Alcon, AMO settle pending patent litigation

September 15, 2006

Wilmington, DE-Alcon Laboratories paid Advanced Medical Optics Inc. (AMO) $121 million as part of a global settlement agreement that resolves four patent lawsuits between the companies. The companies also agreed to work together in the future to resolve patent issues relating to new technology before heading to court.

Wilmington, DE-Alcon Laboratories paid Advanced Medical Optics Inc. (AMO) $121 million as part of a global settlement agreement that resolves four patent lawsuits between the companies. The companies also agreed to work together in the future to resolve patent issues relating to new technology before heading to court.

The settlement dismisses one lawsuit initiated by AMO regarding Alcon's Infiniti vision system and the Advantec and Everest software upgrades for the Legacy phacoemulsification system used for cataract surgery. In turn, Alcon will dismiss three lawsuits it had filed in a Texas court against AMO regarding AMO's Sovereign, Sovereign Compact, and Prestige surgical systems and various viscoelastics.

AMO also will request that the judgment and injunction previously entered against Alcon by the U.S. District Court in Delaware be vacated, along with all corresponding appeals.

"Future modifications or additions to the functionality of systems will have to stand on their own, but there is a process to resolve technology disputes earlier and, we hope, without litigation," said Doug MacHatton, Alcon's vice president, investor relations and strategic corporate communications. "It's not so much a formal process as it is a goodwill commitment by both companies to try to avoid protracted disputes on complex technology issues that might get in the way of advancing the technology of cataract removal."

On Dec. 16, a federal judge in Delaware ruled that Alcon's systems "willfully" infringed two patents used for certain features of AMO's Infiniti system, and the Legacy's software upgrades. The court called the infringement "exceptional" and tripled the damages, setting them at $213.9 million plus attorney fees, all of which Alcon was appealing.

Under the recent agreement, Alcon will pay half of the total $242 million judgment. Specific terms of the settlement are confidential, according to AMO spokesman Steve Chesterman.

He said AMO did not back down from its patent protection, and that the company will continue to take "all necessary steps" to defend its proprietary technology.

"While we were confident in our position in all pending litigation, we believed it was in the best interests of our customers and stockholders to remove the distractions associated with continued litigation to reach a settlement," Chesterman said. "Rather than take an additional 12 to18 months to settle our disputes with Alcon, this settlement allows us to focus today on providing surgeons with leading-edge technologies that improve clinical outcomes."

MacHatton said the deal saves money from being wasted on litigation costs and allows both companies to move forward.

"There is a great deal of intellectual property underlying phaco technology, and the complexity of this would likely keep the parties in court for many years," he said. "The settlement allows each party to communicate the benefits of its technology to the market and lets doctors determine which system provides the best platform for their surgical practices. Both parties recognized that the litigation was taking away from their primary missions of providing advanced equipment that helps doctors safely and effectively restore vision to patients with cataracts."

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