UPDATED Nov. 13, 2012, 5:30 p.m. with comment from Medtronic
UPDATED Nov. 13, 2012, 2:30 p.m. with comment from Edwards Lifesciences
The battle for the U.S. heart valve replacement market may have shifted in Edwards Lifesciences‘ (NYSE:EW) favor today, after a federal appeals court today upheld a $74 million legal win for Edwards over Medtronic (NYSE:MDT) in a patent infringement case.
The decision could see Edwards successfully Medtronic’s CoreValve replacement heart valve from the U.S. market, where its Sapien valve is the only approved device for transcatheter aortic valve implantation.
Edwards and CoreValve Inc. began the patent spat when the Irvine, Calif.-based rivals filed suit against each other in 2007. Medtronic inherited the beef when it purchased CoreValve in April 2009 for about $700 million.
The U.S. Court of Appeals for the Federal Circuit today ruled that Judge Gregory Sleet of the U.S. District Court for Delaware was right to uphold a jury’s decision that the Edwards patent is valid and infringed by the CoreValve device. The federal appeals panel also found that Sleet was right to decline treble the $73.5 million in damages, even though the jury found that Medtronic’s infringement was willful. The panel also said Sleet should reconsider his decision not to grant Edwards an injunction barring further infringement by the CoreValve device.
"We affirm the district court’s rulings, except that we remand for reconsideration of the court’s denial of an injunction in view of the representation of changed circumstances," according to court documents. "We agree with the district court that substantial evidence supported the jury verdict that invalidity on the ground of non-enablement had not been proved by clear and convincing evidence. The judgment of validity is affirmed."
Sleet’s ruling hinged on Medtronic’s pledge to move CoreValve’s manufacturing operation from California to Mexico to avoid infringement. But that never happened, meaning Sleet to reconsider, the federal appeals panel wrote.
"The district court’s explanation of why it was withholding an injunction placed significant weight on CoreValve’s statements that it was immediately moving this manufacturing operation to Mexico, and thus that infringement would terminate," according to the documents. "The district court stated that if CoreValve should renew its infringing manufacture in the United States, then ‘[a]s it did in this case, Edwards can bring suit against CoreValve and seek damages if CoreValve continues its infringing manufacturing operations in spite of the judgment of infringement.’
"Edwards states on this appeal, and CoreValve does not deny, that CoreValve never stopped its infringing manufacture in California. Whether or not that representation was known to be false when made, the situation before us reflects, at least, changed circumstances," the judges wrote. "Recognizing that the circumstances have not been fully explored in the record before us, we vacate the denial of the injunction, and remand to the district court for consideration in light of ensuing events and any other relevant factors."
For its part, Edwards said it expects Sleet to tack on additional damages "accumulated after the verdict was issued," according to a press release.
"We are very pleased that the appeals court has confirmed that Medtronic CoreValve is illegally using Edwards’ transcatheter valve technology. We believe this is a decisive milestone toward final resolution of this matter, given that we have a clear jury verdict that has been affirmed by both the district court and now the U.S. Court of Appeals," Edwards general counsel Aimee Weisner said in prepared remarks.
Medtronic, hastening to reassure that the decision has no impact on the several CoreValve clinical trials under way, said it’s "evaluating next steps."
"Due to its global manufacturing capabilities, Medtronic does not anticipate any interruption to the global supply of the Medtronic CoreValve system," according to an emailed release. "While Edwards has applied for a patent extension, there is no assurance an extension will be issued or what the impact or duration of that extension would be. These applications involve a review by 2 government agencies, and the process often can take between 2 and 5 years."