Medtronic 2013 Annual Report Download - page 132

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Table of Contents
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
INFUSE Product Liability Litigation
Over the course of fiscal year 2013, plaintiffs filed approximately 100 lawsuits against the Company in the U.S. state and federal
courts alleging personal injury from the INFUSE bone graft product. Subsequent to the end of fiscal year 2013, plaintiffs filed
approximately 300 additional such lawsuits. Certain law firms have advised the Company that they may bring a large number of
similar claims against the Company in the future. The Company has not recorded an expense related to damages in connection
with these matters because any potential loss is not currently probable or reasonably estimable under U.S. GAAP. Additionally,
the Company cannot reasonably estimate the range of loss, if any, that may result from these matters.
Shareholder Related Matters
On March 12, 2012, Charlotte Kococinski filed a shareholder derivative action against both the Company and certain of its current
and former officers and members of the Board of Directors in the U.S. District Court for the District of Minnesota, setting forth
certain allegations, including a claim that defendants violated various purported duties in connection with the INFUSE bone graft
product and otherwise. On March 25, 2013, the Court dismissed the case without prejudice. In May 2012, Daniel Himmel and the
Saratoga Advantage Trust commenced two other separate shareholder derivative actions in Hennepin County, Minnesota, District
Court against the same defendants, making allegations similar to those in the Kococinski case. The Company has not recorded an
expense related to damages in connection with these matters because any potential loss is not currently probable or reasonably
estimable under U.S. GAAP. Additionally, the Company cannot reasonably estimate the range of loss, if any, that may result from
these matters.
Mirowski
Medtronic is a licensee to the RE 38,119 patent ('119 Patent) and RE 38,897 patent ('897 Patent) owned by Mirowski Family
Ventures, LLC (Mirowski) relating to the treatment of hemodynamic dysfunction. Medtronic and Mirowski dispute the application
of the '119 and '897 Patents to certain Medtronic cardiac resynchronization products. On December 17, 2007, Medtronic filed an
action in U.S. District Court for the District of Delaware seeking a declaration that none of its products infringe any valid claims
of either the '119 or '897 Patents. If certain conditions are fulfilled, the '119 and/or '897 Patents are determined to be valid, and
the Medtronic products are found to infringe the '119 and/or '897 Patents, Medtronic will be obligated to pay royalties to Mirowski
based upon sales of certain cardiac resynchronization therapy-defibrillator (CRT-D) products. On March 30, 2011, the trial court
entered a judgment of non-infringement in Medtronic's favor. On September 16, 2012, the Federal Circuit reversed and remanded
the trial court's decision for a new trial, based on its holding that the trial court did not properly allocate the burden of proof in the
initial proceedings. Medtronic filed a petition for certiorari to the United States Supreme Court on March 15, 2013, which the
Supreme Court granted on May 20, 2013. The Company has not recorded an expense pursuant to U.S. GAAP requirements in
connection with this matter because any loss is not probable or reasonably estimable. Additionally, the Company cannot reasonably
estimate the range of loss, if any, that may result from this matter.
Other Matters
On September 25, 2007 and November 16, 2007, the Company received letters from the U.S. Securities and Exchange Commission
(SEC) and the U.S. Department of Justice (DOJ), respectively, requesting information relating to any potential violations of the
U.S. Foreign Corrupt Practices Act in connection with the sale of medical devices in several non-U.S. countries. A number of
competitors have publicly disclosed receiving similar letters. Subsequently, the SEC and DOJ made additional requests for
information from the Company. In June 2013, the SEC and the DOJ both informed the Company that they would be closing their
investigations without pursuing any enforcement action or charges against the Company.
The Company has received subpoenas or document requests from certain government bodies seeking information regarding sales,
marketing, clinical, and other information relating to the INFUSE bone graft product, including civil investigative demands from
the Attorneys General in Massachusetts, California, Oregon, and Illinois. The Company is fully cooperating with these requests.
On September 16, 2009, the Company received a subpoena from the Office of Inspector General for the Department of Health
and Human Services in the Eastern District of California requesting production of documents relating to the Company's cardiac
rhythm medical devices, including revenue, sales, marketing, and promotional documents, documents relating to reimbursement
communications to customers pertaining to the devices, documents relating to scientific studies and registries pertaining to the
devices, and documents relating to payments or items of value provided to customers. The Company is fully cooperating with this
inquiry. Allegations relating to post-market clinical studies in this matter were resolved as part of the settlement agreement reached
with the DOJ, on behalf of the U.S. Attorney's Office for the District of Minnesota, in November 2011.
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