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Medtronic Countersues Kyphon BY DAVID KRESSEL, APRIL 19, 2006

As we reported in March, Kyphon and Dr. Harvinder Sandhu filed an IP suit against Medtronic, and now Medtronic has parried with its own lawsuit. Medtronic has countersued Kyphon, claiming Kyphoplasty infringes on 3 patents relating to balloons for use in angioplasty which was acquired in the acquisition of AVE and 1 patent related to balloons used in the spine which was acquired from Gary Michelson and Karlin Technologies.

Based not on our legal opinion, but on the results of the Disc-O-Tech lawsuit, Kyphon has a pretty solid patent position. Also, based on our cursory lay review of the patents Medtronic is using, they appear largely unrelated to Kyphon and kyphoplasty. So it is not clear what Medtronic's goals or expectations are in this battle. One theory is that Medtronic is trying to change the venue from Tennessee, where Kyphon filed suit, to California, where Medtronic filed suit. Another theory is that Medtronic is happy to tie up Kyphon in litigation until its patents begin to expire, which occurs in 2009. A final theory is that Medtronic thinks it can win this lawsuit.

The only thing we can be sure of at this juncture is that we will all have the opportunity to read much more about the case as it progresses.

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