1. A March 17, 1967 study by BATCo described a study in which the "delivery of 'extractable nicotine' was manipulated, to cover a convenient range" by chemical additives in the filters. 750039365-9385 at 9367 (US 88091).

  2. According to M. Lance Reynolds, former B&W Director of Product Development and Director of Research, from the beginning of his career at B&W in 1968 onwards, B&W and BAT Group companies had "projects to try and increase nicotine delivery with respect to tar, for many years." Reynolds PD, United States v. Philip Morris, 9/12/02, 301:1-301:23.

  3. In the 1960s, BATCo undertook two research projects called HIPPO I (completed in January 1962) and HIPPO II (completed in May 1963), which investigated the role of nicotine in cigarette smoking and examined its potential beneficial physical and psychological effects. Their goal was to control nicotine delivery and change nicotine to tar ratios. 105620620-0683 (US 20247); Farone WD, 84:6-15; 105620569-0605 (US 20246); 301083862-3865 (US 20577); Henningfield WD, 89:11-90:8. Prior to the publication of the 1964 Surgeon General's Report, B&W General

577

Counsel Addison Yeaman evaluated the findings of HIPPO I and II, and suggested that the best reaction to the Surgeon General's Report was to provide a filter capable of removing certain constituents of smoke considered suspect by public health officials, while still "delivering full flavor -- and incidentally -- a nice jolt of nicotine." 2046754905-4909 at 4908-4909 (US 20477).

  1. BATCo, like the other cigarette manufacturers in the 1970s and 1980s, also undertook research to control and maintain nicotine delivery for cigarettes with reduced FTC tar levels. The purpose of studies carried out in 1973 to assess the use of additives to reduce tar while at the same time increasing nicotine delivery to smokers was stated as follows: "The increased importance being placed on the lowering of TPM [total particulate matter] and the controlling of nicotine delivery has made it necessary to investigate the different methods available for producing these changes in smoke." The 1973 study also utilized "ADDITIVES FOR NICOTINE CONTROL," including nicotine tartrate, sodium bicarbonate, and diAmmonium hydrogen phosphate to increase the "extractable nicotine" in the smoke. The researchers found that certain combinations of additives successfully reduced tar while "maintain[ing] the impact and physiological strength levels" of nicotine. 402390265-0282 at 0268, 0280 (US 86963).

  2. In 1980, researchers employed by the tobacco companies, such as B&W's scientists Tilford Riehl, D.V. Cantrell, and C.M. DiPietro, studied the effect of cigarette wrapping paper on nicotine delivery and found evidence that some papers enhanced nicotine delivery to smokers of low tar cigarettes. 510000661-0662 (US 85501); see also 400132742-2776 (US 88084).

  3. A September 20, 1979 memorandum, titled "Tar/Nicotine Ratios and Nicotine Transfer Efficiencies of B&W and Competition Brands," indicates that the average nicotine to tar ratio for B&W brands and competition brands had increased, and that the nicotine to tar ratio for

578

"Low Tar" and "Ultra Low Tar" products was higher than for "Full Flavor" products. 5050034311458. BATCo held a Nicotine Conference in England, from June 6-8, 1984. Session titles included: "A smokers [sic] requirement for nicotine. A smoking behavior and market place view;" "Product elasticity, nicotine and perception of product strength;" and "Product modification for maximal nicotine effects." Two out of the three "primary objectives" of the Conference were:

Review the research to establish the relationship between tar and nicotine (ratios and absolute levels) as controlling factors of smoking behavior and their role in product assessment and acceptance. Identify to what extent the nicotine dose on a puff-by-puff, per cigarette, or on a daily basis can be used to indicate a smokers [sic] requirement for nicotine or infer product acceptance.

512106427-6437 at 6428-29, 6430 (US 20846).

  1. Nicotine to tar ratios were also a central issue at BAT's Smoking Behavior-Marketing Conference, held July 9-12, 1984. A presentation was given in which further study of nicotine was encouraged, particularly with the goal of "enhanc[ing] the properties of nicotine in reduced delivery products." B129103030501 at 0326 (US 85449); 521016789-6864 (US 85450).

  2. A BATCo document, titled "R&D Views on Potential Marketing Opportunities, marked, "Not for Circulation" and dated September 12, 1984 refers to compensation and lists as a "high priority" development of "alternative designs (that do not invite obvious criticism) which will allow the smoker to obtain significant enhanced deliveries should he so wish." The author recommends that this action be taken "irrespective of the ethics involved." Also listed under "high priority" is an item described as "nicotine deliveries," in which it is admitted that:

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Nicotine is the key pharmacological component of cigarette smoke. . . . An area of importance is to distinguish whether smokers smoke for (a) transient peak effects or (b) threshold base-line levels throughout the day. Another area of importance is the exploitation of physical and chemical means to increase nicotine transfer, ie [sic] to increase the effective utilisation of nicotine.

