A Medical Device Daily

Medtronic Sofamor Danek (Memphis, Tennessee) has denied charges contained in a lawsuit brought against it by Kyphon (Sunnyvale, California) and Harvinder Sandhu, MD, a New York-based orthopedic surgeon, filed last November in the U.S. District Court for the Western District of Tennessee.

Kyphon said the complaint was unsealed this week after the parties were unable to resolve their dispute.

The suit involves pending and issued Medtronic patents covering devices to treat vertebral compression fractures (VCF) of the spine, fractures affecting the lower back.

Kyphon and Sandhu this week reported formation of a license purchase and consulting relationship in the field of minimally invasive surgery and diagnosis. Kyphon said it has acquired an exclusive license to Sandhu's early invention rights concerning a directional bone tamp for treating VCFs, paying him $5 million up front, with potential milestone payments of another $15 million.

The company said it would take a one-time charge of $20 million for the period ended Dec. 31. It said the agreement includes a provision for a capped royalty stream on any future developed product.

Kyphon said that in 1999, Sandhu discussed his inventions with Sofamor Danek after execution of a non-disclosure agreement and that Sofamor Danek soon thereafter began to file for several patents encompassing Sandhu's inventions, without naming him as inventor and without his permission.

It alleges that Sofamor Danek then incorporated Sandhu's inventions into its internal Equestra project and that the company “recently admitted and confirmed to Dr. Sandhu that its prototype Equestra void creator product is identical to Dr. Sandhu's confidentially disclosed invention.“

After failure of a resolution, Sandhu then proceeded to form the licensing agreement with Kyphon. Their complaint against Sofamor Danek charges breach of contract, trade secret theft, fraud, unjust enrichment and correction of inventorship of several patents and patent applications, including Sofamor Danek's U.S. patent No. 6,676,665.

Medtronic Sofamor Danek said in a statement that it has not yet launched a product in this market sector but that it has not used Sandhu's invention in its patent filings or product development activities.

Pete Wehrly, senior vice president and president of Medtronic Spine and Navigation, noted the need for competition in this sector of the spine market, “and we will defend our right to be in this segment . . . “ He added that the complaint does not “threaten“ the company's “current product availability or impede our business operations.“

Wehrly said that neither Kyphon nor Sandhu had claimed patent infringement and that Sandhu had never received a patent for what he termed the “alleged invention.“ He also referred to Kyphon's “financial interest in keeping others out of the market.“

Kyphon specializes in devices designed to restore spinal function using minimally invasive technologies.

In other legalities, the Federal Trade Commission (FTC) reported that a telemarketing operation selling weight-loss patches and tooth-whitening kits would pay $463,000 in redress and $11,000 in civil penalties to settle charges that it defrauded consumers and made unsubstantiated claims.

The FTC alleged that the defendants promised “free“ samples of the tooth-whitening kits, and then began sending them product and debited their accounts without authorization; that they made unsubstantiated claims about their patches and called consumers listed on the National Do Not Call Registry.

The FTC's amended complaint included seven counts of violations against Conversion Marketing and Adam Tyler MacDonald. It said that besides billing customers without their consent, the defendants claimed that their Pounds Off Patch and Carbs Off Patch produced weight loss “in all users; when applied to skin; and by blocking the absorption of carbohydrates.“

The commission said it has referred a second complaint to the Department of Justice, charging that they called numbers on the “do not call“ registry, abandoned calls placed to consumers, and did not pay the required annual fee to access numbers on the registry.

The defendants are prohibited from misrepresenting any facts in connection with product marketing and prohibits the weight-loss misrepresentations alleged in the FTC complaint. The settlement contains a $979,204 judgment, suspended based on inability to pay, except for $463,000. Settlement of the “do not call“ complaint contains a $580,056 civil penalty, suspended except for $11,000.