Weight loss: GI Dynamics, W.L. Gore settle patent beef

GI Dynamics

A long-running dispute between W.L Gore & Associates and GI Dynamics (ASX:GID) is over after the medical device companies agreed to settle the beef.

Gore filed the lawsuit in 2010, alleging that it was the co-inventor and co-owner of GI Dynamics’ patents, including the latter’s flagship EndoBarrier gastrointestinal liner. GI Dynamics filed a countersuit later that year, alleging misappropriation of trade secrets, breach of confidence, breach of contract, unjust enrichment, misrepresentation and unfair and deceptive trade practices.

The lawsuit came to light in late 2011, after GI Dynamics filed its initial public offering in Australia.

The settlement, which puts to bed all the charges each side leveled against the other, leaves GI Dynamics with "exclusive ownership and control of its patent portfolio," according to a press release. GI Dynamics also granted Gore a non-exclusive, royalty-free license to us its patents for blood vessel devices, as long as it refrains from developing any gastrointestinal devices.

"Neither side will make any cash payments to the other, nor will any royalties be due," according to the release.

"We are delighted with this settlement,"GI Dynamics president & CEO Stuart Randle said in prepared remarks. "It confirms that GI Dynamics is the sole and exclusive owner of its technology and patent portfolio."

The dispute goes back to supplier agreements both companies signed in 2003 and 2004 to have Gore develop materials for the EndoBarrier sleeve. As part of those agreements, GI Dynamics agreed to "make milestone payments and to pay royalties in connection with sales of products manufactured from the tubes," according to court documents.

By 2009, Gore officials were claiming they had a different interpretation of the agreements and that the company "has the right to make, use, and sell material disclosed under the CDA or MTA to any party in any form for any use, including completed intestinal sleeve devices."

In November 2010 Gore filed a motion for summary judgement on all of GI Dynamics’ counterclaims, except those claiming that Gore is not a co-owner or co-inventor of the patents, a move that GI Dynamics opposed.

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