A U.S. court issued a $268 million judgment against Cochlear Ltd. in litigation over patent infringement claims by cochlear implant maker Advanced Bionics and the Alfred E. Mann Foundation. But Cochlear said it will appeal the decision, a process that could take several more years before the case is finally resolved.
Cochlear (ASX:COH), a publicly held company based in Australia, is the world’s largest cochlear implant maker. The second largest is Advanced Bionics (AB), a Valencia, California subsidiary of Sonova Group of Switzerland (CH:SOON). The two are cutthroat competitors in the multibillion-dollar global market for implants that restore hearing.
AB holds exclusive licenses to patents owned by the Alfred E. Mann Foundation for Scientific Research. The nonprofit foundation pioneered many cochlear implant technologies and helped found Advanced Bionics. It joined AB in the infringement suit against Cochlear, which bounced between the district court and U.S. Court of Appeals.
After the appeals court upheld several of the infringement claims, the U.S. District Court in Los Angeles on Nov. 5 ordered the $268,057,078 (USD) judgment against Cochlear.
Cochlear Ltd. To Appeal The Judgment
The five-year-old dispute between the companies focuses on intellectual property tied to Advanced Bionics’ original cochlear implant technology. But according to Cochlear, “the infringement relates to a long-expired patent and has no ongoing impact to Cochlear’s business.”
“We will continue to defend this case, and the next step in the litigation process is our appeal to the U.S. Court of Appeals,” said Cochlear’s CEO and President Dig Howitt. “The case is likely to take years to finally resolve.”
To stay the execution of the judgment pending the outcome of the appeal, Cochlear will need to lodge a $335 million (USD) insurance bond with the court. Cochlear said it has debt and other facilities available to cover the amount of the insurance bond.
Cochlear should have deep pockets to weather the setback should it lose the appeal. It had nearly $1 billion (USD) in revenue last year with healthy profit levels. And its global market leadership in cochlear implants can be expected to give it ongoing sales momentum.