ITC decision prompts eye center to import Nidek lasers

Visx and Summit vow to fight Nidek’s excimers on intellectual property grounds.

Nidek Inc. (Fremont, Calif.) gains marketing momentum and continues to import lasers into the United States, following an International Trade Commission (ITC) ruling that the company’s EC-5000 does not infringe upon two Visx Inc. (Santa Clara, Calif.) patents.

Icon Laser Eye Centers of Toronto plans to enter 100 American markets and use Nidek’s EC-5000 laser, which is approved to treat low, moderate and high ranges of myopia, and was recently approved to treat myopia with astigmatism. Nidek has approximately 500 EC-5000 units installed worldwide.

Icon CEO Simone Mencaglia said in a press release that, “With the favorable decision of the ITC toward the Nidek laser, it is time for Icon to roll out the next stage of its strategic plan.”

Icon will seek 100 candidates to in stall Nidek lasers and offer laser in situ keratomileusis for prices as low as $499 per eye in “special introductory markets.”

Icon has five lasers operating in the United States and 15 outside the United States.

‘Indisputable’ victory

“We are very gratified with the judge’s ruling on this case, as it substantiates our claim that we do not infringe the patent rights of others,” said Hiroshi Okada, vice president and general manager of Nidek USA, in a press release on the company’s Web site. Mr. Okada also added, “Nidek strongly believes and supports the refractive surgeon’s right to freely choose the best and latest refractive technology for their patients and practices.”

According to Nidek, an administrative law judge found that Visx failed to demonstrate that it was practicing its own patents, that Nidek did not infringe any of the patents and that one of Visx’s Trokel patents is invalid and unenforceable due to improper inventorship.

“This represents a clean and indisputable victory for Nidek,” Mr. Okada said. “This decision is a very important step in a detailed and lengthy process Nidek is working on with its legal counsel. The decision in this case follows an other ruling in cases between Nidek and Visx in Great Britain, where Visx had brought similar claims against Nidek and lost.”

Nidek USA marketing director Kuntal Joshi told Ocular Surgery News that his company plans to take advantage of the tremendous opportunity to increase its market share.

“Internally, we have been anticipating this victory and are now situated to meet the market’s demand,” he said.

However, the company has not veered too far from its plans.

“In some ways it’s really business as usual,” Mr. Joshi said. “I can tell you for sure that we’re not doing anything specifically different than before.”

‘Shortcut’ backfires

Visx vowed to appeal the ruling to the full ITC panel in Washington. The commissioners have 45 days from their decision to decide whether to review the case, and then 45 days to complete the review. Their final determination is due March 6. Either side could file an appeal in the U.S. Court of Appeals for the Federal Circuit.

Visx filed with the ITC in February 1999 as a shortcut to prevent Nidek from selling its EC-5000 machines in the U.S., said Liz Dávilla, president and chief operating officer, in a press conference.

“The ITC changes nothing,” she said. “It simply says we didn’t get a shortcut to an injunction that we would have liked to have gotten, but the overall path remains the same.”

The company still has pending a patent lawsuit against Nidek in a federal court for California’s northern district, as well as four suits against ophthalmology practices in various courts.

Ms. Dávilla conducted a press conference after skittish investors brought down the company’s stock sharply in the days following the ITC’s decision. The company fell from 88 1/8 on Dec. 6 to 52 the next day. It remained there for the next week.

Ms. Dávilla conducted the press conference to counter what she called misinformation in the investment community press.

She said Visx filed with the ITC hoping for a quicker action than the patent lawsuit would provide. Visx sought an exclusion order, a kind of injunction, that would prohibit the import of lasers.

“This was a shortcut,” she said. “Clearly we didn’t get the result that we had hoped for, and that is a disappointment to us, but it has nothing to do with the ongoing reality of our patent infringement case against Nidek, as well as four cases that have been brought against Nidek users.”

She added that all 50 Visx patents remain valid and enforceable. The ITC decision involved two of those 50 patents. Other lawsuits involved yet other patents. And still more patents could be brought into play, she said.

