Infringement Award Upheld for Applied Medical

A federal appeals court this week upheld a $20.5-million award to a Laguna Hills maker of surgical devices in a patent-infringement case against industry giant U.S. Surgical Corp.

The ruling will enable Applied Medical Resources Corp. to press ahead with plans to go public within months and other expansion activities, said an elated chief executive, Said Hilal.

“The most heartwarming thing in my life is seeing the justice system work so elegantly. For an immigrant boy, this was absolutely moving, “ said Hilal, 49, who moved to the United States from Lebanon in his teens.

A spokesman for Norwalk, Conn.-based U.S. Surgical Corp. said the company was reviewing the decision and wouldn’t comment on whether it will seek a rehearing. Last year, the company set aside money to pay the judgment.

A three-judge panel for the federal appeals court in Washington, D.C., which hears all patent-case appeals, affirmed the $20.5 million awarded to Applied Medical last summer after a jury trial.

The jury in Virginia awarded more than $15 million and made the unusual finding that U.S. Surgical had willfully violated Applied Medical patents involving abdominal tubes used for less-invasive operations. The district court judge tacked on an additional $5 million for punitive damages.

The lawsuit, filed in late 1996, cost the rapidly growing Laguna Hills company management time and about $5 million in legal fees last year, Hilal said. Because of the legal costs, he noted that the company posted a loss of about $3 million last year on sales of about $22 million.

However, Applied Medical is profitable, its sales are growing this year and the company has been hiring, Hilal said. It employs 70 salespeople, compared with 25 a year ago, and plans to add another 50 to its total work force of 300 by year’s end.

Assuming the company receives the judgment this year, the funds will help position it for a public offering of up to $60 million in stock, the chief executive said.