A Medical Device Daily

In conjunction with its report of recent financial results, Cynosure (Westford, Massachusetts), a developer of light-based aesthetic systems, said it will cross-license certain intellectual property from Palomar Medical Technologies (Burlington, Massachusetts). It said it will make a one-time payment of $10 million for IP covering all royalties on previous sales of hair-removal systems, including the Photosilk and the Apogee family of products.

The payment resolves all outstanding patent disputes with Palomar.

Future sales, it said, will be subject to a royalty that would be equal to a blended rate of about 3.5% of Cynosure’s current total revenue. In exchange, Palomar will license the rights to certain patents from Cynosure in exchange for a lower royalty rate on the Apogee Elite System for a two-year period.

Cynosure’s other flagship products, including Affirm, Cynergy with MultiPlex technology and the TriActive LaserDermalogy System, are not subject to any future royalties.

Patricia Davis, senior VP and general counsel of Palomar, commented on the agreement, saying that it puts Palomar’s competitors “on notice regarding these patents. Since settling our patent infringement lawsuit against Cutera in June, Palomar has filed patent infringement lawsuits against Candela Corporation and Alma Lasers . Palomar intends to continue its strategy of vigorously enforcing our patent position. Licensing these patents to Cynosure without the need for litigation further substantiates the strength of these patents, and we believe other companies may follow the same course of action.”

Michael Davin,president/CEO for Cynosure, said the agreement avoids disruption of the company’s activities. “We are pleased to reach an equitable result with Palomar. We obtained rights to two patents that have proved to be among the most significant in our industry. As a result, we now have the ability to apply the key elements of these patents to significantly enhance our current hair-removal product offerings.”

Cynosure reported that revenues for 3Q06 increased 23% to a record $18.6 million from $15 million for 3Q05. Gross profit margin increased to 60% of total revenues compared with 53% for the same period in 2005.

For the three months ended September 30, 2006, Cynosure recorded a net loss of $4.2 million, or 38 cents a share, which includes the $10 million payment to Palomar, for the cross licensing-agreement.

In another license agreement ending a patent dispute, Picis (Wakefield, Massachusets) has entered into a cross-licensing agreement with Capsule Technologie (Boxborough, Massachusetts).

Picis will grant Capsule a non-exclusive license to its patent relating to systems for automating data communication between external software programs and sensors. And Capsule Tech has agreed to grant Picis non-exclusive rights relating to its software products. The subject technology generally relates to systems for automating patient vital signs collection into a Clinical Information System.

The agreement resolves a pending patent infringement lawsuit initiated by Picis, and related counterclaims. Financial terms of the agreement are not being disclosed.

Picis is a provider of healthcare information technology designed to transform the delivery of patient care in the high-acuity areas of the hospital, including the emergency department, operating and recovery rooms and intensive care units.

Capsule is a provider of device integration technologies.

In other legalities:

• Diomed Holdings (Andover, Massachusetts), a developer of minimally invasive medical technologies, including its EndoVenous Laser Treatment (EVLT) for varicose veins, reported that the U.S. Federal District Court for the District of Massachusetts has set a date of Dec. 8 to establish a trial date for its ‘777 patent litigation against its primary competitors, AngioDynamics (Queensbury, New York) and Vascular Solutions (Minneapolis).

In 2004, Diomed began action against AngioDynamics, seeking injunctive relief and damages for infringement of its U.S. Patent No. 6,398,777, covering the EVLT of varicose veins. Diomed acquired exclusive rights to the patent from the five inventors of the procedure in 2003. Diomed initiated similar actions against Vascular Solutions and two other competitors later in 2004.

Earlier this year a U.S. District Judge ruled that Diomed’s U.S. Patent No. 6,398,777 is both valid and enforceable and rejected defenses by AngioDynamics and Vascular Solutions. The court denied separate motions by each of the parties for summary judgment on the issue of infringement by the defendants, ruling that Diomed is entitled to proceed to trial on its claims for an injunction and damages against the defendants.

• Predictive medicine company PreMD (Toronto) reported that it has been served with materials by Med-11 AG (Med-11) and Dr. Abulkalam Shamsuddin, with Med-11 and Shamsuddin seeking to prevent PreMD from continuing with its legal action in Ontario against Med-11, Shamsuddin and Stuart Brazier. No date for the motion has been set.

On Oct. 24, PreMD said it has commenced an action against Shamsuddin, Brazier and Med-11 in connection with its 1998 license agreement with Shamsuddin, granting an exclusive license to PreMD relating to certain intellectual property involving part of PreMD’s cancer products.

On Nov. 1, PreMD said that a judge of the Ontario Superior Court of Justice in Toronto made an order that PreMD’s motion for an injunction to prevent what PreMD states is the unlawful termination of the License Agreement by Shamsuddin, Brazier and Med-11 shall be heard by a Judge of the Ontario Superior Court of Justice in Toronto during the week of Dec. 4.

PreMD said it is currently reviewing the materials served by Shamsuddin and Med-11 and will take “appropriate action.”