Appeals court reverses $20m TriReme Medical loss to AngioScore

A federal appeals court today reversed a $20 million loss for TriReme Medical and a pair of related companies, sending the case back to a lower court to reconsider whether founder Eitan Konstantino violated his duties to AngioScore when he started TriReme, Quattro Vascular and QT Vascular.

AngioScore, which Spectranetics (NSDQ:SPNC) acquired in 2014 for $230 million, accused Konstantino of breaching his fiduciary duties to AngioScore by developing the TriReme’s Chocolate balloon catheter, which competed directly with AngioScore’s AngioSculpt balloon. The Chocolate device won 510(k) clearance from the FDAin June 2014. The lawsuit, filed in June 2012 in the U.S. District Court for Northern California, also accused TriReme, Quattro and QT Vascular (SGX:5I0) of abetting in Konstantino’s alleged breaches.

Judge Yvonne Gonzalez Rogers agreed July 1, ordering Konstantino to disgorge $250,000 received for licensing the Chocolate rights and a 2.85% royalty on sales of the device. Gonzalez Rogers also ordered Konstantino to cough up his roughly 15 million shares in QT Vascular, which were worth about $2 million at their July 2 closing price of ¢13.5 (0.182 SGD), and any profits gleaned from sales of the stock and any remuneration from consulting on the Chocolate device. The judge also awarded nearly $3.0 million in lost profits and another $17.1 million in future lost profits to AngioScore on future sales from 2014 through the 2nd quarter of 2019.

TriReme, QT Vascular and Quattro Vascular appealed to the U.S. Court of Appeals for the Federal Circuit as soon as the decision was finalized Oct. 14, arguing that 1 of the inventors of the patents, Dr. Chaim Lotan, assigned his interest in them to TriReme. Today the appeals court ruled that the lower court didn’t consider Lotan’s involvement carefully enough.

“It is undisputed that while Dr. Lotan no longer worked on the physical design of the catheter after the effective date, he continued ‘talking’ with AngioScore, performing work relating to designing, implementing, and analyzing clinical trials. The parties dispute the significance of this clinical trial work, however, disagreeing as to whether it amounted to ‘conceiving,’ ‘developing,’ or ‘reducing to practice’ an ‘invention,’ ‘development,’ or ‘improvement,'” Judge Timoth Dyk wrote.

“Discovery before the district court was limited regarding Dr. Lotan’s work after May 1, 2003, and there was no trial. Nor did the district court make any findings about this work. The district court merely found that Dr. Lotan’s post-effective date work on AngioSculpt ‘might have amounted to’ ‘developing’ or ‘reducing to practice’ his recommendations.Whether this work falls under [the statute in question] remains a question of fact that cannot be resolved on a motion to dismiss. We remand for the district court to consider whether Dr. Lotan’s continued work on AngioSculpt after the effective date came within the language of [the statute],” Dyk wrote.

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