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Medtronic Punches Down
This week in Pedersen's POV, our senior editor shares her take on the five-year spat between Medtronic and Axonics.
Amanda Pedersen
March 18, 2024
3 Min Read
Punching down isn’t a good look in comedy (sorry, Dave Chappelle) and it isn’t a good look in business.
That’s not to say that market leaders should always pull their competitive punches, but if a company that sits atop a multibillion-dollar market is going to throw a haymaker at a less powerful opponent, that company had best make sure it’s in the right – or risk looking like a bully.
In the case of Medtronic vs. Axonics, a battle I’ve been following since 2019, what started as a David vs. Goliath medtech story has turned into a Goliath vs. David story.
If you’re just tuning into this saga, here’s a quick recap:
Medtronic held a monopoly in the sacral neuromodulation (SNM) market for about 20 years with its InterStim device, used to treat various bladder and bowel conditions. Lacking competition in the space, Medtronic sat on its laurels rather than actively investing in meaningful improvements to its technology.
Along came Axonics Modulation Technologies with FDA approval in 2019 for a rechargeable version of a similar device.
Medtronic wasted no time in filing a lawsuit, accusing Axonics of infringing on certain claims in seven patents related to its SNM lead placement procedure and implant recharging technologies. In response, Axonics filed seven petitions with the U.S. Patent and Trademark Office, requesting a review of each of the Medtronic patents in question.
Soon, Medtronic catches up with the market challenger by winning FDA approval of its own rechargeable SNM device – begging the question, why did it take a market challenger like Axonics for Medtronic to offer its customers a rechargeable version of the InterStim device?
Ultimately, the Patent Trial and Review Board (PTAB) reviewed six of the seven Medtronic patents at issue and, of those six, upheld three. Meanwhile, both companies have continued to innovate in the space.
The plot twist came in August 2023 when a federal judge ruled that the PTAB had errored in Medtronic's favor by refusing to consider new arguments from Axonics after the board adopted an interpretation of the patents' terms that Medtronic submitted. The court also reopened Axonics' challenges to two other Medtronic patents at a U.S. Patent and Trademark Office tribunal in July 2023.
Now, a competitor that is closer to Medtronic’s own size has offered to buy Axonics. Boston Scientific expects to close the $3.7-billion deal in the first half of the year. So, what does Medtronic do when faced with the prospect of competing with a large-cap peer in the SNM market? It launches fresh new patent infringement allegations at Axonics, of course. This time, Medtronic says Axonics is illegally using Medtronic’s MRI compatibility technology.
Medical device companies have every right and responsibility to defend their intellectual property. Companies like Medtronic would be out of business if they allowed patent infringement to go unchecked.
That said, Medtronic does seem to have an axe to grind with Axonics on a level that goes far beyond standard IP defense. The company, and specifically CEO Raymond Cohen, has gotten under Medtronic's skin. Cohen has been poking the bear from the beginning by publicly calling Medtronic out, and Medtronic has risen to the bait every time.
The timing of the latest patent infringement allegations against Axonics seems especially suspect. With Boston Scientific in the process of buying Axonics, is Medtronic taking advantage of what is a vulnerable time for its small foe?
“Medtronic pioneered the field of sacral neuromodulation and, for the past 30 years, has invested millions annually to advance innovations that benefit patients with incontinence,” Medtronic told MD+DI in a statement. “We welcome competition and respect the intellectual property of innovators.”
The company goes on to say that it seeks to hold Axonics accountable for its unauthorized use of Medtronic’s intellectual property.
“We are confident the evidence will show that Axonics unlawfully used our patented technology,” Medtronic said in the statement.
I hope the company is right about that. Otherwise, the medical device industry will see a company with a market cap of $110.97 billion abusing its power with litigation that could potentially derail a competitive acquisition.
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