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Pillar Point gone, but anti-trust suits plod on
Anti-trust suit claims Summit and Visx illegally fixed the price of laser user fees through the Pillar Point partnership.
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ST. LOUIS — For as long as there have been per procedure licensing fees for the use of excimer lasers manufactured by Summit Technology Inc. (Waltham, Mass.) and Visx Inc. (Santa Clara, Calif.), there have been grumbling and complaints from surgeons and clinic administrators responsible for paying user fees. For almost as long, according to David Harmon, senior editor of the laser refractive surgery newsletter Market Scope, there have been lawsuits posed on behalf of these surgeons and clinics alleging either that the per procedure fees are illegal or overpriced. Visx sells its per procedure key cards for $260. Summit’s royalty fee is $250 for myopia and $275 for myopia and astigmatism, because the astigmatism indication requires an additional disk, according to Bernie Haffey, vice president of sales and marketing at Summit.
Since the dissolution in June 1998 of the Summit and Visx patent agreement known as Pillar Point Partners, several of these lawsuits have been combined, or MDL’d (multi-district litigation) as it is referred to in the courts. What this means is that several complaints from plaintiffs throughout the U.S. are now represented in one suit (MDL 1202) that is currently pending in the U.S. District Court of Arizona. “There are a number of anti-trust and patent infringement cases coordinated in this one litigation,” according to counsel for the plaintiffs, Michael J. Boni, of the Philadelphia law firm Kohn, Swift & Graf, P.C.
Proving the claim
More recently, a scheduling conference with the court resulted in a plan for completion of various pre-trial events such as discovery, according to Mr. Boni. “For the next year, we will be taking depositions and seeking documents and other information to prove our claims,” Mr. Boni told Ocular Surgery News.
According to Mr. Harmon, some of the complaints date back as early as 1996. “Most claim per procedure user fees are unfair, illegal or anti-competitive. Although many have different claims, they all seem to contain some of the basic charges,” he said. “Despite several years in the courts, little progress has been made. The problem lies with the complexity of the patent issues and the strength of patent portfolios. As a result, the cases get tied up in the courts and go on for years. When you’re challenging the Visx or Summit licensing arrangement, you need to have deep pockets, patience and a Don Quixote attitude.”
The plaintiff parties in the case are New England Laser Vision and Eye Care Surgery Center of Maine Inc.; The Eye Professionals, P.A., of Millville, N.J.; Metropolitan Eye Center and Outpatient Surgical Facility Inc., of Clair Shores, Mich.; and David R. Shapiro, MD, of California, among others. John Wipfler, who is the CEO for Eye Care and Surgery Center of Maine said, “The doctors here felt like the whole [user fee requirement] was a fairly raw deal, and thought that it was worth fighting.”
Plaintiffs’ allegations
The plaintiffs allege in their complaint that Visx and Summit illegally fixed the price of the per procedure royalty fee through Pillar Point Partners. “We are not asking for the per procedure fee to be waived,” Mr. Boni said. “We are asking for there to be free and open competition in the setting of those royalties. We are not arguing in our complaint that Visx and Summit are not allowed to charge licensing fees based on their patents, but rather that they agreed to fix the prices of those fees. The argument that we’re making is that because of the agreement to set the price, those prices are higher than they would have been had there been competition.”
The complaint states, “Beginning at least as early as 1992, when Pillar Point was formed, through October 1995, when Summit and Visx began selling PRK [photorefractive keratectomy] laser surgery equipment, and continuing thereafter to at least mid-1998, when defendants dissolved Pillar Point, defendants and their co-conspirators engaged in a continuing combination and conspiracy in unreasonable restraint of trade and commerce of PRK laser surgery equipment, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.”
The complaint continues, “The aforementioned combination and conspiracy consisted of an agreement, understanding and concert of action among defendants and their co-conspirators, the substantial terms of which were to raise, fix, stabilize and maintain at artificially high levels the price of laser vision correction technology, service and products and the per procedure royalty that the plaintiffs have had to pay the defendants.”
Class action
At press time, Mr. Boni was planning to move for class certification. “We are going to ask the court to certify our anti-trust case as a class action,” Mr. Boni said. “If the court does that, then we can proceed with a case that is brought on behalf of all doctors and clinics who paid per procedure royalty fees directly to Visx or Summit.”
Keith E. Eggleton, Esq., a partner with the Palo Alto, Calif., law firm Wilson, Sonsini, Goodrich & Rosati, which is representing Visx in the suit, told Ocular Surgery News, “We, Visx, expect to prevail. We believe the agreements between Summit and Visx allowed both companies to continue developing this technology, which would have been impossible given the respective patent positions of the companies.” Lawyers for Summit Technology did not respond to inquiries from Ocular Surgery News.
The plaintiffs are seeking the amount between the “competitive” amount and the amount charged. A damages analysis is underway to arrive upon a specific dollar amount, Mr. Boni said. Trial dates have yet to be set.
For Your Information:
- David Harmon can be reached at 13610 Barrett Office Drive, Manchester, MO 63021; (314) 835-0600; fax: (314) 835-0606; e-mail: daveharmon@mktsc.com. Mr. Harmon has no direct financial interest in any of the products mentioned in this article. He is a paid consultant for Visx and Summit.
- John Wipfler is CEO of the Eye Care Surgery Center of Maine. He can be reached at 53 Sewell St., Portland, ME 04102; (207) 773-0432; fax: (207) 828-2020. Mr. Wipfler has no direct financial interest in any of the products mentioned in this article, nor is he a paid consultant for any companies mentioned.
- Bernie Haffey can be reached at Summit Technology Inc., 21 Hickory Drive, Waltham, MA 02451; (781) 890-1234; fax: (781) 890-0313.
- Michael J. Boni can be reached at Kohn, Swift & Graf, P.C., 1101 Market St., Ste. 2400, Philadelphia, PA 19107; (215) 238-1700; fax: (215) 238-1968. Mr. Boni has no direct financial interest in any of the products mentioned in this article, nor is he a paid consultant for any companies mentioned.
- Keith E. Eggleton, Esq., can be reached at Wilson, Sonsini, Goodrich & Rosati, 650 Page Mill Road, Palo Alto, CA 94304; (650) 493-9300; fax: (650) 565-5100. Mr. Eggleton did not disclose whether he has a direct financial interest in any of the products mentioned in this article or if he is a paid consultant for any companies mentioned.
- Visx Inc. can be reached at 3400 Central Expressway, Santa Clara, CA 95051; (800) 246-8479; fax: (408) 773-7055.