The Cochlear Limited (ASX: COH) share price is trading slightly higher on Tuesday despite being dealt a blow in relation to its US patent dispute.
In morning trade, the hearing solutions company’s shares are up slightly to $196.20.
What did Cochlear announce?
This morning Cochlear announced that the United States Supreme Court has denied the company’s petition for a review of the US Federal Circuit’s decision which upheld a judgment of US$280 million in patent infringement damages against Cochlear.
This followed a lawsuit by the Alfred E. Mann Foundation for Scientific Research (AMF) and Advanced Bionics (AB) which dragged on for several years.
This is officially the end of the saga and there is no higher power that Cochlear can turn to now.
The good news, though, is that this won’t impact Cochlear’s future results. This is because Cochlear paid the full amount of the US$280 million judgment to AMF and AB in FY 2020.
Furthermore, as the patent at issue in the litigation has now expired, no further infringement damages can accrue, and this judgment will not disrupt Cochlear’s business or customers in the United States.
It is also worth noting that in August Cochlear reached an agreement with AMF and AB regarding the settlement of the two remaining issues in this case. These were AMF’s and AB’s request for prejudgment interest and attorney fees of US$75 million.
The settlement of those claims was contingent upon the outcome of Cochlear’s Supreme Court appeal.
Since Cochlear’s Supreme Court appeal is now finished, the agreed settlement amount that was placed into escrow will be paid to AMF and AB and the settlement will be final. As with the US$280 million, the payment of this settlement liability was provided for in Cochlear’s FY 2020 financial statements and won’t impact its future financial results.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. 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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