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June 1, 2006
10 Min Read
A recent decision in the U.S. District Court in Delaware upheld a 2005 jury verdict in favor of Boston Scientific Corp. (Natick, MA) over rival Cordis Corp. (Miami Lakes, FL), a Johnson & Johnson company—but neither company expects this ruling to be the final word. Cordis has already indicated that it intends to appeal.
In the latest court action, Sue L. Robinson, chief U.S. district court judge for the district of Delaware, ruled that Cordis' Cypher stent infringed upon Boston Scientific's so-called Ding patent, which relates to the technology used to coat drug-eluting stents. Her ruling also affirmed the validity of the Ding patent.
Commenting on the court's decision, Boston Scientific's chief operating officer, Paul LaViolette, said, “This ruling reaffirms the strength and innovation of our drug-eluting stent technologies.”
In a prepared statement, Cordis said it will appeal Judge Robinson's decision on the Ding patent to the court of appeals for the federal circuit in Washington, DC.
The Ding patent decision was Judge Robinson's fourth ruling in the past two months regarding intellectual property disputes between the two companies—with Cordis taking two of the three earlier decisions. The most recent ruling evens the count at two litigation victories apiece for the two companies.
Robinson's first ruling upheld a jury verdict from June 2005 that found that Boston Scientific's Taxus stent infringed on Cordis' Palmaz patent for balloon-expandable stents. That patent has expired.
The second judgment also went against Boston Scientific. Robinson upheld the 2005 jury decision that the company's Liberté and Express bare-metal stents infringed on Cordis' Gray patent, which relates to flexible balloon-expandable stents.
But in yet another decision, Judge Robinson upheld a July 2005 jury verdict that ruled that Cordis' Cypher and Bx Velocity stents infringed on Boston Scientific's Jang patent, which claims specific geometries in stent design.
Most industry analysts believe that the latest court action provides some leverage to Boston Scientific, as the appeals process will take more than a year before it is resolved. In the final analysis, it is generally expected that both companies will be liable for damages and will ultimately reach some kind of cross-licensing agreement.
While growth of the market for drug-eluting coronary stents has slowed in the United States, medtech manufacturers continue to zealously protect their patents, particularly with new competitors expected to gain market entry soon. Worldwide market valuation is currently at $5.5 billion. Cordis' Cypher now leads the worldwide market with a 51% market share, while Boston Scientific's Taxus is still on top in the U.S. market with a 53% share—down sharply from the 70% share it achieved shortly after receiving FDA approval in March 2004.
End of the Road
The U.S. District Court for Rhode Island offered a more definitive resolution to a 10-year series of patent infringement battles between Davol Inc. (Cranston, RI), a subsidiary of C. R. Bard Inc., and Stryker Corp. (Kalamazoo, MI).
In April, U.S. district judge for the district of Rhode Island, Mary M. Lisi, granted a summary judgment in favor of Stryker, freeing it of infringement claims against its Interpulse medical irrigation device.
Stryker was represented by McAndrews, Held & Malloy (MH&M; Chicago), an intellectual property law firm with a significant focus in the medical device arena. The firm helped Stryker avoid the high expense of litigation by successfully pressing for a summary judgment. “In the minds of corporate counsel, the most successful IP litigators are those who help clients avoid trial all together,” says MH&M attorney Gregory J. Vogler, who represented Stryker in its most-recent victory.“This strategy is one that MH&M has employed perhaps better than any IP litigation group in the country.”
Private Placement Dispute
In May, MH&M attorneys were also involved in winning a victory for Ovion Inc., a start-up medtech firm focused on minimally invasive alternatives to surgical sterilization.
MH&M attorneys Leland G. Hansen and Christopher V. Carani represented Ovion in a case filed by plaintiff Musket Research Associates (MRA), a firm that specializes in securing venture capital financing for emerging healthcare companies. In July 2004, Ovion had retained MRA as a “nonexclusive finder/adviser in connection with a proposed private placement” of Ovion's stock.
In March 2005, MRA filed suit against Ovion and its founders, William S. Tremulis and Jeffrey P. Callister, in the U.S. District Court of Massachusetts. In its suit, MRA alleged that Ovion had misled MRA about Ovion's pursuit of corporate partners in addition to venture capital investors. Ovion was eventually acquired by American Medical Systems Inc . ( Minnetonka, MN) in July 2005.
In the May decision, the court granted summary judgment for Ovion against all nine causes of action asserted by MRA. “Our team did a terrific job making it clear to the court that MRA's allegations were completely unfounded,” said Hansen, an MH&M shareholder. “It is gratifying to achieve this type of success for a client.”
