Medtronic 2009 Annual Report Download - page 99

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95
Medtronic, Inc.
On January 9, 2009, Richard Gulbrandsen filed a similar
shareholder derivative action against both the Company and
certain of its officers, directors and employees in Hennepin
County District Court in the state of Minnesota, alleging breach of
fiduciary duty and other claims arising from the same subject
matter as the Markewich putative class action complaint. On April
9, 2009, the court stayed the action until resolution of the
Markewich matter pursuant to a stipulation of the parties.
In addition, on August 11, 2008, Mark Brown filed a complaint
against the Company and certain directors, officers and other
company personnel in the U.S. District Court for the District of
Minnesota, alleging violations of the Employee Retirement Income
Security Act arising from the same subject matter as the
consolidated putative class complaint. The complaint was filed on
behalf of a putative class of participants in and beneficiaries of
the Medtronic Inc. Saving and Investment Plan whose individual
accounts hold shares of company stock at any time from February
15, 2007 to November 19, 2007. On December 29, 2008, the
plaintiff amended the complaint to add similar allegations relating
to alleged off-label promotion of INFUSE Bone Graft and to amend
the class to include participants in the plan from February 15,
2007 to December 12, 2008. The defendants’ motion to dismiss
was granted on May 26, 2009.
On December 11, 2008, the Minneapolis Firefighters’ Relief
Association filed a putative class action complaint against the
Company and two of its officers in the U.S. District Court for
the District of Minnesota, alleging violations of Section 10(b) of
the Exchange Act and Rule 10b-5 thereunder. The complaint is
brought on behalf of persons or entities who purchased securities
of Medtronic from November 19, 2007 through November 17,
2008. The complaint alleges that the defendants made false and
misleading public statements concerning the INFUSE Bone Graft
product which artificially inflated Medtronic’s stock price during
the period. On May 28, 2009, the court order appointed a lead
plaintiff and lead counsel.
On February 24, 2009, Christin Wright filed a complaint against
the Company and certain directors, officers and other company
personnel in the United States District Court for the District of
Minnesota, alleging violations of the Employee Retirement Income
Security Act. The complaint was filed purportedly on behalf of a
putative class comprised of participants and beneficiaries of the
Medtronic Savings and Investment Plan whose individual accounts
held shares of company stock at any time from June 28, 2006 to
November 18, 2008. The plaintiff claims the defendants breached
fiduciary duties by allegedly failing to properly disclose the
September 2008 settlement of the Fastenetix litigation and the
October 2008 settlement of the Cordis litigation.
The Company has not recorded an expense related to damages
in connection with these shareholder related matters because any
potential loss is not currently probable or reasonably estimable
under SFAS No. 5.
Mirowski
Medtronic is a licensee to the RE 38,119 patent (‘119 Patent) and
RE 38,897 patent (‘897 Patent) owned by Mirowski Family Ventures,
LLC (Mirowski) relating to the treatment of hemodynamic
dysfunction. Medtronic and Mirowski dispute the application
of the ‘119 and ‘897 Patents to certain Medtronic cardiac
resynchronization products. The parties entered into a tolling
agreement deferring and conditioning any litigation of the dispute
upon conditions precedent. The tolling agreement expired on
October 1, 2007. In subsequent notices, Mirowski identified certain
claims of the two patents that Mirowski asserts Medtronic is using.
On December 17, 2007, Medtronic filed an action in U.S. District
Court in Delaware seeking a declaration that none of its products
infringe any valid claims of either the ‘119 or ‘897 Patents. If
certain conditions are fulfilled, the ‘119 and/or ‘897 Patents are
determined to be valid and the Medtronic products are found to
infringe the ‘119 and/or ‘897 Patents, Medtronic will be obligated
to pay royalties to Mirowski based upon sales of certain CRT-D
products. A trial date has not been set. As of April 24, 2009, the
amount of disputed royalties and interest related to CRT-D
products is $103 million. This amount has not been accrued
because the outcome is not currently probable under SFAS
No. 5.
In addition, Medtronic is a licensee to the 4,407,288 Patent
(‘288 Patent) owned by Mirowski relating to ICDs. Until November
2001, Medtronic accrued and paid royalties under the license
based on a percentage of ICD sales. Medtronic and Mirowski