China’s Ningbo Intermediate People’s Court of Zhejiang province on May 31 ruled against U.S. medical device giant Medtronic plc in two lawsuits that it lodged against Shanghai HeartCare Medical Technology Corp. Ltd. (上海心玮医疗科技股份有限公司) and its distributor Ningbo Yongheng Medical Device Co., Ltd. (宁波甬恒医疗器械有限公司) for infringing its two patents No. 201380069871.2 and No. 201310471114.X, seeking 10 million yuan ($1.5 million) in damages altogether.
Medtronic in March 2021 sued HeartCare and Yongheng in the Ningbo Intermediate People’s Court. The lawsuits dealt a heavy blow to HeartCare, a five-year-old on the eve of an IPO for its fast-track success. To counter the claims, HeartCare filed an invalidation petition against the two asserted patents before the Patent Reexamination and Invalidation Department (PRID) of the China National Intellectual Property Administration (CNIPA). The PRID issued a final decision revoking the validity of both patents after holding two oral hearings over them dated April 30 and 31 respectively.
Medtronic in 1949 was established in Minneapolis city, Minnesota, which still functions as the conglomerate’s executive and operational headquarters, and has had its legal headquarters based in Dublin city, Ireland for tax purposes since 2015. It is the world’s largest medical device company by revenue, followed by Johnson & Johnson’s medical device segment and Abbott. Medtronic in 1989 expanded its business into China and in 1996 opened its first office in Shanghai municipality, where its headquarters of Greater China is located. Medtronic in 2018 made a 15% equity investment in Weigao Group, a Chinese leading medical device company, and formed a joint venture with it. It opened its first Patient Care Centre in Beijing municipality the same year. Medtronic secured the grant of the two asserted patents No. 201380069871.2 covering endovascular access devices are connected to the connector of control member and No. 201310471114.X covering an apparatus for restoring blood flow in occluded blood vessels and use thereof from the CNIPA in 2017 and 2015 respectively.
HeartCare was founded in 2016 and became listed on the Hong Kong Stock Exchange in 2021. The company develops and manufactures neuro-interventional medical devices to treat conditions ranging from acute ischemic stroke and intracranial stenosis to hemorrhagic stroke. Its most competitive products include the Captor™ thrombectomy device and the left atrial appendage (LAA) occluder. The former is used in the minimally invasive thrombectomy procedures to remove thrombi, or blood clots, in intracranial vessels for patients with acute ischemic stroke (AIS) due to large artery occlusion. It exactly targets the same market of the Solitaire™ X Revascularization Device by Medtronic as its benchmark product. In the complaints, Medtronic alleged that Captor produced by HeartCare infringed the two asserted patents embodied in Solitaire.
HeartCare’s recognition as China’s first indigenous neuro-interventional medical device maker explains its swift rise to be an investors’ darling. Before its inception, the market was almost monopolized by foreign companies, of which Medtronic alone led with a predominant 60% share.
Stoke and ischemic heart diseases are the top two causes of death for Chinese nationals, which have resulted in China’s fast-growing neuro-intervention medical device market. The number of neuro-interventional procedures performed in China increased from 429,000 in 2015 to 1.24 million in 2019, with a compound annual growth rate (CAGR) of 30.4%. China’s neuro-interventional medical device market size expanded from 2.9 billion yuan ($440 million) in 2015 to 6 billion yuan ($900 million) in 2019, with a CAGR of 20.0%. Despite the appealing prospects, Medtronic must have felt pressure from the Chinese government’s policy of volume-based procurement (VBP) introduced to drive down medical bills in 2018 as well as the emergence of Chinese domestic competitor makers like HeartCare.
It is also of note that HeartCare’s Deputy General Manager Li Zhigang, heading the company’s R&D, had served as Principal Engineer of the Vascular Therapies division at Covidien, Medtronic’s subsidiary company, before he came aboard the startup.
The case docket nos. are （2021）浙02知民初173号 and （2021）浙02知民初174号, whose English transliterations are 173 and 174, first instance (初), civil case (民), intellectual property tribunal (知), (2021) Ningbo Intermediate People’s Court of Zhejiang Province (（2021）浙02).