ResMed's Patent Lawsuit Advances

Zacks

ResMed Inc. (RMD) received favorable news with regard to its effort to protect its patent landscape. Recently, the company’s patent infringement case against medical device maker BMC Medical progressed with the involvement of the International Trade Commission which has agreed to investigate the lawsuit.

At ResMed’s request, the International Trade Commission conceded investigation of this Chinese manufacturer and its Florida-based distributors 3B Medical Inc. and 3B Products, L.L.C. in a patent infringement case. Earlier, in May, ResMed filed a patent infringement lawsuit in the federal court against BMC Medical.

The lawsuit claims, among other things, that several BMC Medical products violate numerous ResMed patents. Specifically, the company asserted that the RESmart CPAP and RESmart Auto CPAP devices produced by BMC Medical infringe ResMed’s intellectual property.

Further, some of the nasal masks manufactured by BMC Medical such as Willow nasal pillows patient interface and the iVolve nasal mask violate ResMed’s patents. Notably, BMC Medical is among the major competitors of the company in the international market. ResMed’s efforts to stop any further importation and sales of these BMC Medical products into the U.S. through a lawsuit win should lend a competitive edge to the company.

In April, the company filed parallel lawsuits in the International Trade Commission and U.S. federal court to protect its patent landscape from another international competitor APEX Medical.

Our Take

ResMed currently holds a major position in the worldwide market for generators, masks, and related accessories for the treatment of SDB (sleep disordered breathing), especially obstructive sleep apnea (:OSA). The company enjoys a competitive edge over other players in the market it serves. ResMed’s ability to compete effectively relies on its ability to protect its patent landscape.

Considering the SDB market overview, there is massive growth opportunity driven by lifestyle trends, further penetration and increasing awareness. Evidently, the company’s new generation products are major growth catalysts. ResMed has had to turn to litigation to protect its intellectual property. The move is seen as a coherent decision to spur innovation and new product development.

Currently, the stock carries a Zacks Rank #3 (Hold). While we remain on the sidelines for ResMed, other medical stocks such as Alere Inc. (ALR), LeMaitre Vascular, Inc. (LMAT) and SurModics, Inc. (SRDX) warrant a look. Alere carries a Zacks Rank #1 (Strong Buy) whereas the other two are Zacks Rank #2 (Buy) stocks.

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