Masimo (NSDQ:MASI) said today that it re-tooled the royalty agreement it won a decade ago after a $263 million patent infringement win over then-Tyco Healthcare subsidiary Nellcor, now owned by Medtronic (NYSE:MDT) after a series of corporate buyouts.
The original settlement, inked back in January 2006, called for Nellcor to pay Masimo royalties on products using Masimo’s pulse oximetry technology through March 2011, according to a regulatory filing. Nellcor paid out $68.8 million in 2006, a rate of nearly 20%; that fell to 15%, or $56.1 million, the next year. From 2008 to 2011 the rate was 13%, resulting in collective royalties of $178 million.
In March 2011, Nellcor (then owned by Covidien) and Masimo agreed to cut the rate to 7.75%, resulting in a $28.3 million payment the next year; the payments hovered around that mark through 2015, for total royalties of nearly $119 million from 2012 to 2015. All told, winning in the courtroom brought in roughly $650 million for Masimo over the last 10 years, including the initial settlement amount, according to regulatory filings.
Today the Irvine, Calif.-based company said it agreed to hold the rate at 7.75% through Oct. 6, 2018, “after which no further royalties will be due under the agreement.” That agreement puts the long-simmering dispute to bed, including ongoing patent infringement proceedings, Masimo said.
Earlier this year, the U.S. Patent and Trademark Office’s Patent Trial & Appeal Board delivered split a decision related to Masimo’s patents, which Medtronic challenged last year. The PTAB ruled on petitions to review 2 different patents owned by Masimo related to signal processing apparati, granting Medtronic’s request to review certain claims on 1 but denying other claims on it and on a 2nd patent. Medtronic challenged Masimo patents last October, filing inter partes review petitions with the U.S. Patent & Trademark Office.
