Alma to pay 11.0% for past patent and trade dress infringement
BURLINGTON, Mass., April 2 /PRNewswire-FirstCall/ -- Palomar Medical
Technologies Inc. (Nasdaq: PMTI) announced today the resolution of its on-
going patent infringement and trade dress infringement lawsuit against Alma
Lasers, Inc. Palomar accused Alma's Harmony, Soprano, Soprano XL and Sonata
Systems of infringing U.S. Patent Nos. 5,735,844 and 5,595,568 (the
"Patents"). Palomar has an exclusive license to these patents from the
General Hospital Corporation in Boston, Massachusetts. Palomar also accused
Alma's Harmony System of infringing the distinctive trade dress of
Palomar's StarLux System.
Alma has admitted to the infringement, validity and enforceability of
the Patents and has agreed not to challenge them in the future. Alma has
also agreed to change the trade dress of the Harmony and Aria Systems
within the next six to nine months.
Alma will pay Palomar a 9.5% patent royalty plus interest on prior
sales of their laser- and lamp-based hair removal systems beginning with
their initial sales in 2003 and a 1.5% trade dress fee plus interest on
prior sales of their Harmony and Aria systems. Those amounts will be
determined based on an audit by an independent auditor that will be
conducted over the next few months, and Palomar will recognize those
amounts only after they are determined as part of that audit. In addition,
Alma will pay Palomar for its legal costs incurred during the lawsuit. From
March 28, 2007 through December 31, 2007, Alma will pay Palomar an 8.5%
patent royalty and, beginning on January 1, 2008, Alma will pay Palomar a
7.5% patent royalty on future sales of current and any new light-based hair
removal systems. The terms are in accordance with Palomar's standard
license terms including combination systems that include multiple light
sources for hair removal and other applications.
Patricia Davis, Senior Vice President and General Counsel of Palomar,
commented, "The resolution of this lawsuit against Alma as well as the
resolution last spring of the lawsuits against Cutera demonstrate the
strength of Palomar's patent portfolio. As in the past, when forced to
litigate, we will seek higher royalties than when competitors take a
license on a voluntary basis. As we announced on November 7, 2006, our
license agreement with Cynosure was on more favorable terms simply because
we were not forced to sue Cynosure prior to executing the license. We have
notified our unlicensed competitors that for now Palomar remains willing to
offer licenses. Our willingness and the rates of such licenses, however,
may change as competitors continue to wait for us to sue them for patent
infringement."
Joseph P. Caruso, President and Chief Executive Officer of Palomar,
commented, "This favorable resolution with Alma so early in this litigation
further substantiates the strength of these patents. Palomar pioneered the
cosmetic light-based industry with the first high-powered light-based hair
removal system in 1997. Since then, this industry has become one of the
fastest-growing segments in the medical industry with hair removal
procedures being the most popular cosmetic light based procedure performed
today. Many companies have taken advantage of this high growth by offering
products covered by patents controlled by Palomar, and we intend to
continue to enforce our intellectual property. This strategy provides
significant financial benefit to Palomar and its shareholders."
Mr. Caruso continued, "We were also able to force Alma to change the
look of their products on a worldwide basis. Over the past few years the
market has confused their products with ours and Alma has been able to sell
their product based on the reputation of Palomar. Our sales and marketing
group will now be free to address the growing market for light-based
aesthetic products without this confusion."
Under Palomar's license agreement with the General Hospital
Corporation, Palomar will pay to the General Hospital Corporation 40% of
all payments from Alma excluding Palomar's legal costs and the trade dress
fees.
For more information, please see the Settlement Agreement, the Non-
Exclusive Patent License Agreement, the Trade Dress Settlement Agreement,
the Consent Judgments and Stipulations of Dismissal filed as Exhibits 10.1,
10.2, 10.3, 10.4 and 10.5 to a Current Report on Form 8-K filed today.
About Palomar Medical Technologies, Inc.: Palomar is a leading
researcher and developer of light-based systems for cosmetic treatments.
Palomar pioneered the optical hair removal field, when, in 1997, it
introduced the first high-powered laser hair removal system. Since then,
many of the major advances in light-based hair removal have been based on
Palomar technology. On December 8, 2006, Palomar became the first company
to receive a 510(k) over- the-counter (OTC) clearance from the United
States Food and Drug Administration (FDA) for a new, patented, home use,
light-based hair removal device. OTC clearance allows the product to be
marketed and sold directly to consumers without a prescription. There are
now millions of light-based cosmetic procedures performed around the world
every year in physician offices, clinics, spas and salons. Palomar is
testing many new and exciting applications to further advance the hair
removal market and other cosmetic applications. Palomar is focused on
developing proprietary light-based technology for introduction to the mass
markets. Palomar has an agreement with The Gillette Company to develop and
potentially commercialize a patented home- use, light-based hair removal
device for women. Palomar also has an agreement with Johnson & Johnson
Consumer Companies to develop and potentially commercialize home-use,
light-based devices for reducing or reshaping body fat including cellulite,
reducing the appearance of skin aging, and reducing or preventing acne.
For more information on Palomar and its products, visit Palomar's
website at http://www.palomarmedical.com. To continue receiving the most
up-to-date information and latest news on Palomar as it happens, sign up to
receive automatic e-mail alerts by going to the Investor Relations' section
of the website.
With the exception of the historical information contained in this
release, the matters described herein contain forward-looking statements,
including but not limited to statements relating to new markets, future
royalty amounts due from third parties, development and introduction of new
products, and financial and operating projections. These forward-looking
statements are neither promises nor guarantees, but involve risk and
uncertainties that may individually or mutually impact the matters herein,
and cause actual results, events and performance to differ materially from
such forward-looking statements. These risk factors include, but are not
limited to, results of future operations, technological difficulties in
developing or introducing new products, the results of future research,
lack of product demand and market acceptance for current and future
products, the effect of economic conditions, challenges in managing joint
ventures and research with third parties and government contracts, the
impact of competitive products and pricing, governmental regulations with
respect to medical devices, including whether FDA clearance will be
obtained for future products and additional applications, the results of
litigation, difficulties in collecting royalties, potential infringement of
third-party intellectual property rights, factors affecting the Company's
future income and resulting ability to utilize its NOLs, and/or other
factors, which are detailed from time to time in the Company's SEC reports,
including the report on Form 10-K for the year ended December 31, 2006 and
the Company's quarterly reports on Form 10-Q. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only
as of the date hereof. The Company undertakes no obligation to release
publicly the result of any revisions to these forward-looking statements
that may be made to reflect events or circumstances after the date hereof
or to reflect the occurrence of unanticipated events.
Contact: Kayla Castle
Investor Relations Manager
Palomar Medical Technologies, Inc.
781-993-2411
ir@palomarmedical.com
SOURCE Palomar Medical Technologies, Inc.
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http://www.palomarmedical.com/
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CONTACT:
Kayla Castle, Investor Relations Manager of
Palomar Medical Technologies, Inc., +1-781-993-2411,
ir@palomarmedical.com
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