109869437-9440 at 9437-9438 (US 21707).

  1. BATCo's focus on enhancing the amount of nicotine inhaled by smokers was reiterated in a January 1985 internal document titled "Tobacco Research in BAT Industries." That memorandum indicated that "[m]ore resources will be provided for research into means of enhancing nicotine transfer to smoke and experimental combustion research, including cigarette paper effects." 109070972-0979 at 0976 (US 34858).

  2. In 1986-1987, BATCo undertook studies that revealed that nicotine delivery could be increased through filter modifications, with one study finding up to a 30% increase in nicotine per puff and a 19% increase in the nicotine to tar ratio. 400260652-0674 at 0665 (US 76183).

  3. In 1987, BATCo held a "Fundamental Research Review" in Southampton with scientists from the research and development department. It identified as one of its top three priorities for research in the United States, "Nicotine Control," in order to "optimise nicotine in current and future products." 400260496-0514 at 0499 (US 85451).

  4. At the same time, BATCo's scientists continued to research modifying nicotine to tar ratios. In a May 14, 1987 document developed by the Southampton Research and Development Centre, with contributions from BAT Group participants, including B&W's R.R. Johnson, and distributed to the research and development departments throughout the BAT Group, the authors highlighted the success of the Barclay brand and cited as a reason its nicotine to tar ratio, "using both high blend nicotine and high ventilation levels, to give an NTR [nicotine/tar ratio] some three times that of a full flavour product. . . ." The document pointed out that "[t]echnologically, design of a high NTR product anywhere in the 1-10 mg tar range is possible immediately." The question for further research was how "NTR should vary with tar delivery to give 'acceptable' smoking characteristics at any given delivery level." 570346066-6151 at 6068 (US 53187).

580
  1. In "Chemosensory Research," by BATCo scientist Richard Baker, dated February 28, 1990, Baker argued for continued research on nicotine to tar ratios, maintaining that both components of smoke were necessary -- at the appropriate levels -- to produce a successfully marketable cigarette. However, he made clear that nicotine is of greater importance and that tar's role is to make nicotine inhalation palatable:

The ultimate product of the tobacco industry is nicotine and research should continue to be directed at the development of low tar/medium nicotine cigarette smoke. Nicotine alone in smoke is not practical, nor are extreme tar/nicotine ratios, since nicotine is too irritating – other substances are required for sensoric reasons.

400854060-4066 at 4060 (US 67851). Baker noted that since the 1960s, B&W conducted such nicotine delivery research as part of a coordinated BAT Group research strategy, with "work done by a variety of groups in Southampton, Louisville and elsewhere." Id.

  1. BATCo's Operating Group Five Year Plan 1991-1995, dated January 15, 1991, stated that "[b]asic research will continue into products delivering adequate levels of nicotine . . .[,] controlled release of nicotine . . . and enhancement of the transfer of nicotine . . . ." BATCo used this knowledge to develop ultra low tar products that delivered the nicotine at a level equal to regular cigarettes:
581

Ultra Low Delivery Products -- High priority will be given to the development of more satisfying products in the low and ultra low delivery ranges (1-9 mg). New concepts developed through Projects FELT and GREENDOT will be applied to a range of products in the next 2-3 years, especially at low delivery levels . . . Project FELT which is to be test-marketed as B&H SM in Belgium in the second quarter of 1991, has demonstrated BAT's ability to design a 9 mg flue-cured product that has the impact, satisfaction and mechanics of a 14 mg commercial product (B&H SF). The principles applied to FELT will now be used to develop a 7 mg USB style product to match a 12 mg US commercial product.

201752783-2899 at 2837, 2838 (US 85452).

  1. On March 8, 1994, BATCo published a "Review of Information on Sensory Effects of Changing Tar/Nicotine Ratio of Smoke," designed to summarize the company's knowledge on the

"sensory effects of changing tar/nicotine ratios of smoke." The summary was devised to help

"point[] the way" toward "manipulat[ing] and modify[ing] the impact and irritation sensations and the balance between them." The summary pointed out the following main conclusions:

(1) impact increases when nicotine delivery is increased and tar remains constant;

(2) impact increases when nicotine delivery is held constant and tar is reduced;

(3) a decrease in the tar/nicotine ratio increases smoke pH, which increases impact; and

(4) nicotine is the source of impact.

