SANTA CLARA, Calif., July 21, 2009 -- Align Technology, Inc. (Nasdaq: ALGN) today provided an update on the a lawsuit brought by Ormco Corporation (Ormco) against Align Technology, Inc. (Align) in the U.S. District Court for the Central District of California (District Court), which was tried by jury June 9 through June 25, 2009.
As previously disclosed, on June 26, 2009, the jury delivered a verdict against Align. Ormco alleged that Align infringed claims of Ormco’s 6,616,444 patent. Align claimed non-infringement, invalidity, as well as unenforceability of the patent and equitable defenses. The jury found the claims asserted by Ormco in the 6,616,444 patent to be infringed and valid. The jury also issued an advisory verdict that Ormco did not engage in prosecution laches or unclean hands, equitable defenses raised by Align. The jury only determined liability. Any monetary damages will be determined in a later trial, which has not been schedule, but would likely occur in early 2010. The jury verdict does not preclude Align from selling its Invisalign System. We have not accrued any liability for the judgment related to the Ormco litigation as such amounts are not reasonably estimable at this time. This is due to a number of factors, including: that the Court has not yet entered judgment; that discovery regarding possible damages is a lengthy and time consuming process involving testimony of experts and has not yet begun; and that determining a reasonable royalty rate is highly fact specific and there are many complicated factors to consider in this case.
The Court requested and has received briefing on the equitable defenses raised by Align and is expected to rule on the equitable defenses later this week. Align believes the facts and the law do not support the jury’s findings of infringement and validity and therefore has filed a motion for judgment as a matter of law on all issues seeking to set aside the jury’s verdict of liability. The Court has set a hearing on our motion for August 3, 2009, after which the Court is expected to enter judgment. Depending on the judgment entered by the Court, we may file various post-trial motions and if unsuccessful, we intend to appeal the liability decision and request a stay of the damages phase of the case pending appeal.
On July 13, 2009, Ormco filed a motion for permanent injunction against Align seeking to enjoin the sale of the Invisalign System through the January 2010 expiration of the 6,616,444 patent, as well as other injunctive relief including the destruction of all material, including software, created by Align from September 2003 to the present, the discontinuation of certification programs and the decertification of doctors certified from September 2003 to the present and the destruction of sales representatives’ records developed during this time period. The Court has scheduled a hearing on the motion for permanent injunction for August 17, 2009. Ormco seeks unusual injunctive relief that we believe is unwarranted and not supported by the law or facts of the case. Align will contend that an injunction would cause irreparable harm to Align, its employees and those doctors who include Invisalign as a large part of their practice, and would interrupt patient treatment and services currently underway. In addition, a balancing of hardships weighs heavily in Align’s favor as the issuance of the injunction would require Align the cease the sale of its sole product, the Invisalign System, while the denial of the injunction does not harm Ormco. Finally, any harm Ormco claims to have suffered would be sufficiently compensated by money damage. For these reasons, we strongly believe that Ormco’s motion for a permanent injunction should be denied and we will vigorously oppose the motion. In the unlikely event that the Court grants a permanent injunction, we would immediately appeal to the Federal Circuit Court of Appeals and seek to stay the injunction.
Ormco Patent Litigation Background Previously Disclosed:
Align has had ongoing patent litigation with Ormco, since 2003 when Ormco sued Align for patent infringement and Align won a sweeping summary judgment. Ormco appealed that decision and in August 2007 the Federal Circuit Court of Appeals ruled that 86 of Ormco’s 92 claims (related to 6,616,432, '243, '861 and '444 patents) were invalid and not infringed by Align. Ormco pursued the six remaining claims, which relate generally to a process of gathering and organizing tooth data, in the lawsuit against Align in the U.S. District Court for the Central District of California.
