Applied Medical Resources Corp. scored a huge legal win against larger rival Medtronic in another David versus Goliath case for Orange County this month.
A California federal jury on Feb. 5 awarded Applied Medical $382 million in damages in the antitrust case after finding that Medtronic used discounted product bundles to monopolize the market for advanced bipolar devices.
Applied maintained that Medtronic’s strategy made it economically impossible for the Rancho Santa Margarita firm to compete on price with their rival device, Voyant, which, like Medtronic’s LigaSure, is used to seal blood vessels during surgery.
“We hope this ruling compels large suppliers to re-evaluate their business practices,” Gary Johnson, group president of advanced energy at Applied Medical, told the Business Journal over email.
Applied Medical was represented by Knobbe Martens’ Stephen Jensen, Stephen Larson, Joseph Re, Adam Powell, Kendall Loebbaka and Cheryl Burgess.
“Representing Applied Medical for more than two decades has been an honor, and this verdict sends a strong message: healthcare providers deserve a truly competitive market for lifesaving medical technologies free from exclusionary contractual barriers,” Jensen said in a statement.
It’s the latest success for the Irvine-based Knobbe, the same law firm that won Masimo Corp. a $634 million victory in a patent infringement case against Apple Inc. last year after a long-standing dispute between the companies involving Masimo’s patented heart monitoring technology. Knobbe Martens is the second biggest attorney firm in Orange County, according to the Business Journal’s annual ranking based on the number of attorneys.
Medtronic said that it was “disappointed” with the verdict and plans to appeal.
“We remain confident that our business practices deliver the best product to our customers and at the value they expect,” Medtronic said in a statement to the Business Journal.
“Surgeons choose Medtronic’s LigaSure device time and again because it outperforms Applied’s Voyant.”
Medtronic, the largest medical device maker in the world, is valued at $130 billion. The company reported worldwide revenue of $33.5 billion for the full year (NYSE: MDT).
Medtronic, which is based in Minnesota, has major operations in Orange County, including a neuroscience unit in Irvine and a cardiovascular unit in Santa Ana.
Competing Laparoscopic Surgery Devices
This month’s victory comes three years after Applied Medical filed the suit against Medtronic in 2023.
The two devices at the center of the case are Applied Medical’s Voyant Intelligent Energy System and Medtronic’s LigaSure technology. The competing devices cut tissue and seal blood vessels during laparoscopic and open surgeries.
Applied Medical alleged that Medtronic “engaged in anticompetitive conduct designed to maintain its large monopoly,” including bundling its products together at a discount in contracts with hospitals and group purchasing organizations (GPOs).
According to the suit, Medtronic paid “kickback’’ fees to these organizations in exchange for being their sole source of advanced bipolar devices.
“Thus, the anticompetitive bundling prevents hospitals from purchasing advanced bipolar devices from an at least equally efficient competitor, like Applied, because the competitor cannot offer a low enough price to offset the entire total bundled exclusionary ‘discount,’” according to the 2023 complaint by Applied Medical.
During the trial, Medtronic defended the contracts as standard in the medical device industry and said they were not exclusive and didn’t require customers to buy at a certainlevel, according to Reuters. Following a three-week trial in the U.S. District Court for the Central District of California in Los Angeles, the jury found that Medtronic violated the Sherman Act, the Clayton Act and the California Cartwright Act, according to Knobbe Martens.
“The jury heard an extensive evidentiary record supporting its unanimous verdict,” Johnson said.
“Applied Medical intends to seek injunctive relief to prohibit Medtronic from enforcing these unlawful restrictions, so that hospitals can begin accessing the choices they have been denied for years.”
Second Largest Medical Device Company in OC
Applied Medical, established in 1987, manufactures medical instruments for minimally invasive procedures for more than 75 countries. Its portfolio includes more than 700 products for cardiac/vascular, colorectal, orthopedic, gynecologic and urologic surgeries.
The company has remained privately held since its founding by Chief Executive Said Hilal. Counting over 3,500 employees at its Rancho Santa Margarita headquarters and facilities in neighboring cities Lake Forest and Irvine, it’s Orange County’s second-largest medical device maker by employee count behind Edwards Lifesciences Corp. Companywide, Applied Medical employs 5,533 people, as of last April.
Applied Medical, which manufactures many of its products in-house, launched Voyant in 2015.
The company’s newest product, announced in 2024, was a nylon specimen retrieval bag used to collect tissue during laparoscopic surgical procedures.
Last month, a partnership was announced between Applied Medical and MellingMedical to bring the company’s minimally invasive devices to federal healthcare providers serving veterans, active-duty military personnel and their families.
“We are proud to partner with MellingMedical to expand access to our surgical solutions throughout the federal healthcare system,” Applied Medical Group President Nabil Hilal said in a statement.
