In a medical-device family feud, Radiance Medical Technologies Inc. has won a court battle with its former parent.
Orange County Superior Court Judge Kim Dunning, after a three-day trial, ruled that Rancho Cordova-based Endosonics Corp. didn’t have the right to use Irvine-based Radiance’s Focus angioplasty balloon in a device that combined it with a vascular stent. Endosonics had asserted that it had such rights through a licensing agreement that granted it the use of the balloon with its ultrasound imaging system, which also was part of the stent device.
The decision removes a cloud from industry giant Guidant Corp.’s license to use Radiance’s balloon technology with stents.
An Endosonics representative could not be reached for comment by late last week.
Radiance, then called Cardiovascular Dynamics Inc., was spun off from Endosonics in 1996. In fact, Radiance Chairman Michael Henson was Endosonics’ chairman when the disputed licensing agreement was signed in the months leading up to the spinoff. Henson became CVD’s chairman when the split was culminated and later left the Endosonics board for reasons unrelated to the case.
Endosonics, a subsidiary of Jomed NV, a European device maker, filed suit against Radiance in September 1999 and sought a declaration of its rights under the 1995 license agreement. Endosonics later asked for more than $5 million in exchange for dropping the action, according to Paul Gale, an attorney with Stradling, Yocca, Carlson & Rauth in Newport Beach, who represented Radiance.
Radiance claimed in its trial brief that Endosonics had tried to develop and market an ultrasound-guided balloon/stent device using technology owned by Johnson & Johnson, but the effort foundered. It was only then that Endosonics turned to the Radiance device, the brief said.
If Radiance believed that Endosonics had the right to sell products with the balloon device for pre-mounted stent delivery, the company would have never sought an exclusive license for Guidant. “To do so would have been an invitation for a lawsuit from Guidant, a corporate behemoth in the interventional cardiology market,” the brief said.
“That’s really important,” Gale said. “When Guidant and Radiance made their license agreement, Radiance warranted and represented that Guidant would have the exclusive license.”
As for the litigation’s effect on Radiance’s financial prospects, it wasn’t a “major overhang,” according to Dan Owczarski, an analyst with Gruntal & Co.’s Chicago office. Investors familiar with Radiance knew the company had a strong legal position and weren’t surprised with the outcome, Owczarski said.
“It’s nice to clean up this situation and have resolution,” Owczarski said. But he noted that the situation probably wouldn’t be a long-term catalyst for the stock.
Instead, Radiance’s long-term future is linked to its radiation-delivery technology, which is facing a series of clinical trial, FDA and overseas regulatory milestones, according to Owczarski.
“Radiance’s radiation delivery, so far, has us really excited,” Owczarski said. n
