St. Jude Medical wins $5 million in case against Volcano Corp.

STJ, VOLC

UPDATED 2/14/2011 1:45:00 p.m.

A Massachusetts judge handed St. Jude Medical Inc. (NYSE:STJ) a $5.1 million win in a long-running legal battle with Volcano Corp. (NSDQ:VOLC) involving two of their subsidiaries.

St Jude’s LightLab Imaging Inc. unit, acquired last year, won $600,000 in damages and $4.5 million in legal fees from would-be Volcano pick-up Axsun Technologies Inc. Judge Margaret Hinkle of the Mass. Superior Court wrapped up three trials (including a jury trial) in her final decision, finding San Diego, Calif.-based Volcano and Billerica, Mass.-based Axsun guilty of breaching certain terms of a development and supply contract between the Bay State firms and of "misappropriation of trade secrets," according to court documents.

Little Canada, Minn.-based St. Jude bought Westford, Mass.-based LightLab for $90 million last summer.

Hinkle’s decision also bars Volcano from finalizing its acquisition of Axsun, which it moved to buy out in 2008, until April 2014. But the judge denied LightLab’s move for an injunction against Axsun, as per a ruling issued in October 2010 rejecting claims for protection of five alleged trade secrets relating to laser technologies. In February 2010, the jury trial concluded with a finding that Axsub violated its contract with LightLab to supply tunable lasers to LightLab for its optical coherence tomography (OCT) imaging system until 2016.

Volcano president and CEO Scott Huennekens said his company is happy to put the two-year case in its rear-view mirror.

"After two-plus years of litigation, we are gratified by the court’s decision," Huennekens said. "With LightLab’s trade secret allegations now behind us, we will continue to focus our energy on developing key products that improve patient care."

And Volcano was quick to point out that the $5.1 million hit it’s taking could be a lot worse — LightLab initially sought more than $200 million in damages and $8.9 million in legal fees, according to a Volcano press release.

St. Jude touted the judge’s decision as a legal safeguard for its business interests.

“St. Jude Medical is pleased the court ruled in favor of LightLab and that key technology used in our [OCT] product platform is further protected from the inappropriate and unlawful conduct that was being orchestrated by Volcano and Axsun Technologies,” a company spokeswoman said in an email.

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