She said, “We continue to be absolutely confident that we have a breadth and depth to our patent portfolio, which comes from the fact that Visx invented this technology on U.S. soil with tens of millions of U.S. dollars. We believe that we are entitled to have our customers and our shareholders gain the benefits of that innovative and creative work that was done by early Visx scientists.”

Summit affected

Although Summit was not directly involved in the litigation, their stock also took a hit in the week following the ITC decision. The stock fell from 21 5/16 on Dec. 6 to 15 the next day. It remained there for the next week.

Summit said the ITC decision will have no effect on its patent infringement suits against Nidek and Icon Laser Centers in U.S. district courts.

Summit’s chief executive officer Robert J. Palmisano said the ITC did not address the intellectual property issues that led Summit to sue Nidek and Icon.

“We have a lot of confidence in the validity and breadth of our patents and our right to license our customers to practice the art covered by Visx’s key patents,” he said. Summit and Visx cross-license each other’s patents.

“We believe that our patent licensing policies are fair and reasonable given the tremendous investments we have made through the years, and continue to make, in order to bring this technology to our customers and the public,” Mr. Palmisano continued.

Lawsuits multiply

The list of laser lawsuits has grown cumbersome.

The appeal court case filed by Summit against Nidek claims the EC-5000 infringes on the Azema patent. According to Nidek, a justice of the Tokyo High Court rejected Summit’s appeal and maintained the initial verdict that there was no infringement.

On Jan. 29, 1999, the Tokyo District Court had ruled that the EC-5000 did not infringe on Summit’s Azema patent. However, Summit appealed to the higher court.

Nidek asked the Japanese Patent Office to invalidate the Azema Patent. Nidek continues to seek the determination of invalidity to send a strong warning to those who try to file a suit without sufficient grounds, according to a press release.

Summit filed a suit on Dec. 28, 1998 in the U.S., also claiming infringement by Nidek to the U.S. Azema and Marshall patents.

Also, Visx is now appealing Nidek in the ITC, fighting in federal court and suing four end users in four other courts. Those cases continue.

Nidek alleged that fraud and in equitable conduct during its interactions with the Patent and Trademark Office (PTO) render Visx’s patents unenforceable.

Nidek claims that Visx intentionally withheld material prior art from PTO examiners, and that Stephen Trokel, MD, was not the sole inventor of the patented technology. Visx and Dr. Trokel disputed all allegations before the law judge. The ITC decision agreed with Nidek’s position concerning the Trokel patent, finding it invalid and unenforceable.

Ms. Dávilla said in her press conference that the frequent outcome of a patent re-examination is a stronger patent, “a patent which may have been refined but when it comes out the other end is even more bulletproof than it was going in. We remain hopeful that it will remain the case with the Trokel patent.”

Following the filing of Visx’s patent infringement lawsuit against Nidek, Nidek also had an antitrust suit filed in a U.S. district court in San Francisco. A week after the ITC announcement, the judge removed his stay on both suits.

“The [ITC] judge clearly sided with us,” Mr. Joshi said. “We view this as another victory — one that Visx will not like especially.”

Visx spokeswoman Lola Wood said that cases between Nidek and Visx were both stayed until the resolution of the ITC hearing and both cases can now move forward. She added that the ITC’s investigative staff took the position in the case that Nidek does infringe and should be excluded from the U.S. market. These documents can be found at www.usitc.gov.

For Your Information:

• Visx Inc. can be reached at 3400 Central Expressway, Santa Clara, CA 95051; (408) 773-7158; fax: (408) 730-1399.
• Nidek Inc. can be reached at 47651 Westinghouse Drive, Fremont, CA 94539; (510) 226-5700; fax: (510) 226-5750.
• Summit Technologies Inc. can be reached at 21 Hickory Drive, Waltham, MA 02154; (617) 890-1234; fax: (617) 890-0313.
• Icon Laser Eye Centers can be reached at 1 Young St., Ste. 1014, Toronto, Ontario M5E 1E5 Canada.