A Medical Device Daily

Palomar Medical Technologies (Burlington, Massachusetts), a researcher and developer of light-based systems for cosmetic treatments, reported the resolution of its ongoing patent infringement lawsuits against Cutera (Brisbane, California).

Cutera will pay Palomar $15.5 million as an 8.5% royalty on sales of their laser- and lamp-based hair removal systems beginning with their initial sales in 2000 through March 31, $2.5 million in interest on past sales, and $4 million to cover Palomar's legal costs incurred while enforcing these patents.

In the first lawsuit, Palomar accused Cutera's CoolGlide laser systems, including the CoolGlide CV, Excel, Vantage and Xeo, of infringing U.S. Patent No. 5,735,844.

In the second lawsuit, Palomar accused Cutera's Lamp Systems, including the CoolGlide Xeo and Solera Opus platforms using the PW770 handpiece, of infringing both the 5,735,844 patent as well as U.S. patent No. 5,595,568 (the Anderson patents). Palomar has an exclusive license to these patents from General Hospital (Boston).

Cutera has admitted to the infringement, validity and enforceability of the Anderson patents and agreed not to challenge them in the future.

Under the terms of the settlement, Cutera will pay Palomar for sales of its systems that contain Nd:YAG- and/or ProWave770 handpieces for hair removal.

Beginning April 1, Cutera will pay Palomar a 7.5% royalty on future sales of these systems and any new light-based hair removal systems later developed.

As part of this transaction, Cutera and Palomar have agreed to refrain from asserting any further patent claims against the other's current product offerings.

“The court's rulings throughout this lawsuit, including the Markman ruling and the summary judgment ruling, confirmed the breadth and validity of Palomar's patent position,” said Patricia Davis, senior vice president and general counsel of Palomar. “This favorable resolution with Cutera further substantiates the strength of these patents. Palomar intends to continue its strategy of vigorously enforcing our patent position.”

Joseph Caruso, president and CEO of Palomar, said: “Palomar pioneered the cosmetic light-based industry with the first high powered light-based hair removal system in 1997. Since then, this industry has become one of the fastest growing segments in the medical industry with hair removal procedures being the most popular cosmetic light-based procedure performed today. Many companies have taken advantage of this high growth by offering products covered by the Anderson patents, and Palomar intends to license such companies or prevent continued infringement. This strategy has and should continue to provide significant financial benefit to Palomar and its shareholders.”

In the patent license agreement with Cutera, the 7.5% royalty rate is applicable to all light sources for hair removal. When systems include light sources not for hair removal, the 7.5% royalty rate is applied to the hair removal portion of the entire system. For a system with two or more light sources for hair removal and one or more other light sources not for hair removal, the 7.5% royalty is applied to 70% of the total sale price and for systems with one light source for hair removal and one or more other light sources not for hair removal, the 7.5% royalty is applied to 50% of the total sale price.

Under Palomar's license agreement with General Hospital, Palomar will pay to it 40% of all payments from Cutera excluding reimbursement of Palomar's legal costs.

In other legal news:

• DOBI Medical International (Mahwah, New Jersey) reported that, on or about May 30, it and certain current and former officers and directors of the company received subpoenas from the SEC dated May 26 indicating that the SEC is conducting a formal investigation to determine whether there have been any violations of securities laws for the period from Jan. 1, 2004, to the present.

The company and its officers and directors intend to fully cooperate with and assist the SEC in this fact-finding investigation, DOBI said.

DOBI Medical is a developmental stage medical imaging company working to create a new means for the improved diagnosis of malignant breast disease through the identification of abnormal vascularization associated with tumors.