A Medical Device Daily

Hillenbrand Industries (Batesville, Indiana), a publicly traded company with two wholly owned businesses in the healthcare and funeral services industries, and its Hill-Rom (also Batesville) and Hill-Rom Co. subsidiaries reported that the U.S. District Court for the District of South Carolina granted final approval of the definitive settlement agreement entered into with Spartanburg Regional Healthcare System (Spartanburg, South Carolina) and its attorneys.

The original cost of the settlement, $337.5 million, was reduced by almost $21.2 million to about $316.3 million. The reduction in the settlement amount reflects the portion attributable to customers who opted out of the settlement. The agreement, first reported in November (Medical Device Daily, Nov. 17, 2005), ends the antitrust class action litigation brought by Spartanburg against Hillenbrand and Hill-Rom.

All significant provisions of the agreement were previously disclosed, Hillenbrand said.

Commenting on the settlement in November, Ingo Angermeier, CEO of Spartanburg Regional Healthcare System, said, “We are pleased to announce that an agreement in principle has been reached between Spartanburg Regional Healthcare System and Hillenbrand and its subsidiaries, under which Hillenbrand agreed to pay $337.5 million to the class we seek to represent.”

“In addition to the monetary relief, Hill-Rom's agreement to refrain from bundled pricing of its standard and specialty beds is consistent with policies put in place by it in 2002 and provides very substantial benefits to hospitals like ours by fostering head-to-head competition in those markets. That competition can only lead to better quality products at lower prices.”

Angermeier said the bundled pricing at issue in the case is a prevalent practice in the healthcare industry by which manufacturers of medical supplies sell products to hospitals in a discount package or become subject to higher a la carte prices on products, many of which are critical to their operations.

The original settlement cost, along with estimates of certain legal and other costs to complete the settlement, was fully accrued by Hillenbrand in the fourth quarter of its 2005 fiscal year, which ended Sept. 30, 2005.

The settlement is expected to resolve all of the plaintiffs' claims and those of all class member U.S. and Canadian purchasers or renters of Hill-Rom products from 1990 through the date of the agreement. In March 2006, after receipt of preliminary approval of the settlement agreement, $50 million was paid into escrow. The company anticipates it will fund the balance due of about $266 million by mid-August.

“We are pleased to have received final court approval for our previously announced settlement agreement. Today's decision is a critical step toward finalizing this matter,” said Peter Soderberg, Hillenbrand Industries and Hill-Rom president and CEO. “After funding the settlement, Hillenbrand will continue to have a solid financial position to enable the execution of its strategic initiatives. As we have said before, we believe the claims in this case are without merit, but we also believe it is in our company's and customers' best interests to put this matter behind us. The nearly 10,000 associates of Hillenbrand Industries worldwide will continue to strive everyday to be the people with whom customers want to do business.”

In other court-related news, Sigma-Aldrich (St. Louis), a $1.7 billion life science company, and Oxford BioMedica (Oxford, UK), a gene therapy company, reported that they have filed a lawsuit against Open Biosystems (Huntsville, Alabama), a maker of genomic research tools, for infringement of key patents that cover key lentiviral-based systems for delivery of foreign DNA to a broad array of mammalian cells.

The complaint, which was filed in U.S. District Court Eastern District of Missouri, alleges that Open Biosystems is infringing U.S. patent nos. 6924123 and 7056699.

Rights to the patents, both titled “Lentiviral LTR Deleted Vector,” were exclusively licensed for research use to Sigma-Aldrich by Oxford BioMedica in October 2005.

The suit states that, among other products, Open Biosystems' Lentiviral shRNAmir Library is marketed and sold to researchers and research institutions for incorporation into viral particles that infringe one or more claims of the patents.

Sigma-Aldrich said it has invested in its RNAi program through “significant” intellectual property and licensing activities. The lawsuit filed against Open Biosystems is a result of Sigma-Aldrich's desire to actively protect its intellectual property in this field.

Oxford BioMedica's LentiVector system has broad applications in gene delivery and can be used to deliver shRNA-encoding DNA to cells to enable RNA Interference (RNAi) experiments. RNAi is a natural cellular process that is involved in the regulation of gene expression. In recent years scientists have developed methods that allow RNAi to be exploited as a research tool to decipher the function of particular genes.

Over the course of the last 12 months Sigma-Aldrich said it has made several investments in technology and intellectual property in the rapidly evolving area of RNAi through its membership in The RNAi Consortium, the acquisition of Proligo to solidify its capabilities in RNA synthesis and by obtaining exclusive and non- exclusive licenses to a broad portfolio of RNAi related patents for the research field.

“Sigma-Aldrich has made significant investments in creating the most comprehensive portfolio of intellectual property to allow our customers freedom to operate in the cutting-edge arena of RNA Interference,” said Shaf Yousaf, president of Sigma-Aldrich's Research Biotechnology Business Unit. “Our actions will be to defend our investments and the valuable intellectual property.”

Open Biosystems responded to the lawsuit in a statement issued Thursday, reaffirming its dedication to advancing scientific discoveries through the open distribution of The RNAi Consortium lentiviral libraries.

“The claims of patent infringement in the lawsuit are unfounded, and we intend to vigorously defend against them,” said Troy Moore, chief technology officer, Open Biosystems.

Open Biosystems said it continues to operate under license from the Broad Institute of MIT and Harvard, the developers of the TRC lentiviral libraries. Sigma-Aldrich also distributes these libraries.

“It is never our policy to infringe upon intellectual property,” said CEO Brian Pollock. “Open Biosystems was founded upon an open source business model that supports basic and medical research by making the newest and best life sciences tools readily available to scientists in academia, government and industry.”