Wednesday, June 10, 2009, 6/10/2009 09:17:00 AM

Post-Trial Motions Filed in $36.3 Million Trade Secrets Case Won By Hansen Medical from Luna Innovations

By Todd

This massive trade secrets case stemmed from a 2006 deal between Luna Innovations and Hansen Medical to work together to apply Luna's fiber-optic shape-sensing technology to Hansen's catheter medical device.

The California jury found that Luna not only breached a contract it signed with Hansen to develop technology for a medical device, but that the company also shared Hansen's trade secrets with Intuitive Surgical Inc., one of the largest medical device companies in the country. The 2007 deal with Intuitive was for the supply and development of a navigational aid to be built into future generations of high-tech robotic devices for complex, minimally invasive operations.

In finding in Hansen's favor, the jury said that any intellectual property Luna developed during the work with Hansen belongs to Hansen. Because Luna shared some of that knowledge in its work with Intuitive, Gonzalez said that Hansen will now have to talk to Intuitive or get a court-ordered injunction to prevent Intuitive from using the technology.

Luna has asked a California judge to throw out the $36.3 million jury verdict against it, arguing the award is based on a flawed interpretation of law.

The Roanoke-based technology company filed several post-trial motions Monday offering for the first time since the verdict was issued in late April its concerns with how the trial was carried out and jury verdict rendered.

Even as the legal battle with Hansen Medical Inc. continues, Luna's chief operating officer said there is no bad blood between the two companies and he would be willing to work with Hansen to apply Luna's technology to Hansen's medical device.

"We would like our technology to be used in as many places and as many procedures that could help save lives," COO Scott Graeff said about the application of Luna's technology to medical devices.

Specifically, Luna's lawyers argued Luna is not responsible for lost profits to Hansen. The vast majority of the verdict awarded was for lost profits.

"That a finding of breach of this agreement has somehow resulted in an award of over $26 million in lost profits and other damages is exactly the kind of nightmarish outcome that parties seek to avoid when they negotiate these critical limitations -- and one that cries out for immediate correction here," Luna's lawyers wrote.

The agreement referred to is an $84,100 feasibility study that Luna and Hansen entered into in 2006 to apply Luna's fiber-optic shape-sensing technology to Hansen's catheter. Luna contends that the feasibility study explicitly ruled out an award of lost profits if the deal went sour.

In addition to arguing the $26 million award should be tossed out, Luna argued the $10.2 million awarded for misappropriation of trade secrets was based on poor jury instructions and bad interpretation of the law.

Luna also said while Hansen claimed nine trade secrets were violated, each violation wasn't argued separately. That was an improper application of the law governing misappropriation of trade secrets, Luna said.

"Apparently, Hansen hoped that the jury would be unable to see through the smoke and could be led to find liability through sheer confusion," a portion of one motion reads. "And it succeeded."

Finally, Luna asked that if the judge doesn't agree to throw out the jury award, a new trial be held.

Hansen also filed several motions with the California court in advance of a July 20 hearing where the judge is expected to enter final judgment on the verdict. Until then the jury award is not finalized.

In its motions, Hansen asked for an undisclosed sum for attorney fees and expert costs, $20.4 million in additional damages, an injunction preventing Luna from using the product developed during the initial feasibility study and a license to certain intellectual property related to the case.


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