In loss for Medtronic, appeals court overturns $102M owed by NuVasive for patent infringement

Coerent XL--Courtesy of NuVasive

The $102 million payout awarded to Medtronic ($MDT) in 2011 has been vacated by a U.S. appeals court, to the delight of spinal implant company NuVasive ($NUVA).

The nation's highest patent appeals court just ruled that the appropriate fine for NuVasive's patent infringement should be based on royalties, but not lost profits, which appear to have been taken into account by a federal jury in 2011 when it set the penalty at $102 million.

A new trial will be held in San Diego to determine the appropriate payout to Medtronic. The appeals court did not overrule the federal jury's ruling that NuVasive infringed three Medtronic spinal implant patents covering devices made by the bigwig's Warsaw orthopedics unit.

"Our rejection of Warsaw's claims for lost profits does not mean that Warsaw is precluded from any recovery. Warsaw is entitled to a reasonable royalty sufficient to compensate it for the value of what was taken from it--the value of the patented technology," the appeals panel said, according to Reuters.

"This provides greater clarity on the process moving forward and affirms our view that Medtronic had been awarded an excessive amount of damages. By limiting the damages to only a reasonable royalty, we believe our overall exposure in this phase of the litigation has been reduced from the current amount we have accrued. We look forward to the upcoming retrial," NuVasive CEO Alex Lukianov said in a statement.

In 2013, a U.S. District Court set the royalties payments to Medtronic at 13.75% of sales revenue on NuVasive's CoRoent XL implants and 8.25% on its MaXcess retractors. The payout for patent infringement by NuVasive's Helix and Helix mini anterior cervical plates had already been settled.

Following that decision, NuVasive said it will set aside the money owed as royalties in an escrow account as it seeks to overturn the court decision. The company just overturned the 2011 decision calling for damages based on Medtronic's lost profits, and will seek to reduce the royalties it owes at the upcoming trial in San Diego.

"Medtronic is pleased that the U.S. appeals court upheld the jury's original finding that Nuvasive's devices infringed on our patents. We remain confident that the retrial will return an award that is appropriate to the damages we are seeking in this case. Medtronic is committed to vigorously protecting our intellectual property," said the company in a statement. 

- read the release
- here's Reuters' take

Special Report: 2014's most memorable med tech patent battles - Medtronic

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