Blog Page | November 2015 Hearing Review
This opinion article is adapted from Holly Hosford-Dunn’s September 29, 2015 Hearing Economics blog at HearingHealthMatters.org.
Big drama engulfs the Big 6 lately, as top US management of hearing aid companies are forced out, either falling on their swords or being escorted from buildings by security. The dramas are cliffhangers, a plot ploy to keep us on the edge of our seats, excitedly waiting for a grand finale that resolves all the unknowns.
Cliffhangers in the corner office are exciting, titillating, sometimes tragic—but life goes on. The real Big 6 drama is a slow, fight-to-the-death extravaganza currently playing in US and Danish courtrooms, starring two Danish hearing aid manufacturers in a high-stakes patent war. Last month, David Capithorne’s excellent post1 at Hearing Mojo sounded the alarm (and I paraphrase):
This is one patent war worth watching as ReSound and Oticon go to the mat over ownership of wireless technologies that will likely form the core of future hearing aid devices.
As Shakespeare said, “The play’s the thing.” In truth, compared to the recent drama in the hearing industry, patent wars between rivals are very commonplace and banal. But, in sneak previews in Denmark, court records and media are hailing this as “an extraordinarily big case” and a “global legal showdown” of hearing aid giants.3-5 Oh, the drama!
The Curtain Rises on a Complex Plot
Act 1. In litigation filed first in Denmark and now in the United States, Oticon claims that some GN ReSound products using wireless technologies (eg, antennae technology) are infringing on two Oticon patents.
The devices in question are, well, one of the questions. GN maintains in a press release2 that “the only products that are relevant for the preliminary injunction are consequently ReSound Verso™ and the corresponding Beltone First™ [importantly, not LiNX2 or Legend]. Hence, no impact on GN ReSound’s global commercial performance is expected.” However, Oticon’s US patent suit also mentions “all hearing aid devices that employ wireless radio frequency (RF) communication technology materially similar to that employed in these devices.”1 Oticon wants its patents protected and has filed for injunction to block GN from putting products that use them on the market.
GN estimates an injunction in Denmark alone would hurt them to the tune of 100 MM DKK (about US$15 MM) in market losses. One Danish court verdict decided the patent was valid, that GN had infringed, but ruled against Oticon’s request for injunction. Further, it slapped Oticon with 3 MM DKK ($450,000) in costs and damages, payable to GN. Both sides claimed limited victory in the long view of a protracted legal war:
- Oticon saw it as a sequential step in which the judgement gave them a 2-out-of-3 win: They lost the injunction request but gained important rulings that their patent was protected, valid, and violated by GN.
- GN CEO Anders Hedegaard took a narrower view: The case wasn’t in a patent court, so GN is not in patent violation. By rejecting the injunction request, the court awarded total victory to GN: “We firmly believe that we are not violating the patent and the Maritime and Commercial High Court is not a patent court.”3
Further, GN argues that Oticon’s position is too little, too late:
- Oticon didn’t object when GN came out with a commercial product with antenna technology in 2011;
- Oticon didn’t make a commercial product, regardless of its patent, and
- Oticon didn’t decide to try to enforce its rights until after GN launched its LiNX product line, which also contains antenna technology.
Consequently, GN’s position is one of first-come-first-serve: “…the case therefore concerned whether Oticon was in fact trying to eliminate the first mover advantage obtained by GN ReSound having launched its iPhone compatible products before Oticon.”4
On August 14, the Danish High Court upheld the patent validity and infringement judgements but reversed the lower court’s injunction decision, thereby blocking GN from selling the products in question, at least in the interim. It also awarded 4 MM DKK ($350,000) to Oticon.
Act 2. Oticon’s next move is to sue GN for damages pursuant to patent infringement, and not just in Denmark.3 To which GN’s counter is to minimize, trivialize, and bring its own lawsuit in a different court system (not discussed in this post, Case IPR2015-00103 regarding patent 8300863 before the US Patent Trial and Appeal Board). Says Hedegaard: “We don’t believe their patent is valid. It’s back from the 40s and we don’t believe our technology matches up with the technology their patent pertains to either.”3
Copithorne D. GN ReSound loses a battle but insists it will win global patent war with Oticon. August 19, 2015. Available at: http://hearingmojo.com/resound-patent-war-with-oticon
GN ReSound. Issue of Danish preliminary injunction of older products has no impact on the company’s financial guidance for 2015. August 14, 2015. Available at: http://www.gn.com/Investor/News/Announcement?disclosureId=672195&messageId=837622
Lynge L, Christensen BW. Hearing aid giants in courtroom stand-off. October 7, 2015. Available at: http://medwatch.dk/Top_picks_in_english/article7340181.eceReferences
Valentin A. Oticon v GN Resound—infringement but no PI in Denmark. January 9, 2015. Available at: http://kluwerpatentblog.com/2015/01/09/oticon-v-gn-resound-infringement-but-no-pi-in-denmark
Oticon-direktør: Patentafgørelse bør bredes til USA. August 14, 2015. Available at: http://finans.dk/live/erhverv/ECE7936508/Oticon-direktør-Patentafgørelse-bør-bredes-til-USA/?ctxref=ext
Holly Hosford-Dunn, PhD, is an audiologist and founding partner and editor of hearinghealthmatters.org. She has developed multi-office private practices in Arizona, authored several textbooks, and now has a degree in economics.
Original Citation for this article: Hosford-Dunn, H. Danish Drama: GN & WDH’s Patent War. Hearing Review. 2015;22(11):10.
Photo Credit: Hamlet, the Danish Drama, © Igor Dolgov | Dreamstime.com