A Medical Device Daily

Masimo (Irvine, California) yesterday reported the settlement of all existing patent litigation between itself and Nellcor (Pleasanton, California), a settlement apparently serving to end a five-year legal battle between the two companies concerning key pulse oximetry technology patents.

With the settlement, Nellcor has paid Masimo $265 million for damages through Jan. 31, and all pending patent litigation between the companies will be dismissed.

In addition, Nellcor made an advance royalty payment of $65 million to Masimo related to sales of Nellcor's new products during the remainder of calendar 2006. After Jan. 31, Nellcor will no longer ship its current pulse oximetry platform but will continue to provide service and sensors for previously sold products.

Masimo also has granted Nellcor the right to sell Nellcor's new line of pulse oximetry products in exchange for an ongoing royalty.

A U.S. appeals court last September upheld a $164.2 million verdict against Nellcor, in a dispute over oximetry testing technology (Medical Device Daily, Sept. 9, 2005).

The original ruling, earlier in the year and backing Masimo, won praise from the Medical Device Manufacturers Association (Washington), which said it served to strike a blow against “questionable practices by certain dominant manufacturers and hospital group purchasing organizations“ (MDD, March 28, 2005).

Masimo bills itself as the inventor and leader in the development of Signal Extraction Technology (SET) for the non-invasive monitoring of vital signs.

As part of the Mallinckrodt (St. Louis) division of Tyco (Pembroke, Bermuda), Nellcor is a supplier of pulse oximetry and airway management products.

Following announcement of the settlement, Tyco said it would not change its earlier guidance for earnings from continuing operations of $1.85 to $1.92 a share for fiscal 2006. Company shares rose 9 cents to close at $26.56 on the New York Stock Exchange.

In other legalities, HemoCue AB (Angelheim, Sweden), a privately held manufacturer of medical diagnostic systems and HemoCue Inc. (Lake Forest, California) reported that HemoCue Inc. has sued Stanbio Laboratory (Boerne, Texas), the U.S. distributor for EKF diagnostic (Muenster, Germany), for violations of California's Unfair Competition Law and Unfair Practices Act, as well as for tortious interference with contract, tortious interference with prospective business advantage and trade libel.

The complaint, filed in Orange County Superior Court, alleges that Stanbio has engaged in improper marketing promotions, which offer incentives to HemoCue distributors and customers to relinquish their HemoCue testing equipment.

HemoCue manufactures point-of-care testing systems, including hemoglobin, glucose and urine albumin POC testing systems. HemoCue is owned by EQT, a leading European private equity group.

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