Allied Orthopedic Appliances I v. Tyco Health Care Group Lp

BACKGROUND

The pulse oximetry products at issue in this litigation include sensors and monitors. Sensors attach to a patient’s body. A monitor receives and interprets the signal from a sen- sor and then displays the patient’s level of blood oxygenation. Stand-alone monitors measure only blood oxygenation. Multi- parameter monitors measure various patient diagnostics in addition to blood oxygenation. Monitors are more expensive than sensors on a unit basis, but the volume of sensor sales is much larger than the volume of monitor sales.

Tyco was an early entrant in the pulse oximetry market and was able to establish an installed base of monitors greatly exceeding that of its competitors. Its technology was initially protected by its “R-Cal” patent, which prevented competitors from selling sensors compatible with its installed base of monitors. Tyco anticipated that upon expiration of the R-Cal patent in November 2003, competitors would begin to pro- duce generic sensors compatible with its installed base of monitors. It thus set about creating a new proprietary oximetry technology.

Tyco’s plan matured into what became known as the “Oxi- Max Strategy.” Tyco created a new patented…