A Medical Device Daily

Diagnostics manufacturers Inverness Medical Innovations (Waltham, Massachusetts) and Quidel (San Diego) reported entering into a settlement agreement terminating all domestic and international intellectual property litigation between them.

The settlement provides for a license to Quidel of all current and future patents of Inverness and its affiliates that embody lateral flow technology for all diagnostic products other than for cardiology testing and for consumer/over-the-counter women’s health (except that diagnostics for women’s infectious diseases are within the licensed field of use).

Quidel and its affiliates are cross-licensing their current and future patents that embody lateral flow technology to Inverness and its affiliates for all applications.

Inverness will receive a net payment of $17 million and net future royalties from Quidel at 8.5% of revenues from products using the licensed patents.

Inverness is a developer of diagnostic devices and said it is exploring new opportunities for its electrochemical and other technologies in various applications.

Quidel develops rapid diagnostic solutions at the point of care in infectious diseases and reproductive health.

In other legalities:

iCAD (Nashua, New Hampshire) reported that it has received a letter from R2 Technology (Sunnyvale, California), the company’s principal competitor, advising it of R2’s position that iCAD’s Second Look products allegedly infringed on U.S. patents nos. 6,266,435, 6,477,262 and 6,574,357, licensed to R2.

The cited patents are continuations from the patents already licensed to iCAD by R2 under a September 2003 settlement that resolved previous patent litigation between the companies.

iCAD said that R2 has not given it enough information “to evaluate R2’s position.”

It added that under the prior settlement, R2’s rights to assert subsequent claims of infringement against it “are limited and require reasonably detailed notice, the opportunity for negotiation and binding arbitration as a required alternative to litigation.”

W. Scott Parr, iCAD’s president and CEO, said the company has received no valid claim from R2 and that the company’s patent position “is very strong, and has been enhanced dramatically by our acquisition of Qualia Computing and CADx Medical Systems [Beavercreek, Ohio] in December of 2003 [Medical Device Daily, Jan. 6, 2004]. Should R2 formally assert a claim of patent infringement and demand arbitration, iCAD may in turn assert broad patent infringement claims against R2.”

iCAD is a provider of computer-aided detection solutions enabling the identification of cancer and other life-threatening conditions earlier.

Tenet Healthcare (Dallas) said that it has received a Wells Notice from the staff of the Securities and Exchange Commission regarding the adequacy of the company’s disclosures in its financial reports relating to Medicare outlier reimbursements and stop-loss payments under managed care contracts. Tenet first disclosed the existence of the SEC inquiry into this matter in April 2003.

The company also has been informed that Wells Notices have been issued to certain former senior executives of the company who left their positions in 2002 and 2003. These include its former CEO, chief operating officer, general counsel, CFO, chief accounting officer and senior vice president of government programs.

A Wells Notice indicates that the SEC’s staff intends to recommend that the agency bring a civil enforcement action against the recipients for possible violations of federal securities laws.

Recipients of Wells Notices have the opportunity to respond before the SEC staff makes its formal recommendation on whether any action should be brought. Tenet said it is continuing to cooperate with the SEC regarding the matter.

Tenet Healthcare, through its subsidiaries, owns and operates acute-care hospitals and related healthcare services.