The Review states that BATCo's research was aimed at gaining an "understanding of how impact and irritation can be tailored to meet product requirements by optimisation of nicotine delivery."

575102998-3015 at 3002-3003, 3010 (US 53213).

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(4) American 1468. By the 1960s, American was undertaking numerous studies designed to affect the

nicotine to tar ratio naturally found in cigarettes. These methods included adding nicotine to reconstituted tobacco, increasing the amount of Burley tobacco -- which is naturally higher in nicotine content than other tobaccos -- in a blend to determine its effect on the "nicotine yield," and producing tobacco plants, such as N. Rustica, that had almost double the concentration of nicotine of other tobacco plants used by American. MNAT00316688-6693 (US 21219); X003421-3431 at 3421, 3424 (US 34158); MNAT00881318-1323 (US 21221); see also X002999-3038 (US 88082).

  1. In 1969, American researchers, working with researchers from Philip Morris, RJR, and Liggett, conducted experiments "to determine if [genetically different tobacco] varieties differ in their ratio of nicotine to FTC 'tar.'" MNAT00533294-3295 at 3295 (US 21665).

  2. An April 29, 1974 memorandum from R.M. Irby, Jr., Manager of New Products Division for Research and Development, to Virginius Byran Lougee, III, executive, and E.C. Cogbill, scientist, titled "Compound W" (code word for nicotine) describes the company's efforts to increase the nicotine content of its cigarette tobacco:

Regular PALL MALL Red blend analyzing 1.95% nicotine . . . was treated with Compound W to increase nicotine in the blend by 19%. . . . To make absolutely sure that the complete evaluation has been carried out at the desired nicotine level, the TC-22 blend will be modified with regular PALL MALL blend to yield an exact increase of 19% above the standard 1.87% nicotine blend. This is currently under way. . . . LUCKY 100's blend was treated with Compound W to yield 2.58% nicotine; a 21% increase above the standard control of 2.13%.

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It was also found that "Compound W added to tobacco has little effect on the overall taste of the cigarette. Impact is increased slightly." ATX050142123-2128 at 2123-2124 (US 21602); Sprinkle PD, Carter, 1/19/96, 99:16-17; Henningfield WD, 93:9-94:5.

  1. Robert Sprinkle, an American scientist, stated that the company had a target burn rate and a target puff count that it sought to achieve in its cigarettes, and that it achieved these targets in part through controlling paper porosity. He also admitted that American selected paper porosity in order to assure a target nicotine delivery to smokers. Sprinkle PD, Small, 10/16/97, 67:22-68:25.

  2. In a 1977 document, American's researchers suggested "methods for increasing the [nicotine to tar] ratio" ["NTR"] including: (1) "addition of nicotine to the tobacco"; (2) "addition of ammonia salts . . . to tobacco, which on smoking would free the ammonia and thereby cause an increase in nicotine transfer to the smoke"; (3) increasing "the porosity of cigarette paper"; (4) "adding a nicotine salt . . . to cigarette paper"; (5) "making cigarette filter tips basic [to] enhance the nicotine transfer in the smoke and [to] increase the NTR's. . . . Adding nicotine salts to the cigarette filter is also a means to increase the NTR"; and (6) "adding salts that enhance the combustion of the tobacco" to offset the "reduction in the nicotine content" caused by reducing tar. MNAT00533268- 3286 at 3270-3272 (US 22175).

(5) Lorillard 1473. A draft presentation located in a 1969 file of Alexander Spears, Lorillard's CEO,

describes Lorillard's research efforts:

The research activities on the physiological element are concerned with nicotine. The quantity of nicotine required for the stimulus is mediated to the nicotine content of the cigarette by several factors: (1) absorption rate into the bloodstream, once the nicotine has deposited on the respiratory tract; (2) fraction of inhaled nicotine

584

which is deposited in [the] respiratory tract (pH dependence); (3) concentration of nicotine in the smoke and (4) transfer rate of nicotine from the tobacco to the mainstream smoke.

Spears further stated that "it would be useful to have a wider range of control over nicotine than now exists, through the selection of tobacco and the physical construction of the smoking article. Within one year, it is expected that tobacco modifications can be made to optimize absorption of smoke nicotine." 87667736-7740 at 7737 (US 56302*). In an undated paper, titled "Factors Affecting Smoke Delivery of Nicotine and Carbon Monoxide," Spears identified several factors that affect the nicotine yield of a cigarette and stated: "Through [a] combination of these variables, plant genetics and commercial processes, . . . it is possible to manipulate the yield of nicotine from about .1 mg to 4 mg per cigarette." 00044998-5021 at 5001-5002 (US 34208).

