Medtronic 2009 Annual Report Download - page 96

92 Medtronic, Inc.
Notes to Consolidated Financial Statements
(continued)
lift the July 6, 2007 stay of proceedings on ACS’s motion for an
injunction as to Endeavor. On September 29, 2008, the Delaware
District Court granted ACS’s motion to lift the stay of proceedings
with regard to Endeavor and then denied ACS’s motion for a
permanent injunction with respect to both Driver and Endeavor.
On October 2, 2008, Medtronic filed its Notice of Appeal to the
U.S. Court of Appeals for the Federal Circuit with respect to the
May 2007 judgment in favor of ACS, and all other adverse rulings
to Medtronic. On October 15, 2008, ACS appealed from the District
Court’s September 29, 2008 order denying ACS’s request for a
permanent injunction. Medtronic filed its principal brief in the
appeal on January 26, 2009. Briefing is expected to be completed
by early June 2009, after which the U.S. Court of Appeals for the
Federal Circuit will set a date for hearing oral argument.
On June 18, 2008, Abbott initiated legal proceedings in the
Netherlands against Medtronic BV, Medtronic Trading NL BV
and BV Medtronic FSC asserting that certain of Medtronic’s
Driver, Endeavor and Endeavor Resolute large vessel diameter
stents infringe an Abbott European Lau patent issued on June 18,
2008. On August 28, 2008, a judge of the district court granted
Abbott a preliminary injunction against Medtronic prohibiting
Medtronic from making, selling and distributing certain large
vessel diameter Medtronic stents in the Netherlands. On March 11,
2009 the three judge Netherlands trial court issued an opinion in
favor of Medtronic, finding that the accused large vessel stents
did not infringe Abbott’s European Lau patent and permitting
Medtronic to seek damages for the time during which the
preliminary injunction was in effect. The court did not decide
whether the European Lau patent was valid, but deferred ruling
until the European Patent Office ruled on pending oppositions
to the patent. The European Lau patent remains subject to
challenges to the patent’s validity in opposition proceedings in
the European patent office. Abbott has filed similar lawsuits
against Medtronic’s large vessel bare metal stents in France,
Germany and Japan. In the German proceeding, a trial date is set
for August 20, 2009. In France, a trial is scheduled for November
30, 2009. In Japan, a series of hearings are being held throughout
2009. The first hearing was on February 2, 2009, and the next will
be on July 15, 2009.
In response to Medtronic’s Request for Reexamination for each
of the four Lau patents, in December 2006, the United States
Patent and Trademark Office (USPTO) issued an initial “office
action” finding that the claims which Medtronic products were
previously found to have infringed were not patentable. The
USPTO granted a second petition to reexamine each of the four
Lau patents in 2007. On June 30, 2008, the USPTO determined for
a second time that all of the claims of the earliest Lau patent (US
5,514,154) that Medtronic was found to infringe were invalid. After
granting a third petition to reexamine two of the other four Lau
patents (US 6,066,167 and 6,066,168) in 2008, on September 30,
2008, the USPTO again determined that all claims of those two
Lau patents that Medtronic was found to have infringed were
invalid. Finally, with respect to the fourth and latest issued Lau
patent (US 6,432,133), on March 3, 2008, the USPTO again
determined that all claims of this Lau patent that Medtronic was
found to infringe were invalid with the exception of a single claim.
This latest issued Lau patent is involved in a reexamination
proceeding, which allows Medtronic to participate in the USPTO
proceedings. Responses to the USPTO’s rejection of the claims of
this patent were filed by both parties in October 2008. The patent
holder will have an opportunity to challenge the USPTO’s
determinations in further proceedings in the reexaminations. Until
these reexaminations are concluded, their potential impact upon
the claims relating to the Lau patents in the above proceeding
remains unknown.
The Company has not recorded an expense related to damages
in this matter because any potential loss is not currently probable
or reasonably estimable under SFAS No. 5.
Litigation with DePuy Spine
On January 26, 2001, DePuy Spine (formerly DePuy/AcroMed), a
subsidiary of J&J, and Biedermann Motech GmbH (collectively,
DePuy) filed suit in U.S. District Court for the District of
Massachusetts alleging that Medtronic’s subsidiary, Medtronic
Sofamor Danek USA, Inc. (MSD), was infringing a patent relating
to a design for a thoracolumbar multi-axial screw (MAS). DePuy
subsequently supplemented its allegations to claim that MSD’s
M10, M8 and Vertex screws infringe the patent. On April 17, 2003