Neovasc (NSDQ:NVCN) last week won a round in its patent battle with Edwards Lifesciences (NYSE:EW) subsidiary CardiAQ Valve Technologies that’s already got it on the hook for some $70 million in damages.
A federal jury in Massachusetts found earlier this month that Neovasc stole trade secrets and breached a non-disclosure agreement with CardiAQ in developing the Tiara transcatheter mitral valve replacement. Edwards inherited the lawsuit when it acquired CardiAQ Valve for $400 million in August 2014.
A Bay State federal judge tossed a claim alleging that Neovasc violated Massachusetts laws against unfair competition and unfair or deceptive practices. Judge Allison Burroughs ruled May 27 that most of the wrongdoing took place in Canada, not Massachusetts as required by the statute.
“At trial, CardiAQ did not identify any actionable conduct by Neovasc that occurred inMassachusetts. Throughout the relevant time period, Neovasc was headquartered in Canada. Neovasc received CardiAQ’s confidential information and trade secrets while in Canada, worked on CardiAQ’s prototypes from its facility in Canada, and developed its competing device in Canada,” Burroughs wrote. “Further, because CardiAQ moved to California in February 2010, it is not even clear that CardiAQ experienced all of the harm within Massachusetts.”
Burroughs also said she would require both parties to submit briefs on a remaining correction of inventorship claim, after a hearing on CardiAQ’s bid for an injunction slated for June 3, and plans to decide the inventorship claim and final judgment after that.
Filings show a partnership gone sour
According to court documents, Neovasc approached CardiAQ Valve in June 2009 and offered to help it develop a TMVI device. The companies signed an NDA and worked together on the replacement heart valve until February 2010.
But in mid-2009, CardiAQ valve alleged, Neovasc breached the NDA by using the CardiAQ Valve technology as the basis for the Tiara device, including in patent filings.
The jury found Neovasc guilty May 19 of breach of contract, but did not award any damages for that claim, according to the documents. But the panel found that Neovasc misappropriated 3 of the 6 trade secrets claimed in the suit, awarding $70 million in damages to CardiAQ.
The jury also found that Neovasc used unfair or deceptive trade practices and that CardiAQ Valve co-founder, president & COO Brent Ratz (now an R&D VP for Edwards’ TMVR program) and co-founder Dr. Arshad Quadri (the “AQ” in CardiAQ) contributed to the conception of the CardiAQ Valve patent.
“Through many years of dedicated work with Dr. Quadri, we were able to develop an extensive base of knowledge, make important advancements and create the CardiAQ transcatheter mitral valve to help patients in need who are not well-served by therapies available today,” Ratz said at the time. “We are proud of this foundational work and grateful that the jury recognized these contributions to the developing field of transcatheter mitral valve replacement.”
“Regrettably, the jury trial phase of this lawsuit was not resolved to our satisfaction. We will be exploring our options regarding post-trial motions in the trial court and, potentially, the appellate process,” Neovasc CEO Alexei Marko said after the jury verdict. “As we have throughout this process, we will remain diligent in our company’s purpose to advance our cardiovascular products to improve patient care by addressing two significant unmet structural heart diseases, mitral regurgitation and refractory angina.”