Medtronic 2016 Annual Report Download - page 123

Table of Contents
Medtronic plc
Notes to Consolidated Financial Statements (Continued)
120
are included within accrued certain litigation charges in other accrued expenses and other long-term liabilities on the consolidated
balance sheets as discussed above.
Patent Litigation
Ethicon
On December 14, 2011, Ethicon filed an action against Covidien in the U.S. District Court for the Southern District of Ohio,
alleging patent infringement and seeking monetary damages and injunctive relief. On January 22, 2014, the district court entered
summary judgment in Covidien's favor, and the majority of this ruling was affirmed by the Federal Circuit on August 7, 2015.
Following appeal, the case was remanded back to the District Court with respect to one patent. On January 21, 2016, Covidien
filed a second action in the U.S. District Court for the Southern District of Ohio, seeking a declaration of non-infringement with
respect to a second set of patents held by Ethicon. The court consolidated this second action with the remaining patent issues from
the first action. In addition to claims of non-infringement, the Company asserts affirmative defenses of invalidity for each of the
patents-in-suit. The case is currently in the early stages of fact discovery. The Company has not recorded an expense related to
damages in connection with this 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
INFUSE
On March 12, 2012, Charlotte Kokocinski (Kokocinski) filed a shareholder derivative action against both Medtronic, Inc. and
certain of its current and former officers and 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. On March 25, 2013, the Court dismissed the case without prejudice, and Kokocinski subsequently filed an amended
complaint. On March 30, 2015, the Court granted defendants’ motion to dismiss the amended complaint, dismissing the case with
prejudice. Kokocinski sought reconsideration of that decision, and, on September 30, 2015, the Court denied Kokocinski’s request
for reconsideration. Kokocinski has appealed the Court’s decision to the U.S. Court of Appeals for the Eighth Circuit.
West Virginia Pipe Trades and Phil Pace, on June 27, 2013 and July 3, 2013, respectively, filed putative class action complaints
against Medtronic, Inc. and certain of its officers in the U.S. District Court for the District of Minnesota, alleging that the defendants
made false and misleading public statements regarding the INFUSE Bone Graft product during the period of December 8, 2010
through August 3, 2011. The matters were consolidated in September, 2013, and in the consolidated complaint plaintiffs alleged
a class period of September 28, 2010 through August 3, 2011. On September 30, 2015, the Court granted defendants’ motion for
summary judgment in the consolidated matters. Plaintiffs have appealed the dismissal to the U.S. Court of Appeals for the Eighth
Circuit.
Shareholder Related Matters Resulting from the Covidien Acquisition
On July 2, 2014, Lewis Merenstein filed a putative shareholder class action in Hennepin County, Minnesota, District Court seeking
to enjoin the then-potential acquisition of Covidien. The lawsuit named Medtronic, Inc., Covidien, and each member of the
Medtronic, Inc. Board of Directors at the time as defendants, and alleged that the directors breached their fiduciary duties to
shareholders with regard to the then-potential acquisition. On August 21, 2014, Kenneth Steiner filed a putative shareholder class
action in Hennepin County, Minnesota, District Court, also seeking an injunction to prevent the potential Covidien acquisition. In
September 2014, the Merenstein and Steiner matters were consolidated and in December 2014, the plaintiffs filed a preliminary
injunction motion seeking to enjoin the Covidien transaction. On December 30, 2014, a hearing was held on plaintiffs’ motion for
preliminary injunction and on defendants’ motion to dismiss. On January 2, 2015, the District Court denied the plaintiffs’ motion
for preliminary injunction and on January 5, 2015 issued its opinion. On March 20, 2015, the District Court issued its order and
opinion granting Medtronic’s motion to dismiss the case. In May of 2015, the plaintiffs filed an appeal, and, in January of 2016,
the Minnesota State Court of Appeals affirmed in part, reversed in part, and remanded the case to the District Court for further
proceedings. In February of 2016, the Company petitioned the Minnesota Supreme Court to review the decision of the Minnesota
State Court of Appeals, and on April 19, 2016 the Minnesota Supreme Court granted the Company’s petition on the issue of whether
most of the original claims are properly characterized as direct or derivative under Minnesota law. A decision from the Minnesota
Supreme Court is expected in calendar year 2017.
The Company has not recorded an expense related to damages in connection with the shareholder related 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.