  1. By 1971, Lorillard was analyzing the nicotine content and nicotine to tar ratio of several brands of cigarettes in connection with sales data for each brand. In a February 8, 1971 memorandum to top scientist Alexander Spears and C.L. Tucker, Jr., Director of Product Development and Marketing Research, S.T. Jones wrote that "[i]t has become apparent from the available data that the top sellers, e.g. Winston, Salem, Marlboro, and Kool are all fairly high in smoke nicotine. . . . The one other parameter common to the top sellers is the ratio of smoke nicotine to 'tar.'" Jones concluded that "[t]he ratio of nicotine to tar can be controlled by blending high nicotine and tar grades with low ones resulting in a net gain of nicotine delivery over tar level." 00776195-6201 at 6195, 6196 (US 34293).

  2. By 1976, Lorillard was evaluating methods it believed might be used by other Defendants, including Philip Morris and RJR, to externally apply nicotine to tobacco in order to "raise the impact" of low tar cigarettes "while maintaining a low 'tar' profile." In a March 9, 1976 memorandum from J.R. Reid to Minnemeyer, Reid reported on the methods believed to be used by other Defendants and recognized that the research was important because of "[r]ecent public demand for low tar smoking materials." 00120379-0388 at 0379 (US 85455).

585

  1. In a March 2, 1976 memorandum to Alexander Spears regarding the "R&D Sedgefield Meeting," Lorillard's Schultz summarized the various research topics discussed at the meeting, which took place on February 3, 1976. Regarding the topic of "Enhancement of Nicotine or Nicotine Effects," Schultz stated that "[t]he modification of products to allow delivery of more of the available nicotine in the free form was discussed as a viable possibility. . . ." With regard to the topic "Very Low Tar Cigarettes," Schultz summarized that "[i]t was considered that cigarettes with tar deliveries of 2 mg or less are likely to become important but that reasonable levels of nicotine (0.5 mg or more) and relatively high flavor levels would be necessary to make such a product a leader in the field." 01111982-1985 at 1984-1985 (US 34311); Farone WD, 96:7-19.

  2. By 1976, Lorillard had embarked upon a comprehensive study of product design mechanisms for controlling the nicotine content and delivery of its products with the goal of developing a "cigarette delivering lower tar while at the same time delivering a level of nicotine higher than could be obtained normally. [sic] by conventional cigarette construction." A May 4, 1976 memorandum to F.J. Schultz, Vice President of Research and Development, from Harry Minnemeyer, Director of Research, details the scope of Lorillard's extensive research plan, named the "Nicotine Augmentation Project (NAP)." Lorillard began its Nicotine Augmentation Project in the mid-1970s. According to a project memorandum, the goal of the NAP research was to "develop a flavorful cigarette delivering lower tar while at the same time delivering a level of nicotine higher than could be obtained normally by conventional cigarette construction." Letter of 5/4/76 from

586

Minnemeyer to Schultz re Nicotine Augmentation Project (NAP), US 47721 (at 1). This project is discussed further in Section V(C)(1)(a)(4).

  1. In the 1976 memorandum, Minnemeyer described proposed research into numerous mechanisms for controlling nicotine, including adding "nicotine from an outside source to that naturally present in cigarette tobaccos"; chemical treatment of tobacco with ammonia to create more free nicotine in the smoke, which "would have a much greater physiological effect than nicotine salts"; air dilution of cigarette smoke; decreasing the acidity of smoke; and development of filters that selectively allow the passage of nicotine while reducing tar. 00050444-00050450, passim, (US 47721); Farone WD, 96:7-19; see also 00044529-4533 (US 34192); 00050440-0443 (US 47720).

  2. In a June 8, 1976 report on a portion of Lorillard's Nicotine Augmentation Project titled "Application of Free Nicotine to Cigarette Tobacco and the Delivery of that Nicotine in the Cigarette Smoke," T.M. Larson and J.P. Morgan explained the purpose of the research: "Nicotine was applied as free nicotine and nicotine tartrate to different tobaccos for the purpose of increasing the nicotine to tar ratio in cigarette smoke." One conclusion of the study was that "only a small addition of free nicotine was needed to provide the impact of a higher nicotine cigarette." 00398312- 8322 at 8312 (US 85456); 00781406-1417 (US 20029); Farone WD, 96:7-19.

