Medical devices giant Resmed has been hit with a major patent infringement claim by the prestigious New York University, which alleges the Australian company illegally used the university’s science to create one of its best-selling products used to treat sleep apnoea.
The stock market darling, which is listed on both the ASX and the New York Stock Exchange (NYSE) and sports a $58 billion market capitalisation, was hit with the suit over its AirSense10 and other science used by the company in June.
It’s not the first time Resmed has been embroiled in a patent infringement claim.
According to NYU’s complaint filed in the Southern District of New York, the university sent Resmed chief executive Michael Farrell a letter in early June demanding the health group disable key features of its device within 24 hours. The company did not accede to NYU’s request.
Resmed sells a range of products and masks that help treat sleep apnoea and other conditions. This includes its hugely successful machine to treat sleep apnoea, the AirSense10 -- the device at the centre of the NYU lawsuit.
The university is seeking unpaid royalties, interest and costs. The quantum of the NYU’s claim is not currently disclosed.
Resmed sales have recently been boosted thanks to a product recall by Philips, which makes a product that competes with the AirSense10. Resmed has forecast it could earn an additional $US300 million ($406 million) in the 2022 financial year as a result of Phillips’ issues.
Resmed reported total revenue of $US3.2 billion for the 12 months to June 30, which included $US1.6 billion in device revenue. It has sold the AirSense10 for seven years.
NYU alleges Resmed has ripped off the science from seven patents that are owned by the university and were invented by the sector’s foremost expert, David Rapoport, MD.
Dr Rapoport is currently the director of sleep medicine research program at Mount Sinai hospital in New York and has a degree in physics from Massachusetts Institute of Technology, an MD from Albert Einstein College of Medicine and a Pulmonary Fellowship at New York University Medical Center/Bellevue.
“Dr. Rapoport holds multiple US and European patents for improvements on nasal CPAP (also known as continuous positive airway pressure ventilators),” the claim alleges.
The NYU’s claim covers elements of the AirSense10 as well as an algorithm used by the machines, the AutoSet system which detects the correct air pressure required for each user, and the AutoRamp feature, which ramps up and down depending whether the user is awake or not.
The NYU alleges that Resmed wilfully infringed on its patents, avoiding paying royalties on sales.
“ResMed has actively induced and encouraged, and continues to actively induce and encourage, medical professionals to prescribe the AirSenseTM 10 AutoSetTM systems to patients, and patients to use the AirSenseTM 10 AutoSetTM systems, by marketing, promoting and advertising the infringing use of the AirSenseTM 10 AutoSetTM systems.”
It’s not the first time Resmed has been embroiled in a patent infringement claim. In 2019, Resmed and rival Fisher and Paykel settled a long-running tit-for-tat patent dispute relating to a range of products sold by both companies, though that settlement was so small it barely covered the costs of legal fees relating to the dispute.
Not all patent disputes to hit Australian companies result in small remedies. Cochlear in 2020 lost its appeal against a US patent infringement suit, costing the hearing aid maker $416.3 million in damages, interest and legal costs.
Resmed is already looking past the AirSense10. It revealed at its August results that it was in the process of launching its new product, the AirSense11. The user manual for the new machine shows that it incorporates the AutoSetTM algorithm.
Mr Farrell told analysts on a call following the group’s results on August 6 it would continue to sell the AirSense10.
“There is some commonality between our devices, and we will make those trade-offs and that’s why we will provide both AirSense 10 and AirSense 11. But the AirSense 11 is a huge leap forward for the industry and our goal will be country-by-country to roll that out.”
“But yes, for the next six to 12 months, there’s going to be a lot of selling both the fantastic AirSense 10 and the amazing AirSense 11 in parallel in countries around the world.”
Resmed has until September 17 to file it defence to the claim.
A spokeswoman for the company said: “We are aware of a patent infringement lawsuit filed by New York University, and are prepared to defend ResMed’s innovation. “
“With a 30-plus year history of innovation, and over 8,200 patents and designs issued or in process, ResMed is the leader in sleep therapy.”
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