A Medical Device Daily

Medtronic (Minneapolis) yesterday reported that a jury in Delaware has rendered a verdict in a retrial of patent litigation between it and Cordis (Miami Lakes, Florida), a Johnson & Johnson (New Brunswick, New Jersey) business.

The jury, Medtronic said, found that Cordis' Palmaz and Schatz patents are valid and that Medtronic's Microstent II, GFX and GFX II coronary stents – stents which Medtronic said it no longer markets or sells – infringe the Palmaz and Schatz patents.

The case will now proceed to post-verdict phase hearings, including hearings regarding various motions related to damages and potential appeals, Medtronic said. Timing of these hearings has not yet been determined.

Medtronic said that the jury verdict does not prevent it from selling its current portfolio of coronary stents, including the S7 and Driver stents, in the U.S. or abroad. In addition, it said that the verdicts "have no impact on the commercialization of the Endeavor Drug Eluting Coronary Stent or the ENDEAVOR Clinical Program."

In other legalities: Cytyc (Marlborough, Massachusetts), a women's health company, reported that an arbitration panel has issued a partial final award in its dispute with DEKA Products Limited Partnership (Manchester, New Hampshire) regarding royalties involving a 1993 agreement concerning Cytyc's ThinPrep Pap Test products. The partial final award established the products upon which a royalty of 1% is due but reserved a decision on the exact amount of the final past royalties award until the parties have submitted royalty calculations.

Cytyc contended that the terms of the license with DEKA required paying a 1% royalty only on the filter component used to prepare the ThinPrep Pap Test. The arbitration panel determined, however, that the agreement required Cytyc to pay a 1% royalty on the entire multi-component ThinPrep Pap Test kit from Nov. 17, 2000, to Dec. 31, 2004.

The panel dismissed all other claims against Cytyc.

Cytyc said the exact amount of the final award will be determined "in the next several weeks." Meanwhile, it will take a pretax charge against 1Q earnings of about $8 million, or 4 cents a share.

"We believe that this charge, along with existing reserves for this matter, will be sufficient for our estimate of the final award amount payable to DEKA for all past royalties and other costs, if any," said Patrick Sullivan, Cytyc's president, CEO and chairman. He said that, based on the 4-cent impact of this charge, earnings-per-share guidance for the 1Q05 will be in the range of 17 cents to 18 cents and full-year 2005 earnings per share guidance will be reduced to the range of 89 cents to 96 cents. "Exclusive of this first quarter charge, we expect the 1% royalty on all future sales of ThinPrep Pap Test disposables to be paid by Cytyc as a result of this award will not be material to our subsequent quarterly financial results," said Sullivan.

He expressed disappointment with the findings, adding: "We continue to believe that DEKA has been paid all royalties due under the terms of the license . . ."