The latest round in a long-running battle over negative-pressure wound therapy patents went to Smith & Nephew plc (NYSE:SNN), after a Texas judge’s ruling that some claims in a pair of Kinetic Concepts Inc. (NYSE:KCI) patents are invalid.
Judge Royal Furgeson of the U.S. District Court for Western Texas found that the claims “would have been obvious to a person of ordinary skill in the field,” according to court documents.
That decision puts one of several cases around the world to rest — for now, anyway. KCI said it’s mulling its options in the case, including a request for reconsideration or a circuit court appeal.
“We strongly disagree with the court’s decision, which effectively sets aside the jury verdict from March 2010,” KCI president and CEO Cathy Burzik said in prepared remarks.
KCI and Smith & Nephew — through its Hull, England-based Advanced Wound Care unit — have been trading claims and counter-claims since May 2007, when Smith & Nephew acquired Blue Sky Medical Group Inc., a California-based device manufacturer that had developed its own NPWT business line. KCI and Blue Sky already had been slugging it out in court for several years over the technology, which is touted to promote healing by gently removing fluids and infectious material from wounds using vacuum devices and tubes in the wound covering.
At the time, Smith & Nephew said it believed Blue Sky had not infringed on KCI-licensed patents, citing a recent court decision siding with the company. The British device conglomerate acknowledged KCI had filed appeals, but said the acquisition provided immediate entry into the NPWT market and “significantly improves the long-term growth prospects” of its wound care unit.
Judges on the Patents Court of the High Court of Justice of England and Wales in June entered an injunction barring Smith & Nephew from infringing two patents licensed to KCI supporting much of its NPWT line. The injunction was stayed pending appeal and is now scheduled to be heard this month. Smith & Nephew’s Renasys NPWT products will remain on the market throughout the appeal process.
Both sides have claimed their share of victories in the dispute. A Texas jury found that KCI’s patents were valid but also found that a gauze product sold by Smith & Nephew did not infringe on those patents. But another federal jury convened in Texas in March ruled against the firm finding a foam covering also used with the Renasys system did infringe on a KCI-held patent, which if upheld on appeal, would keep Smith & Nephew from selling the foam covering in the United States through 2014 when the patent expires. Similar cases are pending in Germany and Australia as well as before the U.S. Patent and Trademark Office.
The financial stakes for both companies likewise are high. In its 2010 annual report, KCI said NPWT products generated about $1.25 billion in worldwide sales during each of the past two years — or more than 60 percent of its overall business.
Smith and Nephew estimates it currently controls about 16 percent of the global wound management market, producing about $829 million in sales for the company during 2009, but did not specifically break out its NPWT.