Baxter Healthcare Wins Patent Infringement Suit

[Bill Peckham]

WOW! I'm not sure what this will mean to dialyzors but I think it is a very big deal.
http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20080404005760&newsLang=en

Federal Court in California Orders Competitor Fresenius to Stop Selling its Infringing Hemodialysis Machine

CHICAGO--(BUSINESS WIRE)--Baxter International, Inc. has won a long-running battle in a patent infringement suit (Fresenius USA, Inc. et al v. Baxter International Inc. et al.) against Fresenius Medical Care involving Fresenius’ Number One - selling hemodialysis machine in the United States. The U.S. District Court for the Northern District of California today issued opinions permanently enjoining Fresenius from manufacturing its flagship product affirming it infringes on Baxter’s technology and awarding damages to Baxter. Bell, Boyd & Lloyd LLP represented Baxter in the case.

The Order, written by Judge Saundra B. Armstrong, requires that Fresenius stop making, using or selling the 2008K hemodialysis machine effective January 1, 2009. Judge Armstrong also imposed a 10% royalty on the sales price of each infringing machines sold from now until January 1, 2009 and further imposed a 7% royalty on all disposable products used with the infringing 2008K hemodialysis machines. The 2008K is, according to Fresenius, its “cornerstone product” and is the best selling hemodialysis machine in the marketplace, with over 90 percent market share.

In granting the injunction, Judge Armstrong noted that much of the hardship that Fresenius will face from the injunction is its own doing because it did not take any steps to design around the patents-in-suit: “t is Fresenius's burden, and not Baxter's, to taste the bitter fruit of its own inaction.”

In a February 2007 ruling, Judge Armstrong upheld the validity of Baxter’s patents that had been challenged by Fresenius in a 2003 law suit, ruling that Fresenius failed to introduce substantial evidence of invalidity.

Baxter is represented by Bell, Boyd & Lloyd LLP. The trial team included Michael J. Abernathy, Alan Barry, Kara E.F. Cenar, Sanjay K. Murthy, Adam L. Marchuk, Brian J. Arnold and Marron Mahoney.

Baxter International is based in Illinois and, through its subsidiaries, assists healthcare professionals and their patients with the treatment of complex medical conditions, including hemophilia, immune disorders, cancer, infectious diseases, kidney disease, trauma and other conditions.

[flip]

This could have some serious effects. My center uses these machines and products. Since we are an independent center, we pay a much higher rate for these products than Fresenius affiliated centers do. Now Fresenius is building a new dialysis center here and offering a lot of perks and benefits for patients who switch. The end result is that my beloved center will probably be sold to Davita or DCI in order to remain competitive as, I'm sure Fresenius will pass along the royalties in price increases to the non-Fresenius centers. Nurses will be replaced by technicians who cost less and have less medical training. This really sucks!

[Adam_W]

This is going to hit a lot of people, both professionals and patients, really hard. I wonder whats going to happen to all the existing 2008Ks once this takes effect. If they are all pulled from use, that's going to be a major problem, simply because so many centres use the 2008K (my centre uses them for the in-centre patients). This may make other dialysis machine manufacturers such as Gambro, B. Braun, etc. very happy. Nurses, PCTs, bio-med techs, etc. are suddenly going to have to start learning new machines. I wonder if FMC is also going to have to pull the 2008K@home machines. Well, at least for a while, Fresenius will no longer be the Microsoft of the North American dialysis machine market. I hope the transition to new equipment goes smoothly so that patient care is not compromised. It is a shame though. The 2008K is a nice machine, and if I had to use a full sized machine instead of the NxStage, the 2008K would be my first choice (assuming I had a choice).

Adam

[Bill Peckham]

There does need to be confirmation because this is a press release from the law firm that was representing Baxter. I know that in some cases things have to be pulled from the market (Blackberry was facing that a while back) but I don't know how that would be possible for the machine that has 90% of the market. Fresenius has been messing up lately - they're not allowed to market their Baby K for home use because of issues with their 510K application (there is no mention of the Baby K on FMC websites). Now this. I assume there is more to the story but maybe not.

[Bill Peckham]

I provide a summary of the suit's five year history here: http://www.billpeckham.com/from_the_sharp_end_of_the/2008/04/baxter-freseniu.html

FMC responds - surprise! They'll appeal. http://www.rttnews.com/sp/breakingnews.asp?item=31

With several previous decisions clearly in favor of the Company, FMCH said it would appeal to the Court of Appeals for the Federal Circuit to have the original June 2006 jury verdict of invalidity reinstated and will seek a stay of the injunction pending resolution of the appeal.

In addition, the company said it has developed a back up design and expects no material impact on its product business with hemodialysis machines.