Medtronic 2012 Annual Report Download - page 133

Download and view the complete annual report

Please find page 133 of the 2012 Medtronic annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
116
that are the subject of the lawsuit), that could require significant expenditures or result in lost revenues. In
accordance with U.S. GAAP, the Company records a liability in the consolidated financial statements for loss
contingencies when a loss is known or considered probable and the amount can be reasonably estimated.
If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better
estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but
not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed.
When determining the estimated loss or range of loss, significant judgment is required to estimate the
amount and timing of a loss to be recorded. Estimates of probable losses resulting from litigation and
governmental proceedings involving the Company are inherently difficult to predict, particularly when the
matters are in early procedural stages, with incomplete scientific facts or legal discovery; involve
unsubstantiated or indeterminate claims for damages; potentially involve penalties, fines or punitive
damages; or could result in a change in business practice. While it is not possible to predict the outcome for
most of the matters discussed, the Company believes it is possible that costs associated with them could
have a material adverse impact on the Company’s consolidated earnings, financial position, or cash flows.
Litigation with Wyeth and Cordis Corporation
On February 22, 2008, Wyeth and Cordis Corporation (Cordis) filed a lawsuit against the Company
and its subsidiary, Medtronic AVE, Inc., in U.S. District Court for the District of New Jersey, alleging that
Medtronic’s Endeavor drug-eluting stent infringes three U.S. “Morris” patents alleged to be owned by Wyeth
and exclusively licensed to Cordis. On January 19, 2012, the Court found the patent claims asserted against
Medtronic to be invalid and entered an Order and Judgment in favor of Medtronic and the other defendants.
Wyeth and Cordis have appealed. The Company is indemnified for the claims made by Wyeth and Cordis.
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 this matter.
Litigation with Edwards Lifesciences, Inc.
On March 19, 2010, the U.S. District Court for the District of Delaware added Medtronic CoreValve
LLC (CoreValve) as a party to litigation pending between Edwards Lifesciences, Inc. (Edwards) and
CoreValve, Inc. In the litigation, Edwards asserted that CoreValve’s transcatheter aortic valve replacement
product infringed three U.S. “Andersen” patents owned by Edwards. Before trial, the court granted summary
judgment to Medtronic as to two of the three patents. Following a trial, on April 1, 2010 a jury found that
CoreValve willfully infringed a claim on the remaining Andersen patent and awarded total lost profit and
royalty damages of $74 million. Medtronic has appealed to the U.S. Court of Appeals for the Federal Circuit.
On March 12, 2010, Edwards served a second lawsuit in the Delaware court upon CoreValve, Medtronic
Vascular, and Medtronic, asserting that Medtronic’s transcatheter aortic valve replacement product from
CoreValve infringed three U.S. Andersen patents owned by Edwards, including two of the patents that were
the subject of the first lawsuit. Medtronic has moved to dismiss the lawsuit. Also pending in the Delaware
court is Edwards’ claim that the CoreValve transcatheter aortic valve replacement product infringes a
Cribier patent. This claim is scheduled for trial in calendar year 2014.
Edwards also previously asserted that the CoreValve product infringed an Andersen patent in Germany
and the United Kingdom, which is a counterpart to the U.S. Andersen patents. Courts in both countries
found that the CoreValve product does not infringe the European Andersen patent. On February 11, 2010,
a German appellate court issued its opinion affirming the trial court ruling that the CoreValve product does
not infringe the Andersen patent in Germany. On June 30, 2010, the United Kingdom appellate court
affirmed a trial court ruling that the CoreValve product does not infringe the Andersen patent in the United
Kingdom. Both cases have been dismissed.
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 this matter.