Orange-based dental products maker Sybron Dental Specialties Inc. has settled a long-running patent lawsuit with a rival by taking a stake in the company.
Sybron, part of Washington, D.C.-based Danaher Corp., is getting $13 million and 7.6 million shares of Santa Clara-based Align Technology Inc., a 10% stake worth $77 million at recent check.
The deal settles six years of litigation that recently came to a head in federal court in Los Angeles.
Sybron’s Ormco Corp. unit, which makes braces and other orthodontic gear, sued Align for infringement on patents covering 3-D computer modeling of teeth.
A jury found in favor of Sybron in June, leading the companies to a settlement earlier this month.
Align and Sybron settled on Aug. 17, the day a U.S. District judge was due to hear Sybron’s request for a permanent injunction against Align, according to Don Tuttle, Sybron’s president of specialty products.
The fight was over several patents related to Ormco’s Insignia braces and arch wire system, which uses computers to allow precise bracket placement to straighten teeth.
Tuttle called it “digital dentistry.”
The settlement with Align, best known for its Invisalign braces that straighten teeth without visible brackets, was amicable, according to Tuttle.
“All companies preferred a settlement,” he said.
Align said it was “pleased to resolve this ongoing litigation” in a statement by Chief Executive Thomas Prescott.
Align may have had little choice.
“Had we not come to a settlement and the judge decided to (issue an injunction), she had the power to shut down Align from any business for a period of time,” Tuttle said. “That’s the thing that helped us move toward an amiable settlement.”
The settlement is a “positive development” for Align, said Matt Dolan, a senior medical device research analyst at Newport Beach-based Roth Capital Partners LLC, in a research note.
Dolan, who follows Align but not Danaher, suggested Align may have gotten a financial break by settling. He estimated Sybron originally was seeking damages of about $130 million, or about 40% more than what it ended up getting.
Tuttle said no settlement figure ever was discussed.
Align, with a recent market value of about $900 million, was mismatched in the fight. Danaher had a market value of $20 billion as of last week.
Joint Product
Sybron and Danaher, a diversified company best known for Craftsman tools sold at Sears stores, now are “interested stockholders” in Align, Tuttle said.
Align and Sybron plan to work together on braces combining technology from both companies to treat complicated cases of crooked teeth in adults.
“We really don’t know what it is yet,” Tuttle said.
The device’s goal, Tuttle said, will be to allow patients “to be in braces the shortest amount of time and then get into a clear aligner (from Align) and finish up treatment that way.”
That could open up a new market for both companies.
Danaher bought Sybron for $2 billion in 2006 to boost its business selling products to dentists. Sybron and its various units make braces, bands, crowns, elastics, dental implants, root canal products and others.
Sybron is “just now starting to move” some of its businesses to an Anaheim facility it leased in 2007, Tuttle said.
Those include Sybron Implant Solutions, a maker of dental implants, and SybronEndo, the company’s root canal product arm.
Sybron’s administrative operations will stay in Orange near Angel Stadium of Anaheim, Tuttle said.
The company leased nearly 167,000 square feet of space near Disneyland for 10 years.
The building was the former home of Odetics Inc., a now-defunct aerospace company that evolved into an incubator of other businesses.
