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February
14,
2011 -- 5:00pm EST
Laser Wars: Volcano Vindicated on OCT Trade Secret
Suit
Last
week the Superior Court of Massachusetts entered a Final
Judgment in the latest round of "Laser Wars" being waged between
Volcano Corporation (NASDAQ: VOLC) and St. Jude Medical (NYSE: STJ).
Both companies "lasered up" a few
years ago...and that has led to their "lawyering up" -- remember "Stent
Wars"?
In fact, Dr. Julio Palmaz, co-inventor of the first
angioplasty balloon exandable Palmaz-Schatz stent, told
me last year that the
biggest thing an inventor needed to understand was just how much
time he'll be spending in court,
defending his patent. That certainly is the case with the laser technology
used in a new generation of intravascular imaging catheters, called
OCT (Optical Coherence Tomography) which can be used to image the
inside of a coronary artery, look at a stent's positioning, whether
it has healed correctly, etc.
So here's the "prequel". First Volcano acquired
CardioSpectra in December 2007, followed by Axsun
Technologies a year
later, setting course for development and manufacture of a future OCT
technology. Another
year later and St.
Jude Medical acquired LightLab, which had been developing
OCT and had just gained FDA approval. The complicating factor was that
Volcano's new subsidiary Axsun manufactured LightLab's laser!
So a number of law suits were filed on both sides and
the results of the latest round were announced last week. Both companies
issued press releases and it seemed that both were claiming victory
(see "St.
Jude Versus the Volcano"). The Court did find that Volcano and
Axsun had violated the unfair competition clauses of Massachusetts State
Law 93A, and fined them $600,000. Volcano also has to pay for St.
Jude's mandatory attorneys' fees and costs --
the price tag: $4.5 million. (Another example of why my mother was
right and I shoulda been a lawyer!)
But importantly for Volcano, the Court agreed with a
jury verdict from October and threw out any claims of patent or trade
secret violation. As for the fines? LightLab originally claimed damages
in the amount of $200 million and legal fees of $8.9 million, so
the Court settlement was for half the legal fees and 0.3% of the
damage claims.
Volcano's General Consul and Senior VP, Darin Lippoldt
stated in an email to Angioplasty.Org that "Volcano is well-positioned
financially, and this does not impact us in the short
or long term." And he wrapped up the case findings, as follows:
Both the jury and the Court found that
only three items were misappropriated, none of which are relevant
to or used in either Volcano’s or Axsun’s business.
Those three items are: (1) specification for a laser that Axsun
no longer supplies to LightLab; (2) specification for a laser
that Axsun currently supplies to LightLab; and (3) a 2008 Axsun
laser prototype, that is not being used for any purpose. In
the litigation, LightLab claimed that Axsun/Volcano misappropriated
hundreds of other trade secrets and that Volcano used those
misappropriated trade secrets in its OCT program, and that
Axsun used them in the development of its OCT laser. However,
LightLab lost all of those claims.
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There still is outstanding litigation (does it ever stop?)
but the important news for Volcano is that they are now free to
move forward with their OCT platform. According to Lippoldt:
For over two years, St. Jude and LightLab
alleged that we misappropriated their trade secrets in building
our OCT system. The court vindicated us in that regard, and
we can now proceed with our development without the distraction
of those allegations against us.
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Need I say, stay tuned? Like a laser...
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