A jury last week returned a $16 million judgment in favor of Johnson & Johnson (NYSE:JNJ) in an ongoing patent spat with Globus Medical (NYSE:GMED).
The jury in the U.S. District Court for Delaware ruled that Audubon, Pa.-based Globus infringed on 3 spinal implant patents owned by J&J’s DePuy-Synthes unit with its now-discontinued Independence ALIF system, Coalition ACDF system and InterContinental Plate-Spacer product lines.
The ruling stems from a lawsuit filed by Synthes in July 2011. The damages were based on a 15% royalty rate applied to approximately $107 million in sales Globus reported from the sale of the devices. A formal ruling has not been issued in the case.
"Globus Medical does not expect the verdict to impact its ability to conduct its business or to have any impact on its future revenues," company officials said in a prepared release. "As this lawsuit involved only 3 products that are no longer part of Globus Medical’s product portfolio, this verdict will not impair the company’s ability to sell any of its current products and will not require any royalty payments to Synthes based on current or future sales."
Leerink Swann analyst Richard Newitter called the verdict "unfavorable" but "manageable" in a note to investors this morning.
"While the verdict is disappointing, we believe the financial impact should be limited given: (1) the ~$16M in damages look manageable in light of GMED’s $224M net cash position, and (2) minimal risk to future sales/margins as we believe ongoing royalties are unlikely since the company has already redesigned and launched new versions of the products deemed to infringe," Newitter wrote. "Ultimately we’re inclined to view the outcome as a relatively positive resolution to the biggest – at least from a financial standpoint – of GMED’s 3 currently outstanding legal overhangs. We reiterate our OP rating and we’d be buyers on any pullbacks to the stock."
In May, Globus filed suit against JNJ in the same court, alleging that the Zero-P VA intervertebral fusion implant violates U.S. patent #8,328,872, for an "Intervertebral Fusion Implant," assigned to Globus last December, according to court documents.
