Court Wants To Reassess Damages In NuVasive/Medtronic Patent Fight
This article was originally published in The Gray Sheet
Executive Summary
In a long-standing patent fight between NuVasive and Medtronic, an appeals court has ruled NuVasive was being penalized twice for lost profits based on damages awarded by a jury. The judges unanimously agreed to send the case back to a district court to reevaluate how much Medtronic should be paid.
NuVasive Inc. may be getting a break on what it needs to shell out to Medtronic PLC for infringement of certain spine device patents.
The Court of Appeals for the Federal Circuit says $102 million that was awarded to Medtronic in a patent case against NuVasive should only have been based on “reasonable royalty” and has sent it back to a district court to reexamine how much Medtronic should be paid. The court argues NuVasive was already being charged for lost profits when it was ordered to pay back royalties.
In 2011 verdict, a jury found that NuVasive’s CoRoent XL implants, MaXcess II and III retractors, and Helix and Helix Mini anterior cervical plates infringed three patents owned by Medtronic related to implants for the thoracic and lumbar spine, a plate-and-screw system for the cervical spine and a tissue retractor. Based on the infringement Medtronic was eventually awarded $102 million which included lost profits and back royalties. (See (Also see "Litigation In Brief" - Medtech Insight, 26 Sep, 2011.).)
The jury also found that Medtronic’s NIM-Eclipse spinal system infringed one NuVasive patent involving the use of neuromonitoring in a lateral approach to spine fusion surgery, awarding damages of $660,000 to NuVasive, including back royalties.
However, upon appeal federal judges unanimously ruled March 2 Medtronic is not allowed to recover damages for lost profits or for the sale of convoyed products while still upholding that all the patents had been infringed.
“NuVasive argues that that the ongoing royalty determination should be redone because it includes a lost profits component,” said the court in its opinion. “Because the ongoing royalty impermissibly includes a lost profits component, we vacate the award and remand for the district court to determine an appropriate ongoing royalty rate in light of this opinion and the jury verdict after a new trial.”
According to NuVasive, a retrial could come sometime later this year and the company’s CEO Alex Lukianov says he looks forward to it.
"This provides greater clarity on the process moving forward and affirms our view that Medtronic had been awarded an excessive amount of damages,” said Lukianov in a company statement. “By limiting the damages to only a reasonable royalty, we believe our overall exposure in this phase of the litigation has been reduced from the current amount we have accrued.”
Larry Biegelsen, an analyst with Wells Fargo, agrees and says the ruling is a positive result for NuVasive, but by how much the damages will be reduced is hard to determine. “Note that the ruling of the Appeals Court and a subsequent ruling should have a limited impact on [NuVasive's] business moving forward because the most significant [Medtronic] patent expired in February 2015,” he added.