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ArthroCare’s Favorable Patent Infringement Ruling Put on Hold

Earlier this month, the U.S. Court of Appeals for the Federal Circuit partially upheld a jury verdict in favor of ArthroCare Corp. (Sunnyvale, CA) in its patent infringement dispute with Smith & Nephew plc (London). At issue were patents covering electrosurgical instruments for use in minimally invasive arthroscopic procedures. The appeals court upheld the validity of two ArthroCare patents while rejecting a third claim. Additionally, the court lifted the permanent injunction against Smith & Nephew after it found that a procedural error had occurred in a district court hearing on an antitrust counterclaim brought by Smith & Nephew.

Smith & Nephew's antitrust countersuit alleged that a prior agreement between ArthroCare and Ethicon Inc. (Somerville, NJ), a Johnson & Johnson company, represented unfair competition and a restraint of trade.

Additionally, Smith & Nephew has subsequently reported that the U.S. Patent and Trademark Office (PTO) has rejected claims of the other two U.S. patents asserted against the company by ArthroCare. ArthroCare has not yet publicly commented on this development.

With the permanent injunction vacated and the case on appeal, Smith & Nephew can continue to manufacture and sell its bipolar radio-frequency products until the matter is resolved in an upcoming Delaware District Court hearing.

ArthroCare develops surgical instruments and related products based on its internationally patented Coblation technology, which dissolves target tissue while minimizing damage to surrounding healthy tissue. With 1030 employees, ArthroCare had 2004 revenues of $154.1 million, a 30% increase over 2003 revenues of $118.9 million.

Smith & Nephew, with 7866 employees, manufactures medical devices for the orthopedic, endoscopy, and advanced wound-management sectors. The company's 2004 revenues were $2.41 billion, 15% higher than its 2003 revenues of $2.10 billion.

© 2005 Canon Communications LLC

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