Mindray Medical shells out $25M to settle pulse oximeter patent battle with Masimo

Mindray Medical ($MR) and Masimo ($MASI) are laying their years-long legal battle over pulse oximeter technology to rest, with the companies agreeing to dismiss all outstanding litigation against one another in China and the U.S. and promising not to sue one another in the future.

As part of the settlement, Mindray will pay Masimo $25 million by mid-January 2016 and will hand the latter "certain patents" for unrelated technology, the companies said in a statement. Shenzhen, China-based Mindray will also buy all pulse oximeter technology components for its patient monitoring devices sold in the U.S. and Canada from Masimo through Dec. 31, 2027.

Mindray expects to take a $15.3 million Q4 charge related to the settlement, but says that on the whole the agreement is "immaterial to its operations" and "will not adversely impact its business," the company said in a statement.

The drama dates back to 2012, when Masimo sued Mindray in the U.S. District Court for the Central District of California for infringing 9 patents related to pulse oximeters and sensors. Masimo also claimed that Mindray breached a purchase and license agreement from Nov. 2002, in which it promised that it would promote Masimo's pulse oximeter technology. Masimo asked for damages and an injunction that would prevent Mindray from selling its Beneview pulse oximeters and sensors.

The news comes at a transitional moment for Mindray. Earlier this month, the devicemaker agreed to a $3.3 billion management buyout of its American depositary receipts, representing a 1.9% to its price when the company first announced the take-private offer in June. Mindray is borrowing as much as $2 billion from two Chinese banks to facilitate the buyout, one of the biggest debt deals for that kind of transaction in China, the WSJ pointed out.

Meanwhile, Masimo is forging ahead with its pulse oximeter technology. In October the company got an FDA OK for its MightySatRx fingertip pulse oximeter device, a few months after scoring a CE mark for its product. The device tracks arterial oxygen saturation (SpO2) and pulse rate and can display results through an IPhone, a potential selling point for hospitals as they look for lighter, more portable technology.

- read the statement

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