A Medical Device Daily

DePuy Spine (Raynham, Massachusetts) and Biedermann Motech (Schwenningen, Germany) have agreed to settle a patent infringement lawsuit with Alphatec Spine (Carlsbad, California) for $11 million and royalties on future sales of Zodiac and Solanas screw products.

In the lawsuit, DePuy and Biedermann accused Alphatec's Zodiac and Solanas screw products of infringing U.S. patent No. 5,207,678. Alphatec has paid $11 million to DePuy, the patent's U.S. licensee, and Biedermann, the patent's owner, for past sales of the accused products. The company also admitted that the '678 patent is valid and enforceable and that it covers its Zodiac and Solanas screw products as part of a license agreement between the companies.

DePuy Spine and Biedermann Motech granted Alphatec a license under the 678 patent to continue making, using and selling its Zodiac and Solanas screw products, but the company will have to pay a royalty and mark the products with the '678 patent number.

"This is an important result for DePuy Spine and Biedermann Motech," said Gary Fischetti, president of DePuy, a Johnson & Johnson (New Brunswick, New Jersey) company. "This settlement ties to our overall strategy to defend our patent portfolio and realize value for our intellectual property rights. We will continue to enforce our patents and protect our intellectual property rights to enhance our ability to pioneer innovative solutions for spinal disorders."

In 2006 Alphatec reported that the U.S. District Court in Boston denied a motion by DePuy seeking a preliminary junction against the sale and manufacture of the Zodiac and Solanas polyaxial pedicle screws (Medical Device Daily, Nov. 6, 2006).

In other legalities: A battle between two stem-cell companies escalated this week with StemCells (Palo Alto, California) filing suit against Neuralstem (Rockville, Maryland) in federal court in Northern California for patent infringement, libel and "unfair competition." The suit is in retaliation of the action Neuralstem launched against StemCells last week.

StemCells said the action alleges that Neuralstem and its two founders infringed its U.S. patent No. 7,115,418 (methods of proliferating human neural stem cells) and its recently issued U.S. patent No. 7,361,505 (neural stem cell compositions of matter). The two patents had not previously been asserted by StemCells against Neuralstem and are not part of the pending Maryland litigation initiated by StemCells in 2006, which is currently on hold by court order, the company said.

The California action also alleges that Neuralstem has engaged in a campaign of misinformation about StemCells' patents and proceedings before the U.S. Patent and Trademark Office (USPTO). StemCells said it is seeking compensatory and enhanced damages as well as injunctive relief.

Last week Neuralstem launched a lawsuit against StemCells alleging that it "intentionally withheld crucial information" highly material to the patentability of StemCells' new patent and that it was done with the intent to deceive the USPTO in order to get the patent allowed (MDD, May 8, 2008).

That suit was filed in the U.S. District Court for the District of Maryland Southern Division. Neuralstem said it wants the court to make StemCells' patent unenforceable.

StemCells reported last month that the USPTO had issued the 505 patent with claims covering human neural stem cells derived from any tissue source, including embryonic, fetal, juvenile or adult tissue (MDD, April 24, 2008).

At that time, StemCells President/CEO Martin McGlynn said the company was "confident that any third party wishing to commercialize neural stem cells as potential therapeutics or to use them as drug-screening tools will have to seek a license from us, irrespective of how they derive the cells. We have already granted licenses to several companies and are currently considering licensing other."

Richard Carr, president of Neuralstem, said last week that the company does not believe it is infringing on the patent and that the "threatening statements" StemCells made in April "leave the misleading impression that we would require a license from them as a result of the issuance of this patent. Nothing could be further from the truth."

According to StemCells, "Neuralstem's repeated false statements and public accusations over the past year, culminating in its allegations on the procurement of the '505 patent this month, together with its continued and willful infringement of StemCells' intellectual property, necessitated the company's California action."

"While we are disappointed that Neuralstem chose to escalate matters, we have a duty to our shareholders to protect our good name and the significant value of our intellectual property portfolio built over the years," McGlynn said. "Litigation of this type can be very time consuming and expensive and might have been avoided had Neuralstem chosen to negotiate a license as others have. We are confident that in the fullness of time the courts will find that Neuralstem has infringed our intellectual property rights."

"I want to emphasize that our intellectual property portfolio provides many layers of protection for our neural stem cell technology, including our HuCNS-SC product candidate," he added. "Regardless of Neuralstem's aggressive actions, it is important to realize what is at stake here. We are litigating whether Neuralstem has freedom to operate, not whether we do."

Both companies are developing cell-based therapeutics aimed at treating diseases of the central nervous system.