Philips Settles Patent Case for $300 Million

The settlement ends seven years of patent litigation with Masimo and actually marks the beginning of a business partnership.

Nancy Crotti

Royal Philips has agreed to pay Irvine, CA-based Masimo Corp. $300 million to settle a patent infringement case.

The settlement also includes an agreement for the two companies to form a wide-ranging, multi-year business partnership involving both companies' innovations in patient monitoring and therapy solutions. A Masimo SEC filing spells out the terms of the agreement, with financial and other portions redacted.

The November 5 settlement ends seven years of litigation in which a Delaware federal court awarded Masimo a $467 million verdict against Philips Electronics North America Corp. and Philips Medizin-Systeme Boblingen GmbH in 2014.

Philips appealed the verdict, in which the jury found Masimo patents were infringed by Philips products incorporating a noninvasive pulse oximetry measurement technology that measures the level of oxygen saturation in a patient's blood. In May 2015, a Delaware federal court agreed with the $467 million verdict awarded to Masimo.

The settlement also included a provision in which both parties agreed to dismiss with prejudice all pending legal disputes between them, including the patent infringement and antitrust lawsuits pending in the U.S. District Court for the District of Delaware. The companies also agreed not to sue each other for patent infringement for certain of each other's products.

Their new partnership includes joint marketing and sales programs in North America and certain markets in Asia and Europe for Masimo's non-invasive sensor technologies, such as its rainbow and SET platforms, in conjunction with Philips's patient monitoring and certain therapy solutions. Philips has also agreed to integrate Masimo SedLine brain function monitoring, O3 regional oximetry, and Nomoline capnography technologies in certain Philips IntelliVue monitors.

Philips has agreed to make available the Masimo versions of integrated products, such as the SET or rainbow for pulse oximetry, SedLine for brain function monitoring, and O3 for regional oximetry, available globally where Philips makes its own or third-party products with similar technology, as soon as Philips wins regulatory clearance. Philips has said it will pursue timely regulatory clearance in countries where Masimo's corresponding accessories are available or where Masimo has specific plans to make them available. Masimo, in turn, has agreed to provide Philips with technical and validation-related information to pursue such clearance.

Masimo estimates that its SET measure-through motion and low perfusion pulse oximetry is used on more than 100 million patients worldwide. The company introduced its rainbow pulse CO-oximetry technology in 2005, allowing noninvasive and continuous monitoring of blood constituents that previously could only be measured invasively, including total hemoglobin, oxygen content, carboxyhemoglobin, methemoglobin, and more recently, pleth variability index and oxygen reserve index, in addition to SpO2, pulse rate, and perfusion index.

Philips' patient-monitoring solutions range from multi-parameter bedside monitors to wearable patient monitors combined with mobile applications and clinical decision support tools. With a primary focus on prediction and prevention of patient deterioration, these integrated solutions aim to support clinical workflow and caregiver efficiencies, and enhance patient care. Philips estimated that In 2015, about 275 million patients were monitored using its devices.

"I am very satisfied that we have reached an agreement that is beneficial for both companies and that we have ended our legal disputes," Royal Philips CEO Frans van Houten said in a joint statement. "Going forward, Philips and Masimo will completely focus on jointly delivering meaningful innovations to our customers, such as the integration of Masimo rainbow technology across our IntelliVue patient monitoring product range."

"I am delighted that we were able to reach this important agreement which allows us to focus on the future to deliver the solutions that our customers have been looking for," added Joe Kiani, chairman and CEO of Masimo.

Nancy Crotti is a contributor to Qmed.

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