  3. In a June 16, 1976 memorandum to Alexander Spears, H.J. Minnemeyer gave another progress report on Lorillard's "Nicotine Augmentation Project." Minnemeyer wrote that "[a]bout a dozen approaches have been recognized as a possible solution to the problem of delivering more nicotine in the smoke of low tar cigarettes." Minnemeyer stated that "[o]ne approach involved the procurement and addition of nicotine to tobacco to supplement that already present, while [another] attempts to optimize the delivery of nicotine already present in cigarette tobaccos. . . ." Minnemeyer also reported that small amounts of nicotine could be added to a blend without affecting the nicotine to tar ratios as reported by FTC testing:

587

Participants in this work now feel that a satisfactory low tar smoking article might be achieved by the addition of much less nicotine than was previously thought necessary. By spraying the blend with a small amount of nicotine it might be possible to get the impact of a higher T&N cigarette. This might be achieved without actually changing the T&N figures one would get from untreated tobacco.

00044525-4528 at 4525, 4526 (US 34191).

  1. Lorillard concluded as early as January 31, 1977, as a result of research on the Nicotine Augmentation Project, that nicotine could be successfully added to reconstituted tobacco leaf by spraying, that nicotine added in this manner was in fact delivered to the smoker in a normal manner, and that "the added nicotine improved the overall quality of the RL [reconstituted leaf] smoke somewhat." 81090368-0380 at 0369, 0372 (US 85457); Farone WD, 96:7-19. In an April 12, 1977 report concerning "Enrichment of Reconstituted Leaf Nicotine Content By Direct Addition of Nicotine Alkaloid to the RL Slurry," Morgan and Larson concluded that the "[n]icotine content of the final product can easily be controlled by the addition of predetermined amounts of nicotine alkaloid." 00398474-8484 at 8474 (US 20025); 01254872-4876 (US 20043); Farone WD, 96:7-19. In a June 30, 1977 memorandum, H.S. Tong recommended further study of the "enrichment" of reconstituted tobacco leaf through the addition of pure nicotine or nicotine salts, stating: "I think it is an important and worthwhile project because it gives us precise control over nicotine contents in all our products." 00045059-5059 (US 34209); Farone WD, 96:7-96:19.

  2. A July 27, 1976 memorandum from Senior Chemist M. A. Skladanowski to Mary Sue Ireland described methods studied by Lorillard to "increase nicotine to tar ratios in the mainstream smoke of cigarettes." The memorandum notes that: "The use of air dilution to augment cellulose acetate filters has increased as the demand for low tar and nicotine cigarettes has increased. . . . The renewed interest in air dilution as a filter mechanism is due to the fact that these filters produce relatively high nicotine in the mainstream smoke." 00044989-00044993 at 4989 (US 34207). Later that year, Skladanowski reported in a November 4, 1976 memorandum the results of another internal research project concerning the effect of air dilution filtration on nicotine delivery and determined that among "[t]he advantages of a total air dilution cigarette are . . . higher nicotine to tar ratios . . . [and] [g]reater smoke pH." 00044975-4984 at 4975 (US 34205). In an April 4, 1977 memorandum, Skladanowski again reported the results of a study of air dilution filtration, finding that:

588

[a]ir dilution alone, without a cellulose acetate filter increased the nicotine to tar ratio in the smoke and the number of puffs per cigarette. . . . By simply removing the cellulose acetate filter and adding air vents, a True 85 cigarette with 11.6 mg tar and 0.6 mg nicotine was modified to deliver 13 mg tar and 1 mg nicotine. The nicotine to tar ratio in the smoke of modified cigarette . . . was 52% greater than in the control.

00044955-4970 at 4959 (US 85459); Farone WD, 96:7-19.

  1. A February 14, 1978 confidential report prepared by Harry Minnemeyer and P.D. Schickedantz reviewed the progress of Lorillard's Nicotine Augmentation Project. The report reveals that Lorillard had initiated a "major new project . . . in order to create the technology necessary to market a cigarette with a nicotine to tar ratio higher than is normally found in commercial cigarettes." The report reviewed the various technological mechanisms studied by Lorillard as a means of increasing nicotine delivery to the smoker in "ultra low- and low-tar" cigarettes, including: studies of Lorillard's manufacturing process for the purpose of determining whether nicotine could be extracted from the waste of normal tobacco processing; studies of the effect on nicotine delivery and impact of spraying tobacco with nicotine tartrate and free nicotine; studies of increasing the ratio of free nicotine to total nicotine by raising smoke pH; and studies of increasing the nicotine to tar ratio of "low tar" cigarettes through filter design and treatment of the filter with additives. 00782192-2223 at 2196-2199 (US 54377); Farone WD, 96:7-19.
589

  1. In 1982, Lorillard experimented with adding bases to tobacco to enhance transfer of nicotine to mainstream smoke and alter nicotine to tar ratios. 00053989-4018 (US 34217); 00053989-4018 (US 47723); Henningfield WD, 75:22-76:1, 77:15-18; Farone WD, 96:7-19.

