Edwards Wins $392 Million, Asks to Block Medtronic

Jan 15, 2014 7:33 pm ET

(Corrects previous appeal in third paragraph.)

Jan. 15 (Bloomberg) -- Edwards Lifesciences Corp., awarded more than $392 million in a patent-infringement lawsuit against Medtronic Inc., plans to ask a judge to prevent its rival from selling a new heart-valve device in the U.S.

Medtronic was set to begin selling its CoreValve by April pending Food and Drug Administration clearance, one of the biggest medical-device approvals anticipated by investors this year. Edwards has had the U.S. market to itself for the aortic valves inserted without cracking the chest since November 2011.

Both devices are sold outside the U.S. in a market expected to reach $3 billion by 2019. Medtronic said it plans to appeal today’s jury decision on Edwards’s Cribier patent. Medtronic had appealed an earlier decision on the Anderson patent through the U.S. Supreme Court, which declined to hear it. Medtronic paid Edwards $84 million in initial damages last year in a case that’s still pending.

“It’s a high hurdle,” said Edwards Chief Executive Officer Mike Mussallem in an interview at the JPMorgan Chase & Co. health-care conference in San Francisco. “In general you don’t commonly see injunctions, but you have pretty decisive facts in this case. And now the same judge saw two juries find willful infringement. It will be interesting to see what the judge does with that. We’re hopeful.”

Edwards, based in Irvine, California, gained 1.8 percent to $71.89 at the close in New York. Minneapolis-based Medtronic fell less than 1 percent to $59.33.

Triple Damages

The lawsuit over the Cribier patent was filed in federal court in Santa Ana, California, in June 2011 and transferred the following year to Wilmington, Delaware. Edwards will seek triple damages because the jury ruled Medtronic’s infringement was intentional, Mussallem said.

There are about 300,000 people worldwide with severe aortic stenosis, a narrowing of the valve between the left ventricle and the aorta. Blood can back up in the heart, leading to chest pain, breathlessness and weakness. One in three patients can’t tolerate the open-heart surgery that has been proven to improve quality and lengthen life. Half die within a year if untreated.

“Today’s ruling is a nice turn of events for Edwards, but we don’t expect investor’s to ascribe significant value to the ruling given that: 1) the appeals process can take time -- we estimate 14-18 months; 2) we believe an injunction barring Medtronic from launching this year in the U.S. is highly unlikely -- and was not issued in today’s ruling,” said Danielle Antalffy, an analyst at Leerink Partners in New York.

European Cases

Medtronic should be able to get FDA approval and begin selling CoreValve while the legal maneuvers are under way, she said.

Medtronic won a similar case regarding the Cribier patent in Europe and an injunction in Germany based on the Spenser patent was overturned in November after the European Patent Office said the claims may not be valid.

It has been difficult to get an injunction in the U.S. since a 2006 Supreme Court ruling requiring that other measures, such as royalties, won’t adequate resolve the issue and the public interest isn’t harmed. Since Medtronic’s CoreValve comes in different sizes and will treat patients that Edward’s Sapien currently cannot, any infringement on the patent would likely be resolved with an ongoing royalty payment until the patent expires in 2017, Antalffy said.

The case is Edwards Lifesciences LLC v. Medtronic Corevalve LLC, 12-cv-00023, U.S. District Court, District of Delaware (Wilmington).

--Editors: Romaine Bostick, Andrew Pollack