Vector.. thanks for the info from HQ.
Here too is one poster's take.. from AOL:
Subject: Visx versus Nidek
Date: Wed, Oct 28, 1998 21:31 EST
From: Carnoustie
Message-id: <19981028213146.15820.00000754@ng25.aol.com>
To all,
Since some posters seem vexed over recent developments, allow me to answer the call.
Nidek makes a competitive laser, the EC-5000, which is expected to receive FDA approval shortly. Since Nidek is a privately held Japanese company it is impossible to know what their strategy for marketing their laser will be, but the pressure on Visx shares comes from the assumption of some that Nidek will attempt to market here without settling royalties first with Visx. Furthermore, it is theorized they will attempt to sell their laser for
a higher cost than the VISX Star but will forego the per-use royalty charged by Visx. Since this could be viewed as an attractive marketing ploy, it merits serious concern.
Should Nidek follow this course, Visx will attempt a preliminary injunction against them based on their U.S. patents. If they receive such an injunction, which would prevent Nidek marketing their machine in the U.S. until the Visx patents have been scrutinized, it is essentially game, set, and match for Visx unless the enforceability of their patents is overturned. In the meantime, Nidek is stymied in the U.S. I would like to point out as an
important precedent that Autonomous, a company which we must presume gave the Visx patents careful study, elected not to go the court route with Visx, but instead crawled into bed with Summit.
Nevertheless, should Visx fail to gain such a preliminary injunction, it would allow Nidek to market and sell their machines in the U.S. while they and Visx do a presumably long dance through the courts. However, any potential Nidek customers must weigh the advantages of a no-royalty arrangement with Nidek against the risk of treble damages for willful infringement against Visx should their patents be upheld. Furthermore, if Nidek is found to have
infridged on Visx, Nidek purchasers will risk having no service or upgrade options should Nidek withdraw from the U.S. market.
Since this has all come to a head because of a United Kingdom patent ruling, let's give it a look.
The U.K. patent decision: Fact from Fantasy
Visx sued Nidek on two "apparatus" patents called L'Esperance patents. One patent focused on the laser scanning beam, the other on broad-beam laser technology.
On the scanning beam, the judge agreed Visx's patent was valid and enforceable, but let Nidek off the hook on a very narrow interpretation of the patent focusing on the size of the scanning beam.
On the broad-beam patent, the judge ruled Nidek actually violated the patent, however, again on a technicality, the judge set Nidek free. This loophole is specific to U.K. law: if there is ANY public discussion of a patent's content prior to filing then the patent is unenforceable. In this case, a very general verbal discussion of the application of light to the eye for vision correction occured in a German conference a month before Visx filed its
U.K. patent.
The U.K. Decision: Relevant in the U.S.?
With regard to the scanning beam patent, the language of the U.S. patent is not so focused on beam size as is the U.K. patent, so the narrow interpretation being relevant here is very slim.
On the broad beam patent, U.S laws of public domain are very different than the U.K. The discussion must be in writing for more than one year before the patent is filed; it can be longer if the invention occured before it entered the public domain.
Strong U.S. Patent Portfolio
Visx has by far its strongest patent position in the U.S. These 49 patents include the L'Esperance patents, the Trokel patents (method of use and apparatus), and the Munnerlyn patents.
The differences in U.S. patent law, the broader language of the U.S. patents the breadth of the Visx U.S. patent portfolio, suggest the U.K. decisions have little or no relevance to the United States regardless of the spin suggested by Nidek press releases. It is hard to imagine Nidek successfully introducing their machine in the U.S., regardless of FDA approval, without ultimately settling with Visx.
The only potential fly in the ointment is the FTC and their continuing hearings regarding allegations of patent fraud by Visx. However, it needs to be pointed out that the FTC allegations only involve five patents which Visx has already disclosed are not of core importance. Again, we have Automous to look at: if they thought the FTC could give them a toehold against Visx, would they have sold out to BEAM?
I will close with the highly unoriginal observation that Visx is a stock which has long attracted short interest, and has continuously had to overcome all manner of hype and rumour, whether it be the over-inflated procedure expectations floated during the Muller years at BEAM, the Autonomous as giant-killer of more recent times, or now Nidek at present, and presumably Bauch and Lomb in the near future.
Those who have an interest in manipulating Visx stock are most successful when they create a climate of uncertainty, which Visx's industry-dominating success has made difficult of late.
As a long-time holder of this stock with an average share cost in the low twenties (and in retirement accounts to boot) can afford to be sanguine about what I interpret as the latest "short scenario". I intend to place another order for additional shares tonight.
Those posters who are newer to the stock, have a higher share cost basis, or might even be margined would do well to look at the whole picture. Factor VISX's overwhelming current dominance--which includes a track record with other would-be infringers--add in the October 27th Strong Buy ratings of analysts at Warburg Dillon Read and Hambrecht & Quist against the possibility of a successful domestic infringement by Nidek against Visx, and then
determine your buy, sell or hold position.
Hope this helps, regardless of your inclinations.
Regards,
Carnoustie
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