  2. Lorillard extensively studied the effect of treating filters with various chemical additives on the nicotine to tar ratios in mainstream smoke. For example, an April 8, 1982 memorandum concerning the "Results of Preliminary Experiments to Increase Nicotine to Tar Ratios in Mainstream Smoke by Augmenting Nicotine Elution [Extraction] from the Filter" concluded that increasing the amount of nicotine in a filter, modification of particle size in the smoke aerosol, and modification of the polarity of a filter were all possible mechanisms by which more nicotine could be "eluted," i.e., extracted by means of a solvent from a filter, thereby increasing the nicotine to tar ratio. 00054361-4368 at 4361, 4367 (US 34220).

  3. A July 25, 1984 memorandum reported on Lorillard's "Evaluation of Potassium Acetate as a Cellulose Filter Additive." The report concluded: "Addition of potassium acetate caused significant increases in nicotine delivery (28%, 45%) and nicotine/CPM [corrected particulate matter] levels (19%, 36%) relative to the control." 83897124-7127 at 7125 (US 55935); see also

590

  1. An August 3, 1984 memorandum from M.A. Sudholt to M.S. Ireland acknowledged that "[o]ne object of the nicotine project has been to increase the level of nicotine relative to tar in cigarette smoke. Increased ratios of nicotine to [tar] as high as 66% were obtained with diethylaminoethyl cellulose ion exchanger purchased from Whatman." 83897139-7142 at 7140 (US 55938); see also 81070726-0727 (US 88772); Farone WD, 96:7-19.

  2. A February 6, 1985 memorandum described the "ultimate goal" of Lorillard's ongoing study of filter design as "increas[ing] the amount of nicotine which 'migrates' to the filter from the tobacco while cigarettes are stored, prior to consumption. It is hoped that shifting more nicotine to the filter than is currently shifted with cellulose acetate filters will increase the smoke impact." The report concedes: the "major objective" of Lorillard's study of nicotine was "to increase the physiological impact and/or nicotine to tar ratio in ultra low tar cigarettes." 80551040-1042 at 1040 (US 55381).

(6) Liggett 1489. Liggett also recognized the need to increase the nicotine to tar ratio. In 1977,

Liggett's new product concepts included producing a "low tar cigarette with increased nicotine impact." Methods for designing this proposed cigarette included adding nicotine to the tobacco blend, or increasing the smoke pH through the use of additives. LWDOJ9165472-5472 (US 22169).

  1. In 1978, Liggett researched creating "Cigarettes with Elevated Nicotine." As part of this research, Liggett created test cigarettes using the additive nicotine maleate to alter the nicotine to tar ratio. LG234157-4157 (US 21425).

  2. In a November 9, 2001 e-mail to Vector and Liggett management and employees, Timothy Jackson, the Vice President for Operations at Vector Tobacco, stated with regard to the

591

Omni and Quest cigarette brands, "The purpose of the samples that have been tested on these two products is to see if we can maintain taste/impact while lowering the tar." VDOJ 25299-5299 (US 75450) (Confidential). In another e-mail dated August 27, 2001, Jackson informed Liggett and Vector management that the Omni was being modified in order to "attempt to provide more initial impact to the cigarette." Jackson further informed management that alternatives were being considered "to try and moderately increase nicotine." VDOJ 25348-5348 (US 64735) (Confidential).

  1. A memorandum dated July 25, 2001, regarding the launch of Omni Gold, a Vector Tobacco product, details cigarette design changes in the filters, paper, and various flavorings. This memorandum also acknowledges the concept of compensation and notes that a particular choice of paper "should deliver the correct tar and nicotine numbers as well as the correct puff count." VDOJ 25339-5341 at 5339, 5340 (US 64737) (Confidential); Dietz PD, United States v. Philip Morris, 7/1/02, 95:3-118:8.

c. Defendants Understood the Correlation Between Nicotine Delivery and Cigarette Sales 1493. For several decades, the cigarette company Defendants have recognized that the

commercial success of any cigarette depends on its ability to deliver adequate levels of nicotine to smokers. As the internal documents discussed below reveal, each Defendant also understood that its market position, as well as the financial viability of the tobacco industry as a whole, required the development of cigarettes that provide nicotine in amounts sufficient to ensure that smokers become and remain addicted. Accordingly, each Defendant took steps, over a sustained period of time, to develop such cigarettes.

