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29 January 2014Americas

Non-profit celebrates ear implant win

A US medical research foundation has received about $131.2 million in damages after a jury  found that two of its patents covering cochlear implants were infringed.

The Alfred E Mann Foundation for Scientific Research (AMF) had sued Cochlear, the world’s largest seller of implantable cochlear stimulators and processors, in 2007.

AMF’s patents claim cochlear implants, which restore hearing to patients with non-functional inner ears, and related technologies used to improve hearing.

The research foundation was working on cochlear implants in the 1980s, and sought to broker a licensing deal with Cochlear, before the discussions broke down in 1992.

AMF later formed Advanced Bionics (AB) as a commercial entity to manufacture cochlear implants, and exclusively licensed the associated patents to the spin-off company in 2004.

After Cochlear was sued in 2007, it argued that the licensing agreement between AMF and AB was a “virtual assignment” of the patents to AB, giving AB the sole right to sue for infringement of those patents.

The US District Court for the Central District of California sided with Cochlear in 2009, finding that because AMF had transferred to AB “all substantial rights under the patents,” AB should be “considered the owner of those patents”. That meant that AMF lacked a standing to sue.

AMF appealed to the US Court of Appeals for the Federal Circuit, which  reversed the district court’s ruling in 2010.

The appeals court held that AMF is the owner of the patents because it retained “substantial” rights in them, including the right to sue for their infringement if AB declined to do so (which it did).

On January 23, on remand from the appeals court, a jury at the district court  found that Cochlear had wilfully infringed the two patents, setting the damages at approximately $131.2 million.

The damages may seem high at first, said MaryAnne Armstrong, partner at Birch Stewart Kolasch & Birch, LLP. But because “presumably the infringement has been spread” over about seven years, and that Cochlear reported revenues of about $750 million last year, the damages award might “not be so unreasonable” for Cochlear.

Cochlear can still ask the judge to reconsider the $131.2 million fine, she added, and the judge can modify the fine if the jury “clearly made a mistake” on any of the case’s issues, such as validity or wilful infringement.

She added: “The decision seemed to be pretty reasonable. We will have to see whether they appeal it. The parties have talked before and may talk again. Often, once parties have an actual verdict it puts a little more incentive to negotiate.”

Cochlear can appeal against the decision to the federal circuit.

The decision is available  here. 

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