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.
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.
Need I say, stay tuned? Like a laser…