592

  1. A May 5, 1975 memorandum from John T. Landry, Philip Morris's Executive Vice President of Marketing, to Clifford H. Goldsmith, President, expressed that Landry was "alarm[ed]" that Marlboro's nicotine delivery had "dropped . . . sharply below that of Winston." Landry acknowledged, "it puts us at a competitive disadvantage," and recommended "that this problem be thoroughly explored with Manufacturing and R&D and that every attempt be made to return the nicotine delivery to more suitable levels." 1000219888-9888 (US 85409); see also 1000046538- 6546 at 6543 (US 26074).

  2. Even though Philip Morris publicly stated for decades that nicotine is used in cigarettes for "taste," an internal Philip Morris document, dated March 18, 1980, discusses the utility of nicotine to Defendants, and to Philip Morris in particular. In that document, a memorandum from Jim Charles, Manager of Research and Development to Robert Seligman, then-Vice President of Research and Development, Charles wrote that "[n]icotine is a powerful pharmacological agent . . . and may be the most important component of cigarette smoke." Charles argued that further research on nicotine was vital and that it would have a "direct bearing on our market position in a 10-15 year time frame." 1003289974-9975 (US 21553).

(2) R.J. Reynolds 1496. A July 3, 1973 memorandum from Jerry R. Moore to R.A. Blevins, Jr., the Director

of Marketing and Planning at RJR, reported that a study conducted by Reynolds's Marketing and Development Department found a direct, significant correlation between the amount of "free nicotine" in a brand and the sales level of that brand. 501011401-1401 (US 20668). Blevins summarized the results of the study and his recommendations in a July 12, 1973 memorandum to William S. Smith, Jr., member of the CTR Research Board of Directors, as follows:

593

Our analysis suggests that pH does not correlate as closely with share performance as does free nicotine. Our emphasis should be directed toward free nicotine while pH would provide us with a measure of or tool to effect free nicotine.

501011403-1403 (US 20669). Free nicotine is nicotine in the unprotonated form, i.e., without a proton or positive chemical charge. See also definition and discussion of "free nicotine" at V(C)(2)(d)(1); see also Farone WD, 93:22-98:21.

  1. In 1973, Reynolds also conducted a "historical review of smoke pH data and sales trends" comparing data for its own cigarettes to that of its competitors. A May 10, 1973 report about the review, written by John D. Woods and Gloria C. Harilee, indicated that "smoke pH data for competitive brand filter cigarettes measured since 1964 were compiled "for the purpose of attempting "to correlate these data with cigarette sales trends." Woods and Harilee found that:

A high pH smoke is strong due to a high concentration of unbound, or free, nicotine in the smoke. . . . Correlation of these values with sales trends were made and the results showed even stronger positive correlations than were found for smoke pH-sales trends studies.

500606138-6153 at 6138 (US 48334). Similarly, in 1982, Reynolds reported internally that shortly after Philip Morris began increasing smoke pH and free nicotine through the introduction of added ammonia (diammonium hydrogen phosphate) in 1965, Philip Morris's sales began growing very rapidly. 500540827-0832 (US 20639).

  1. In a February 5, 1979 handwritten memorandum, RJR scientist C.L. Neumann stated that RJR wished to "obtain a fundamental understanding of the role of nicotine in smoking satisfaction" by examining "whether there is a minimum or threshold level and an optimum smoke nicotine level related to smoking satisfaction" and "the relationship of smoke pH to nicotine perception and satisfaction." Neumann recognized the significance of these issues to increasing Reynolds's sales: "If the optimum smoke nicotine and pH can be determined for each of our products, then these products can be tailored with respect to these variables to provide maximum satisfaction and acceptance for the consumer, [h]opefully resulting in increased sales." 504460126- 0134 at 0128, 0130, 0133 (US 88065).
594

  1. Admitting that there is no "chemical compound more important to a smoker's decision to continue smoking than nicotine," Gary Burger, former RJR Vice President for R&D and, before that, Director of Toxicology, stated that from at least 1983 to 1996, Reynolds researched the threshold level of nicotine to "arrest the decline in the social acceptability of smoking." Burger PD, Arch v. American, 8/22/97, 44:15-72:7, 117:16-20; see also 519192752-2754 (US 80229); 519192755-2756 (US 80230); 519192757-2758 (US 80231).

  2. In 1989, Reynolds identified "a particularly disturbing difference" between Winston and Marlboro: "smaller puffs of Marlboro delivered higher levels of nicotine into the bloodstream, and delivered them more quickly, than Winston." Reynolds concluded that this difference "could be a major factor in why people stay with a brand . . . even though they don't know why." 507555896-5909 at 5898-5899 (US 20779).

