Medtronic/Axonics Dispute Will Impact Future of SNS
by James Cavuoto, editor
September 2021 issue
The patent dispute between Medtronic and Axonics Modulation moved closer to resolution earlier this month as the U.S. Patent & Trademark Office offered decisions on the validity of the Medtronic patents. But the issue of infringement, and financial damages, if any, is still unresolved and awaiting a high-stakes trial that is likely to have a profound impact on the market for sacral nerve stimulation systems.
Medtronic filed suit against Axonics in November 2019, asserting claims for infringement of seven patents related to Medtronic’s sacral neuromodulation lead placement procedure and implant recharging technologies. In response, Axonics filed Inter Partes Review with the Patent Trial and Appeal Board in March 2020 to contest the validity of all seven patents and the litigation was stayed pending the outcome at the PTAB. Last year, the PTAB granted Axonics’ request and instituted a review of the patents. In a pair of decisions announced this month, the PTAB offered good news and bad news to both firms, upholding the validity of some of the patents, but invalidating several claims from two of the patents.
Either party may appeal the IPR decisions to the director of the PTO and to the U.S. Court of Appeals for the Federal Circuit. Axonics expects the stay on legal proceedings in the U.S. District Court in the Central District of California to continue until the appeals process is complete. Medtronic said it will request that the court lift the stay on the IP infringement case and resume proceedings.
“Medtronic appreciates the PTAB’s efforts in this matter,” said Brett Wall, executive vice president and president of the neuroscience portfolio at Medtronic. “We are pleased with the outcome of the review process and look forward to our day in court to protect the proprietary technology that brings SNM therapy to patients around the world.”
But Axonics CEO Raymond Cohen bristled at Medtronic’s efforts to spin the PTAB decisions as a victory. “First and foremost, it is important to understand that the PTAB rulings as to whether the claims in the Medtronic patents are valid or not do not mean that anyone has ‘won’ anything,” he said. “When one party suggests that another party is infringing, the other party often asks the PTAB to determine if the claims in the patents are actually valid. This is what Axonics has done and for Medtronic to claim ‘victory’ is purely posturing. The fact that the PTAB decided to invalidate several claims in Medtronic’s ‘112 patent is a net positive for Axonics. Moreover, we believe the PTAB’s narrow construction of the claims in the ‘758 patent and ‘148 patent strengthens our non-infringement argument. Axonics remains confident that it does not infringe any Medtronic patents—valid or invalid—and that we will ultimately prevail on the patent claims asserted against us.”
Cohen also took a swipe at Medtronic for resting on its laurels in the SNS marketplace. “Medtronic took advantage of its monopoly and chose not to innovate for over 20 years,” he said. “Axonics took a different path and, in effect, created a renaissance in SNM therapy by introducing significant enhancements such as a long-lived rechargeable implantable neurostimulator and making SNM devices MRI compatible for the first time. We refuse to be intimidated by Medtronic and are confident that Axonics will ultimately prevail on all of the patent claims Medtronic has asserted against us.”
A major issue in the infringement case, if it goes to trial, is the tined lead technology used in Medtronic’s InterStim product. While Medtronic’s tines are arranged cylindrically along the length of the lead, Axonics uses helical tines, which the company contends does a better job of managing lead migration.
It is difficult, if not impossible, to predict whether a jury would find Axonics’ device infringing, and if so, what monetary damages would be appropriate. But given the high stakes involved, it may well be in the best interest of both firms to settle this out of court, perhaps with a cross-licensing deal or with Axonics paying a nominal royalty to Medtronic.
A Medtronic victory in the infringement case could saddle Axonics with enormous financial penalties, or possibly impact their freedom to operate. An Axonics victory, on the other hand, might open the floodgates for other implanted SNS vendors to enter the market and further impact Medtronic’s market share and credibility. A licensing deal, on the other hand would halt further erosion of Medtronic’s IP in this area and offer a disincentive for new competitors to enter the implanted SNS market.