Cochlear Limited jumps on court ruling: Here's what you need to know

Implantable hearing device manufacturer, Cochlear Limited (ASX:COH), has seen its shares jump on news a US District Court ruled in the company's favour on three of four counts of patent infringement.

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Shares of leading implantable hearing device manufacturer, Cochlear Limited (ASX: COH), jumped 1.5% today on the back of a positive ruling from a U.S. District court.

Further to its announcement earlier this month, Cochlear said a Californian District Court has entered judgement on a patent infringement lawsuit actioned by the Alfred E. Mann Foundation for Scientific Research (AMF) and Advanced Bionics (AB) LLC – one of Cochlear's key rivals.

The court overturned three of four previous rulings which made Cochlear liable to pay $131.2 million in damages for infringement of patents. In addition the court ordered a new trial for damages on the fourth patent.

Cochlear said it will seek to appeal the court's decision on the fourth patent in the hope of overturning the decision.

"We strongly believe the facts and law do not support the Judgment on infringement entered against Cochlear and as previously stated, Cochlear will now appeal this Judgment to the US Court of Appeals," Cochlear CEO, Dr Chris Roberts, said in the company's ASX announcement.

However both AMF and AB will also seek to overturn the District Court's ruling on three of the four patents.

Are Cochlear shares ready to reach $100?

Today's news highlights an important advantage afforded to leading healthcare companies. Like fellow S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) companies, CSL Limited (ASX: CSL) and Resmed Inc. (CHESS) (ASX: RMD), Cochlear has the enviable position of having its products protected from becoming commodity products due to patents on its devices.

Whilst the outcome of the appeals announced today remain uncertain, Cochlear shares (currently priced around $88.78) could be worthy of a second look for investors focused on the long term (five or more years).

Motley Fool contributor Owen Raskiewicz has no position in any stocks mentioned. Owen welcomes your feedback on Google plus (see below) or you can follow him on Twitter @ASXinvest. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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