Medtronic Inc.
(MDT) won $57 million in settlement from AGA Medical Corp. after the federal U.S. district court jury in San Francisco ruled in its favor. AGA had infringed upon two U.S. patents owned by Medtronic through the use and sale of Amplatzer Occluder and vascular plug products. Medtronic will also receive 11% in royalties from future sales of these products by AGA through 2018.

The two patents in question are U.S. Patent Nos. 6,306,141 and 5,067,957, commonly known as the Jervis patents. These patents involve technologies that require the use of metal alloys to facilitate the working of doctors in different surgical operations. Medtronic has patents for these technologies.

The new ruling is a shot in the arm for Medtronic. The additional revenue generated from this settlement will take care of the company’s bottom-line. Medtronic is a leading global medical technology company specializing in implantable and interventional therapy devices and products. The company’s deep product pipeline and strong R&D program position it well for long-term organic growth, rather than having it rely purely on acquisitions.

Medtronic’s management has a typical ‘ONE Medtronic’ approach that encompasses the following goals: drive sustainable long-term growth of 9%-11% through innovation, focus on increasing operating margins by 300 to 400 basis points, EPS growth of 11%-14% and return a minimum of 40%-50% of free cash flow to shareholders annually and align the organization for consistent execution. Based on its results, we believe that the company is well on track to achieving these goals.

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