A federal jury ruled Tuesday for R.J. Reynolds Tobacco Co. in a high-stakes dispute with Star Scientific Inc. (STSI) over Star's patent claims for a new method of curing tobacco in a way that reduces certain cancer-causing toxins.

Star, an aspiring tobacco company based in Petersburg, Va., was seeking several hundred million dollars in patent-infringement damages from RJR, a unit of Reynolds American Inc. (RAI), alleging that the nation's second-largest tobacco company encouraged its farmers to practice Star's invention without permission.

But after a four-week trial, a jury in Baltimore sided with Reynolds, ruling that RJR did not infringe Star's curing patents and that the patents were invalid.

The jury verdict dealt a significant blow to Star's fortunes. Star's shares tumbled more than 80% in after-hours trading, to 80 cents.

In addition to seeking a large jury award, Star was hoping to reach lucrative licensing agreements with other tobacco companies.

August Borschke, chief patent lawyer for R.J. Reynolds, said the company was pleased with the verdict.

The jury "saw what we have known all along, that Star's patents are invalid, and they should not have been issued in the first place," Borschke said. "The jury also confirmed R.J. Reynolds did not infringe Star's patents in any event."

RJR said at trial that it had invented its own tobacco-curing method that reduced certain toxins, known as known as tobacco-specific nitrosamines, and didn't need to copy Star's.

The verdict is an important marker in the case but will not be the last word in the dispute.

Star spokeswoman Sara Machir said Tuesday evening that the company will file a motion for a new trial in the coming days, and if that fails, will immediately appeal. She declined further comment on the verdict.

Elliot Favus, an analyst with Favus Institutional Research who attended the month-long trial, said the company would have a tough time raising enough money to support itself.

Favus, who had a sell recommendation on Star's stock before the trial, said the company's legal prospects had been a big driver of investment in its business. The company's two commercial offerings, both smokeless tobacco products, haven't been successful, he said.

"I'd be happy to see them prove me wrong, but I just don't see a path forward,"he said.

Star had described itself to the public - and the jury - as a different kind of tobacco company that was dedicated to making products that are less harmful to tobacco users.

An RJR lawyer chafed at Star's self-portrayal during the trial, saying to jurors, "This getting-on-their-high-horse thing is a little suspect."

-By Brent Kendall, Dow Jones Newswires; 202-862-9222; brent.kendall@dowjones.com