Summary
This 8-K filing from Tyco International Ltd. (though misidentified as Johnson Controls in the prompt) on January 23, 2006, primarily details a significant settlement agreement with Masimo Corporation and Masimo Laboratories, Inc. This agreement resolves a patent infringement lawsuit that began in June 2000. The settlement involves a substantial payment by Tyco's subsidiary, Nellcor, to Masimo, addressing both past damages and future royalty obligations related to oximetry products. Investors should note the financial impact of this settlement, which includes a $330.48 million payment made by Nellcor. This payment comprises $265 million for damages related to infringing product sales up to January 31, 2006, and $65 million as an advance royalty for new "06 Products" through December 31, 2006. The agreement also includes a covenant not to sue for Nellcor's new product technology and terminates ongoing patent litigation, but does not settle related antitrust lawsuits. This resolution offers clarity on a significant legal overhang for Tyco.
Key Highlights
- 1Tyco International Ltd. (not Johnson Controls) entered into a Settlement Agreement and Release of Claims with Masimo Corporation and Masimo Laboratories, Inc.
- 2The settlement resolves a consolidated patent infringement action filed in June 2000.
- 3Tyco's subsidiary, Nellcor, paid Masimo a total of $330.48 million on January 19, 2006.
- 4The payment includes $265 million in damages for sales through January 31, 2006, and $65 million as an advance royalty for oximetry sales (including "06 Products") from February 1, 2006, through December 31, 2006.
- 5Nellcor receives a covenant not to sue on its "06 Products" and a termination of all pending patent litigation with Masimo.
- 6Nellcor will discontinue sales of infringing products but will continue to service previously sold items.
- 7The settlement does not resolve related Masimo antitrust lawsuits or consumer antitrust class lawsuits.