Edwards and Medtronic to Settle All Patent Litigation; Medtronic to Make over $1 Billion in Payments

by Knobbe Martens Olson & Bear LLP
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According to a press release, Edwards Lifesciences and Medtronic have agreed to settle all outstanding patent litigation between the companies, including cases related to transcatheter heart valves. The press release noted that the agreement will result in the dismissal of all pending cases or appeals in courts and patent offices worldwide, and includes a provision that the parties will not litigate patent disputes with each other in the field of transcatheter valves for the eight-year duration of the agreement.

According to Edwards’ May 19, 2014 8K filing with the SEC, Medtronic will make a one-time, upfront payment to Edwards of $750M as part of a patent cross-license agreement.  Thereafter, Medtronic will pay quarterly license royalty payments through April 2022. For sales in the United States, the royalty payments will be based on a percentage of Medtronic sales of transcatheter aortic valves, subject to a minimum annual payment of $40M and a maximum annual payment of $60M.  The parties agreed that a separate royalty payment will be calculated based on sales of Medtronic transcatheter aortic valves manufactured in the United States but sold elsewhere.

Edwards has pledged to contribute $50M of the settlement proceeds to the Edwards Lifesciences Foundation to support efforts to improve patient care, raise disease awareness, and educate clinicians.

The settlement resolves a long history of patent litigation between the parties; a few notable milestones of which are summarized below:

On April 11, 2014, according to a press release, the U.S. District Court for the District of Delaware issued a preliminary injunction barring Medtronic from selling its CoreValve TAVI product to most new customers in the U.S.  In 2011, Edwards received FDA approval for its Sapien transcatheter aortic valve, which was the first approved transcatheter aortic valve in the U.S. until the CoreValve system was approved in January 2014.

On March 6, 2014, Medtronic announced in a press release that the European Patent Office (EPO) has invalidated European Patent Number EP2055266B1 (“the ’266 Patent”) assigned to Edwards Lifesciences PVT, Inc. According to the press release, the ’266 Patent was the basis for an August 26, 2013 injunction prohibiting sales of Medtronic’s CoreValve® System in Germany.  The EPO stated that the oral proceedings resulted in “[t]he European patent [being] revoked because at least one ground for opposition prejudices the maintenance of the European patent.”

On January 15, 2014, a District of Delaware jury returned a verdict finding that Medtronic infringed certain claims in U.S. Pat. No. 8,002,825, and also found that the patent was not invalid. The jury further awarded Edwards $388.8M in lost profits and $4.8M for a reasonable royalty.

In 2010, a jury found that the CoreValve device infringed Edwards’ U.S. Pat. No. 5,411,552 to Andersen et al. (the “Andersen patent”) and awarded Edwards $73M in damages.  The verdict was upheld on on appeal, and in October 2013 the U.S. Supreme Court declined to review that decision. In December 2011, Edwards filed an application for patent term extension on the Andersen patent. Edwards’ petition noted that the patent was due to expire on May 2, 2012, and requested an extension of 1,757 days based on the FDA regulatory review period of the Sapien valve, such that the new requested extended expiration date would be February 22, 2017. The USPTO has not yet made a final determination of the length of the patent term extension, but has granted multiple interim patent term extensions, the latest of which extends the Andersen patent’s term until May 2, 2015.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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