Medtronic 2012 Annual Report Download - page 134

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Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
117
Sprint Fidelis Product Liability Matters
On October 15, 2007, the Company voluntarily suspended worldwide distribution of its Sprint Fidelis
(Fidelis) family of defibrillation leads. Approximately 4,000 lawsuits regarding the Fidelis leads were filed
against the Company, including approximately 47 putative class action suits, reflecting a total of
approximately 9,000 individual personal injury cases. The parties subsequently reached an agreement to
settle over 14,000 filed and unfiled claims. The Company recorded an expense of $221 million related to
probable and reasonably estimated damages under U.S. GAAP in connection with such settlement in fiscal
year 2011, and paid out the funds in the third quarter of fiscal year 2012.
In addition, one putative class action has been filed in the Ontario Superior Court of Justice in Canada.
On October 20, 2009, that court certified a class proceeding, but denied class certification on plaintiffs’ claim
for punitive damages. Pretrial proceedings are underway. The Company has not recorded an expense related
to damages in connection with that matter because any potential loss is not currently probable or reasonably
estimable under U.S. GAAP. Additionally, the Company cannot reasonably estimate the range of loss, if
any, that may result from this matter.
Shareholder Related Matters
On December 10, 2008, the Minneapolis Firefighters’ Relief Association filed a putative class action
complaint against the Company and certain current and former officers in the U.S. District Court for the
District of Minnesota, alleging violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule
10b-5 thereunder. 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 August 21, 2009, plaintiffs filed a consolidated putative class action complaint expanding the
class. The Court certified the class on December 12, 2011. On March 30, 2012, the Company announced that
the parties agreed to a class-wide settlement, pending notification to class members and subject to final
court approval.
The Company has recorded an expense of $90 million related to probable and reasonably estimated
damages under U.S. GAAP in connection with this settlement.
On March 12, 2012, Charlotte Kococinski filed a shareholder derivative action against both the
Company and certain of its current and former officers and members of the Board of Directors in the U.S.
District Court for the District of Minnesota, setting forth certain allegations, including a claim that
defendants violated various purported duties in connection with the INFUSE bone graft product and
otherwise. In May 2012, Daniel Himmel and the Saratoga Advantage Trust commenced two other separate
shareholder derivative actions in Hennepin County, Minnesota, District Court against the same defendants
in, and making allegations similar to, those in the Kococinski case. The Company has not recorded an
expense related to losses in connection with these matters because any potential loss is not currently
probable or reasonably estimable under U.S. GAAP. Additionally, the Company cannot reasonably estimate
the range of loss, if any, that may result from these matters.
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. On December 17, 2007, Medtronic filed an action in U.S. District Court for the
District of 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 cardiac resynchronization therapy-
defibrillator (CRT-D) products. A bench trial concluded on March 13, 2010. On March 30, 2011, the trial
court entered a judgment of non-infringement in Medtronic’s favor. Mirowski appealed that decision to the
U.S. Court of Appeals for the Federal Circuit and the Federal Circuit heard oral argument on March 6, 2012.