Global conglomerate Royal Philips and Masimo Corp., a maker of patient-monitoring equipment, have mended fences through a new partnership after a $467 million patent infringement lawsuit.
In late 2014, Irvine, Calif.-based Masimo won nearly $467 million in damages in a suit accusing Philips Electronics North America Corp. of infringing two patents for measuring blood oxygen levels. Today, Amsterdam-based Philips and Masimo announced a multiyear business partnership that ends all pending lawsuits between the two companies and releases Philips from having to pay the $467 million jury verdict.
The partnership includes joint marketing and sales of Masimo sensors in conjunction with Philips' patient-monitoring equipment and select therapy products in North America as well as certain markets in Asia and Europe. Philips also plans to integrate Masimo's monitoring products into some Philips patient monitors.
Philips has agreed to make a $300 million cash payment to Masimo in the fourth quarter as a part of the agreement, which is expected to have a minimal impact on operational profit in the fourth quarter. The legal savings caused Masimo to raise its fiscal 2016 earnings from $2.14 per diluted share, up from $2.13. It will use some of the proceeds to pay off its revolving line of credit.
Philips has launched a wide range of partnerships over the past few years to jointly develop and market products, including an agreement with a proton therapy equipment manufacturer, a biotech firm and several hospitals. The company has also made a number of acquisitions and, like many equipment manufacturers, expanded its consulting offerings.
Masimo stock was up about 5% midday Monday at $60.15 a share. Philips stock, which includes many other businesses that are a part of the electronics giant, was up 2% at $30.19 a share.