Edwards valve patent victory could hit Medtronic for $1.6bn

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The most recent skirmish in the increasingly bitter rivalry between Medtronic and Edwards Lifesciences over their transcatheter aortic valves has turned in Edwards’ favour after a US court ruled that Medtronic had infringed patents covering Edwards’ Sapien device. The $390m damages awarded to Edwards is bad enough for Medtronic, but it gets worse: Edwards can now seek further damages of three times that amount.

A flicker of hope for the larger company exists in that the chances that Edwards will be awarded an injunction preventing Medtronic marketing its CoreValve in the US – it is expected to launch this spring – are slim. But this is the latest in a string of setbacks for Medtronic, and management must wish that it had taken, or had been able to take, the much more common and much cheaper path of settling out of court.

Wilful

The potential for additional damages, which could bring the total award to $1.6bn exclusive of lawyers’ fees, comes thanks to the jury finding that Medtronic wilfully infringed the patent; that is, that it did not believe Edwards’ IP to be invalid.

The grudge match between the companies has been going on for some time. In 2010 Edwards was granted $74m damages after a US ruling that Medtronic had infringed another transcatheter heart valve patent. That decision was upheld on appeal and Medtronic forked out the $74m, plus around $10m of interest, last year. Edwards says it is still owed additional damages from this suit.

The current case is also reminiscent of a dispute that played out in Germany last year. Both valves are approved and sold in Europe’s biggest market, but in August an injunction – awarded the previous month after it was found that Medtronic had infringed a different Edwards patent – came into effect, preventing the sale of CoreValve in Germany. The hiatus did not last long, though: the injunction was overturned on appeal in November.

The US case is unlikely to progress to this stage, according to Leerink analysts, despite Edwards pledging to seek an injunction. CoreValve is set to be approved to treat patients for whom Edwards' device is unsuitable, so the situation is more likely to be resolved with an ongoing royalty payment until the patent’s expiry in 2017. Medtronic is appealing against yesterday’s ruling and said it would fight Edwards on any moves it took to secure an injunction, too.

No settlement

Still, the situation is a huge hindrance for the Minneapolis company, and follows hard on the failure of Simplicity, its renal denervation system (Failure of Medtronic’s Symplicity trial exacerbates concerns over renal denervation, January 9, 2014).

This was, along with CoreValve, one of the key product launches for Medtronic over the next year or so, and while launch is likely to proceed as expected – the device’s trial results have been as good as Sapien’s or better – a large chunk of revenue is now lost (CoreValve data cause FDA to waive panel requirement, October 30, 2013).

Perhaps the most remarkable aspect of this case is its very existence. Most companies engaged in a fight like this would have reached a settlement involving licencing rights to the various patents long ago. It could be that Medtronic did try to settle and was denied by Edwards, or maybe the companies are such fierce adversaries that neither would countenance surrender.

Whatever the background to the case, the ultimate winners here might be neither Edwards nor Medtronic, but their lawyers.

To contact the writer of this story email Elizabeth Cairns in London at elizabethc@epvantage.com or follow @LizEPVantage on Twitter

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