NuVasive ordered to pay Medtronic royalties in spinal implant suit

Medtronic ($MDT) may be at risk of losing big in a patent battle with one company, but the Minnesota device giant is on the winning side of a dustup with rival NuVasive, at least for now.

The Wall Street Journal reports that a U.S. District Court has ordered NuVasive ($NUVA) to pay royalties to settle a patent dispute over various spinal-related implant products. That's 13.75% on NuVasive's CoRoent XL implants and 8.25% on MaXcess retractors covered by the suit--resolving "Phase 1" of the patent litigation. ("Phase 2," concerning certain cervical plates, was already settled.)

But while Medtronic may very well be getting its money at some point (the case is heading to appeal), it had sought much higher royalty rates then the court granted. NuVasive notes that Medtronic wanted a massive 36% royalty for CoRoent XL implant sales and 22% on MaXcess retractors.

San Diego-based NuVasive said it has been budgeting for the ruling, and now upped its estimated royalty expense for 2013 to $16 million, up from $11 million. All is not lost for the company however. It says that litigation royalty expense accruals will go away in February 2015, after some of the affected Medtronic patents expire. Meanwhile, NuVasive will set aside the money in escrow as it seeks to overturn the court decision.

NuVasive chairman and CEO Alex Lukianov said in a statement that the company "will promptly and aggressively appeal the verdict and damage award to the Court of Appeals for the Federal Circuit," and expects to "vigorously defend the investments" the company has made in what it asserts is a pioneering "lateral approach to spinal fusion surgery."

And while Medtronic may very well be on the winning side against NuVasive, it risks facing an injunction in German court in another ongoing patent battle. The decision, expected any day now, could prevent it from selling its CoreValve transcatheter aortic valve replacement in the country, thanks to tough legal action in a fierce patent dispute involving archrival Edwards Lifesciences ($EW).

- read the WSJ story
- here's the NuVasive release

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