A Medical Device Daily

Medtronic (Minneapolis) reported that a Delaware jury rendered verdicts in patent litigation between Medtronic and the Advanced Cardiovascular Systems (ACS; Santa Clara, California) subsidiary of Guidant (Indianapolis). The jury found that Guidant's “Lau“ patents at issue are valid and that certain Medtronic stents, including the S7 and Driver stents, infringe those patents.

The jury verdict represents the end of the jury phase of the trial, but does not conclude this court proceeding, Medtronic said. It said a further hearing regarding Medtronic's claim that Guidant's patent is unenforceable due to “in-equitable conduct“ would be conducted by the U.S. District Court in Delaware at a time yet to be determined by the court.

The outcome of the inequitable conduct hearing will conclude the evidence phase of the trial and could impact the jury verdicts, Medtronic said. Inequitable conduct generally refers to the willful disregard of patent filing procedures, including the identification of all “prior art“ in patent filings, the company said.

Medtronic said the jury's findings do not inhibit it from selling its coronary stents in the U.S. and has no jurisdiction over the sale of such products outside the U.S. In addition, it said the verdicts have no immediate impact on the commercialization of the Endeavor drug-eluting coronary stent outside the U.S. or the Endeavor clinical program.

Medtronic stents covered in the trial proceedings include the Microstent, GFX, GFXII, S540, S660, S7, Driver, Bridge and BeStent2.

Lumenis (Yokneam, Israel), a global manufacturer of laser- and light-based devices for medical, aesthetic, ophthalmic, dental and veterinary applications, said that it has received a notification — referred to as a “Wells Notice“ — from the staff of the Boston District Office of the Securities and Exchange Commission in connection with the staff's ongoing investigation into various accounting matters.

The notification indicated the staff's intention to recommend that the SEC bring a civil proceeding seeking, among other things, an injunction and civil monetary penalties against the company alleging violations of the antifraud and other provisions of the U.S. federal securities laws in connection with the reporting of certain transactions reflected in its 2002 and 2003 financial statements. The transactions identified were the subject of the report of internal investigation conducted on behalf of the audit committee of the board of directors disclosed in the company's press release dated May 3, 2004.

The notification also indicated the staff's intention to recommend allegations that the press release disclosing the audit committee report was misleading for failing to provide detailed information on the quarterly impact on earnings (loss) of the improper recognition of revenue in certain transactions covered by the audit committee report, which in some quarters had been significantly higher on a percentage basis than those percentages reported on an annual basis; and creating an impression that all transactions covered by the audit committee report involved premature recognition of revenue, whereas in certain of the transactions revenue should never have been recognized.

In that regard, Lumenis noted that the effect of the company's accounting for the transactions as transactions in which revenues should never have been recognized was included in the table of aggregate effects which was set forth in the May 3, 2004, press release.

The company said it “understands“ that the staff of the SEC has separately sent a Wells Notice to one former officer of the company.

Under the SEC's procedures, a Wells Notice indicates that the SEC staff has made a preliminary decision to recommend that the commission bring a civil enforcement action against the recipient of the notice. The Wells Notice received by Lumenis indicates that the staff intends to recommend that the commission bring an enforcement action against the company alleging that it violated Section 17(a) of the Securities Act of 1933.

Lumenis noted that it has been taking steps for some time to improve its internal controls and intends to continue its review of internal controls. The company is using outside consultants to assist it in that review.

Align Technology (Santa Clara, California), inventor of Invisalign, a proprietary method of straightening teeth without wires and brackets, reported that the San Francisco County Superior Court has granted a temporary restraining order (TRO) against defendants OrthoClear (San Francisco), OrthoClear Holdings and individual defendants and former Align employees Muhammad Ziaullah Chishti, Bao Tran, Peter Riepenhausen, Joe Breeland, Jeff Tunnell, Christopher Kawaja and Charles Wen, pursuant to a multi-claim lawsuit filed by Align earlier this month.

On Feb. 18, the court granted Align's request for and issued a temporary restraining order prohibiting Ortho-Clear and the individual defendants from “engaging, assisting or participating, directly or indirectly, in soliciting, inducing to leave, recruiting, or encouraging any current Align employee or consultant to terminate or alter his or her employment or business relationship with Align“ or attempting to do the same.

The court also granted Align's request for and issued a TRO prohibiting OrthoClear and the individual defendants from “disclosing, using, lecturing upon or publishing any proprietary information belonging to Align without the express prior written permission of Align.“ For the purposes of the TRO, the court defined “proprietary information“ as employment agreement materials, signed by each of the individual defendants, which include, among other things, Align's trade secrets, inventions, mask works, ideas, processes, formulas, source and object codes, data, programs, other works of authorship, know-how, improvements, discoveries, developments, designs and techniques. They also include information regarding plans for research, development, new products, marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers, as well as information regarding the skills and compensation of other employees of the company.

In response to a cross-application for a temporary restraining order filed by certain defendants, the court enjoined Chishti and the Align parties from disparaging each other in such a manner as to violate their mutual non-disparagement clause.

The court also enjoined Align and specific officers from advising any Align employee or consultant that he or she will be subject to criminal charges or a civil lawsuit if that person elects to change his or her employment status with Align, unless Align has good cause to believe criminal conduct has been or will be committed or that a civil cause of action will lie against the employee or consultant.

The court also required Align to refrain from taking any actions inconsistent with federal or state securities laws relating to the issuance or redemption of Align stock.

On Feb. 2, Align filed a multi-claim lawsuit in San Francisco County Superior Court alleging tort, contract, statutory and common law causes of action arising from Ortho-Clear and the individual defendants' plan to unlawfully utilize Align's intellectual property, confidential information and employees.

Roche Diagnostics (Indianapolis) dismissed a complaint filed in U.S. District Court, Southern District of Indiana on July 30, 2004, against former supplier Access Diabetic Supply (Pompano Beach, Florida).

The lawsuit claimed that Access Diabetic Supply misinformed consumers to believe that the Accu-Chek Compact blood glucose meter had been the subject of a high rate of complaints and product returns and had been recalled. Access Diabetic Supply now has agreed to contact all consumers who may have received the erroneous communication and inform them of the error, Roche said.