A federal judge this week ordered IP licensing firm Orthophoenix to pay $572,000, plus interest, to Medtronic to cover legal fees incurred in a suit between Orthophoenix and Stryker (NYSE:SYK) over patents formerly owned by Medtronic (NYSE:MDT).
In April 2013, Medtronic sold patents to Orthophoenix, with an agreement that the firm would “provide counsel to Medtronic” in the case of a 3rd-party claim against Medtronic, and would require Orthophoenix to “defend, indemnify and hold Medtronic harmless from any claim, damage, or liability including attorney’s fees” which related to enforcing or defending the patents.
In Oct. 2013, Orthophoenix filed a suit against Stryker claiming it infringed upon the patents it had purchased. Although Medtronic was not party to the case, Stryker sought discovery from Medtronic, according to court documents. In response, Medtronic requested that Orthophoenix indemnify the company, but Orthophoenix refused.
Orthophoenix argued that since the claim was from Orthophoenix, and not against Medtronic, it was not on the line to pay the bill. Stryker and Orthophoenix settled the case in early 2016.
This week, Delaware District Judge Leonard Stark ruled that the settlement agreement requires the Orthophoenix to cover Medtronic’s legal fees, including costs incurred from the discovery requests from Stryker.