Masimo Corp. v. Tyco Health Care Group LP, Mallinckrodt Inc.
Published: Aug. 6, 2005 | Result Date: Mar. 21, 2005 | Filing Date: Jan. 1, 1900 |Case number: CV024770MRP Verdict – $420,000,000
Judge
Court
USDC Central
Attorneys
Plaintiff
Marc M. Seltzer
(Susman Godfrey LLP)
Stephen E. Morrissey
(Susman Godfrey LLP)
Vineet Bhatia
(Susman Godfrey LLP)
Defendant
Stephen C. Neal
(Cooley LLP)
James Donato
(Northern District of California)
Experts
Plaintiff
Jeffrey J. Leitzinger
(technical)
Einer Elhauge
(technical)
Defendant
Janusz A. Ordover
(technical)
Robert Willig
(technical)
Facts
In 1998, plaintiff Masimo Corp., an Irvine-based company that designs, manufacturers, and sells pulse oximetry products (technology that ensures a patient is receiving sufficient oxygen), introduced to the United States market the Masimo Signal Extraction Technology (Masimo SET). The plaintiff claimed it provided more accurate and reliable oxygen-saturation and pulse-rate values from patients in motion or with weak blood flow. Pulse oximeters are either stand-alone devices or are incorporated into a multi-parameter patient (MPPM) device. The plaintiff licensed Masimo SET to companies that manufactured MPPMs. These original equipment manufacturers (OEMs) incorporated the technology into their own monitors. The plaintiff also makes and sells stand-alone pulse oximeters that can be connected to existing MPPMs as upgrades. In the early 1980s, Nellcor Puritan Bennett began selling and licensing its pulse oximetry equipment. This Massachusetts-based company offered the technology in its own MPPMs and as stand-alone. It also licensed the technology to OEMs. In 1997, defendant Mallinckrodt Inc. bought Nellcor. In 2000, New Hampshire-based defendant Tyco Health Care Group LP bought Mallinckrodt. The plaintiff claimed that Mallinckrodt and later Tyco unlawfully monopolized the domestic pulse oximetry systems market by entering into anticompetitive contracts with hospital group purchasing organizations (GPOs), OEMs, and direct hospital purchasers. These contracts consisted of: 1) sole source contracts with GPOs and hospitals; 2) market-share based pricing agreements with GPOs and hospital purchasers; 3) product bundling agreements with GPOs and hospital purchasers; 4) co-marking agreements with OEMs; and 5) equipment financing programs.
Damages
The plaintiff claimed that as a direct and proximate result of defendants' conduct, it was entitled to damages of $256 million for lost profits. Under the antitrust laws, the plaintiff's damages automatically were trebled.
Result
The jury found the defendants liable and awarded the plaintiff single damages for its actual lost profits totaling $140 million. This will automatically be trebled to $420 million under Section 4 of the Clayton Act. The jury specifically found that Tyco unlawfully maintained its monopoly, and that all the challenged practices, except the financing programs, constituted exclusive dealing arrangements and unreasonable restraints on trade.
Deliberation
two days
Poll
8-0
Length
four weeks
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