The patents-in-suit are titled “Ultrasonic dissection and coagulation system” and “Ultrasonic curved blade.” While Covidien argued that Ethicon’s devices infringed upon its patents, Ethicon attempted to use an “obviousness” defense. Determining legal obviousness requires considering whether two or more pieces of prior art could be combined, or a single piece of prior art could be modified, to produce the claimed invention.
Ethicon argued that its devices combined existing non-ultrasonic, laparoscopic technologies in such a way that would have been obvious and therefore Covidien’s patents were, effectively, unfair.
“Though the simplicity of this argument seems tempting, this is insufficient to make a clear and convincing case that the patents-in-suit ‘only unite old elements with no change in their respective functions,’” U.S. District Judge Janet Bond Arterton wrote in the ruling.
Arterton also said Ethicon failed to reasonably show that an engineer of ordinary skill would have seen a benefit to using curved blades, dual cam mechanisms, a rotating blade and clamp, a device that fits down a 5-millimeter trocar and the use of a tube-in-tube design, as the patents describe. Proving this was an essential component to the obviousness defense.
The judge held that Covidien, formerly known as Tyco Healthcare Group LP, proved infringement of all asserted claims of the patents-in-suit. The federal court awarded Covidien a $176.5 million verdict upon ruling that several claims of Covidien’s patents were valid, enforceable, and infringed by Ethicon. The amount of the verdict, which could be appealed, was based on an 8 percent royalty rate on infringing sales through March 2012, plus prejudgment interest. Eight percent of infringing sales from April 1, 2004, to March 31, 2012, yields royalty damages of $140 million, according to the court’s opinion. The prejudgment interest amounts to $36.5 million.
“As a global healthcare market leader, Covidien invests significant resources into creating and developing medical innovations,” said Chris Barry, president of advanced surgical technologies at Covidien. “We are pleased that the federal court recognized our innovation in ultrasonic surgical devices, finding our patents both valid and infringed by Ethicon Endo-Surgery. We will continue to vigorously protect our innovative products, solutions and intellectual property.”
On the day of the judgment, March 28, Covidien stock hit a 52-week high of $67.72 per share. While partly in response to the lawsuit win, Jefferies & Co. analyst Raj Denhoy attributed the hike to market anticipation of the spin-off off Covidien announced in 2011. The company intends to peel off its Mallinckrodt pharmaceuticals division by mid-2013, leaving Covidien to focus only on devices and supplies.
Covidien is based in Ireland, with U.S. headquarters in Mansfield, Mass. Ethicon shares its headquarters operations between Somerville, N.J., and Cincinnati, Ohio.