Litigation in a Vacuum
Kinetic Concepts Inc. (San Antonio, TX) got some good IP news in April, when it reached an agreement with German medical product manufacturer Paul Hartmann AG (Heidenheim/Brenz, Germany) for the withdrawal of a patent appeal pending before the European Patent Office (EPO) board of appeals. But in light of a bigger challenge looming in U.S. courts, it's doubtful that settlement cheered KCI officials for very long.
The European proceedings involved a vacuum-assisted closure (VAC) patent licensed to KCI by Wake Forest University. In 2004, the EPO established that KCI's patent claims covered a range of pressures from 7.6 to 752 millimeters of mercury (mmHg) of negative pressure and provided that the “screen means” term describing the dressing is an open-cell polymer foam. KCI's VAC systems typically operate between 50 and 200 mmHg of negative pressure, with a default setting of 125 mmHg.
As a result of Hartmann's withdrawal, the patent opposition proceedings were terminated and the EPO's 2004 decision upholding and construing the patent will remain in place.
KCI and Hartmann also signed a letter of intent to enter into strategic cooperation for the distribution and rental of KCI's VAC line of products in Eastern Europe and for the copromotion of VAC products in the Swiss and German home-care markets.
“We are very pleased to resolve the European patent opposition, and we are looking forward to working with Hartmann to introduce VAC into the Eastern European markets through their existing country organizations and sales networks there,” said KCI president and CEO Dennert O. Ware. “Hartmann is a renowned company in Europe and has well-developed sales organizations in the Swiss and German home-care settings, which we believe will help increase VAC penetration in those countries.”
Under the terms of the letter of intent, the parties have agreed to enter into various agreements embodying their cooperation. In the event that the parties cannot reach one or more definitive agreements on the strategic relationships, KCI agreed to pay Hartmann specified sums of up to $2.25 million.
Meanwhile, closer to home, KCI has embarked on a jury trial in its patent infringement suits against Bluesky Medical Inc. (Carlsbad, CA) and Medela AG (Baar, Switzerland), and analysts suggest that the outcome of the trial could have a significant impact on the future of the company.
Again at issue in the case are KCI's patents and trademarks for vacuum-assisted closure. But this time the trail goes back to earlier disputes that began in 2001. In that year, KCI reached a settlement with Medela, which agreed to stop marketing its Vario suction pumps for vacuum-assisted wound closure.
But according to KCI, Medela employee Richard Weston left the company in 2002 and formed Bluesky Medical with the specific intent of taking over where Medela had left off. In 2002, Bluesky began selling a version of the Medela pump, rebranded as the Versatile 1, as a wound-care product. KCI filed suit against Bluesky in 2003, and added the allegation that Medela had breached the agreement it made in 2001.
In February 2005, BlueSky Medical filed an antitrust counterclaim, seeking recovery of damages allegedly caused by KCI's business practices. The firm recently added additional claims and allegations that KCI has interfered with the BlueSky's business opportunities and made disparaging statements concerning products. According to Bluesky, KCI wrote to FDA requesting that the agency revoke its 510(k) clearance for the Versatile 1 pump.
The trial is being heard in the U.S. District Court for the Western District of Texas. KCI is represented by R. Laurence Macon, a partner in the firm of Akin, Gump, Strauss, Hauer & Feld (San Antonio). In 2002, Macon won a $173.6 million verdict for KCI in its antitrust suit against competing hospital bed maker Hillenbrand Industries Inc. and its Hill-Com Co. business unit (Batesville, IN).
Bluesky Medical is represented by Randy J. McClanahan of the firm of McClanahan & Clearman LLP (Houston), a plaintiff's civil litigation boutique firm. According to the firm's Web site, McClanahan & Clearman represents “individuals and businesses in high-stakes plaintiff's commercial and business litigation, including class actions.” The firm portrays itself as “an entrepreneur in partnership with its clients,” and is compensated for its work almost solely on a contingency fee basis.
Medela is represented by attorney Kevin M. Sadler, a partner in the law firm of Baker Botts LLP (Austin). Sadler's practice focuses on civil litigation, representing major energy and technology firms in the defense of tort, contract, and statutory claims, including class actions.
Industry watchers have expressed mixed views about the prospects for the case, with some concluding that Bluesky's antitrust counterclaim may be stronger than originally thought. In turn, financial analysts have been led to guess wildly about the future share price for KCI stock—and perhaps the future of the company. The jury trial began at the end of May and is expected to last about six weeks.
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