The Cochlear Limited (ASX: COH) share price is edging lower today as the company announced it has been denied an appeal rehearing in its US patent infringement case.
While the S&P/ASX 200 Index (ASX: XJO) is currently storming 1.92% higher on the back of COVID-19 vaccine news, the Cochlear share price is down 2.54% for the day at $184.21.
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Previous developments
This morning's announcement relates to Cochlear's ongoing court battle with Alfred E. Mann Foundation for Scientific Research (AMF) and Advanced Bionics (AB).
In November 2018, the US District Court in Los Angeles ruled against Cochlear and awarded damages totalling approximately US$268.1 million to AMF and AB. The company appealed this decision soon after.
Prior to this, the case had been dragging on for years. Back in 2014, a jury found that a group of Cochlear's implants, sound processors, and software infringed 2 of AMF's patents. Since then, there have been numerous rulings in favour and against Cochlear.
The result of the appeal of the November 2018 decision was finally handed down in March this year, with the US Court of Appeals for the Federal Circuit in Washington D.C. affirming the previous decision. As such, the court ordered the Cochlear to pay the US$268 million of damages to AMF and AB.
At the time of the announcement, the company stated in an ASX release it would "seek an en banc review by the full Court of Appeals in a petition for a rehearing".
What did Cochlear announce today?
This morning, the company revealed that the US Court of Appeals had denied its petition for a rehearing of the appeal.
The judgement will become final on 26 May 2020 and Cochlear will now pay approximately US$280 million, which includes post-judgment interest. The company noted that it has committed loan facilities available to fund the payment.
Meanwhile, a decision is still pending in the US District Court on AMF and AB's application for pre-judgment interest of US$123 million and attorney fees of $15 million. Cochlear has opposed both applications and the associated calculation methodology for the amounts.
As there is significant uncertainty over whether Cochlear will be forced to make these payments, the company is treating this exposure as a contingent liability on its balance sheet.