(3) Brown & Williamson and BATCo 1501. A 1963 letter from B&W's R.B. Griffith, Director of Research and Development, to

BATCo's Chemist, John Kirwan, discussed "the question of desirable or optimum levels for either nicotine or sugar or a balance between the two," and how the level of nicotine and sugars might "be varied to win consumer preference for our brands." Griffith pointed out that B&W's "sales pattern

595

[from 1960 to 1963] has been positively correlated with the nicotine level of the tobacco in our products." Griffith went on to state that "the nicotine level of B&W cigarettes [studied] was not obtained by accident." He closed by recognizing the marketing department's role in determining nicotine content in cigarettes, stating, "I think that we can say even now that we can regulate, fairly precisely, the nicotine and sugar levels to almost any desired level management might require. . . ." 102630333-0336 at 0333, 0334, 0335, 0336 (US 23000).

  1. A September 20, 1979 memorandum from the B&W Research Department, written by Rufus Hugh Honeycutt comparing tar and nicotine delivery information amongst various commercial cigarettes, noted that "[p]erhaps not coincidentally, Philip Morris and R.J. Reynolds have the highest average NTE [nicotine transfer efficiency] and the highest USA sales." 505003431- 3438 at 3433 (US 85412); see also 505003675-3688 (US 85413); 510000667-670 (US 51496); 2077864189-4190 (US 45063).

  2. On April 7, 1982, BATCo's G.O. Brooks, a research scientist, sent a letter to B&W's William L. Telling regarding a study concluding that when a cigarette's nicotine level "is so low that the nicotine is below the threshold of pharmacological activity then it is possible that the smoking habit would be rejected by a large number of smokers." 660913609-3633 at 3620 (US 22763). Considering this threshold "satisfaction" level, BATCo senior scientist S.J. Green later warned that "we should be aware of the long-term dangers of following the crowd into ultra-low nicotine deliveries." Green explained, "Nicotine is an important aspect of 'satisfaction,' and if the nicotine delivery is reduced below a threshold 'satisfaction' level, then surely smokers will question more readily why they are indulging in an expensive habit." 110069974-9982 at 9975 (US 20268); see also 400993160-3215 at 3196 (US 75975*); 100051935-1948 (US 34587). Green's warning demonstrates BATCo's understanding that the trend towards ultra-low nicotine deliveries could mean "that the market would extinguish because people would get to the point that smoking really would be a matter of taste and pleasure and not nicotine receptors in the brain; at that point, people would find it easier to quit." Henningfield WD, 97:21-98:3.

596

(4) Lorillard 1504. In an April 29, 1976 memorandum to J.R. Ave and Alexander Spears, Richard E.

Smith, Vice President of Marketing and Development for Lorillard, summarized a meeting on Lorillard's "5 Year Domestic Cigarette Marketing Plan." Smith wrote:

[i]t was agreed that judgement and recent publicity give an enriched nicotine product the highest priority of all new brand projects. This project has been divided into three parts: a.) How to get the nicotine (quantities, prices, throw-away costs, etc.), b.) How to use the nicotine (on both the 5 mg and 2 mg tar products), and c.) What are the corporate implications of nicotine addition.

03364986-4988 at 4987 (US 85408); see also 01254896-4898 at 4897 (US 34518); 83250744-0747 at 0746 (US 55650).

  1. A November 9, 1976 memorandum from Richard E. Smith to Fred Schultz, Vice President of Research and Development, recommended that an industry-wide effort to offer a product with 50% less nicotine be discontinued despite "considerable consumer trial appeal" because such a cigarette "could not deliver the smoking satisfaction to sustain consumer purchase." 01244504-4504 (US 20042).

  2. One of Lorillard's highest priorities in the late 1970s was its nicotine enrichment program, as already discussed supra. In a February 9, 1977 memorandum to Fred Schultz, Harry Minnemeyer, Director of Research, reported on the "Continuation of Nicotine Augmentation Project

597

(CONAP)." Minnemeyer explained that the objective of Lorillard's extensive study of the mechanisms by which nicotine delivery could be controlled was a "highly important business objective." 83251036-1044 at 1037 (US 55688).

  1. In a July 22, 1977 memorandum from Fred Schultz to Alexander Spears, Schultz briefly summarized the progress of Lorillard's efforts to increase the impact of "low tar" cigarettes by adding nicotine directly to reconstituted tobacco leaf and stated: "Consideration of nicotine delivery necessary to achieve long term use and satisfaction by the consumer dictate that we should continue to pursue the concept of nicotine enhancement." 00361822-1823 at 1823 (US 20024).