AMF says Cochlear can’t win patent fight


Despite this, Cochlear president Dig Howitt remained confident. “It is quite probable that we will win on appeal,” he said at the company’s half-year results last month.

The US firm says Cochlear is intent on delaying the case to bleed AMF out.

The patents at the centre of the battle, which have expired since the case began, relate to electronic processes for transmitting sound. These patents helped generate around $US1.8 billion in revenues for Cochlear.

‘Kitchen sink approach’

The US District Court has already awarded $US123 million in pre-judgement interest to AMF and AB. Cochlear opposed the application.

During the most recent hearing, the judge launched a spray at Cochlear’s continued appeals, criticising its “kitchen sink approach” to the case and encouraged the doubling of the jury-awarded damages to AMF to $US268 million.

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Mr Petrovich said Cochlear cannot challenge the fact they infringed on patents or the royalty base, all they can challenge is the damages.

“Once we go to courts, we could get the same amount, we could get more, either way, it is still a big number,” he said.

“The only thing we lose if they gain an appeal is time, it just pushes back their ultimate day of reckoning.”

Cochlear said it will continue to fight the case. Late last year it lodged a $US355 million insurance bond to allow it to appeal the most recent judgement. Its management told investors during its half-year results that it was confident of an outcome in its favour.

While it “is unable to reliably estimate the final damages award”, Cochlear said it is confident it “will be able to access debt facilities to fund the existing decision and any award of interests and costs”.

However, it still managed to rattle investor confidence during the results with the news it had lost market share in two of its biggest markets, the US and Germany, thanks to the launch of an implant by Advanced Bionics, which can be safely used in MRI scanners.

Analysts have forecast that the market share losses will continue.

Cochlear was approached for further comment.

Cochlear’s share price has begun recovering after it saw a massive 12.4 per cent fall, dropping from $194.41 down to $170.30 following the release of the company’s results in mid-February. The stock closed down less than 1 per cent on Thursday at $177.14.

Covering energy and policy at Fairfax Media.

Colin Kruger is a business reporter. He joined the Sydney Morning Herald in 1999 as its technology editor. Other roles have included the Herald’s deputy business editor and online business editor.

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