Cynosure settles patent infringement lawsuit against CoolTouch

Feb 9 2010

Cynosure, Inc. (Nasdaq: CYNO), developer of the award-winning Smartlipo™ LaserBodySculpting(SM) procedure for minimally invasive removal of fat, and its largest shareholder, El.En. S.p.A, today announced a settlement of their patent infringement lawsuit against CoolTouch, Inc.  Cynosure and El.En. alleged that CoolTouch's 1320 nm CoolLipo™ laser system infringed on El.En.'s U.S. Patent No. 6,206,873 (the 873 patent) licensed to Cynosure, which covers laser technology to remove subcutaneous fat.  

Under the terms of the settlement, CoolTouch will make payments representing a 9% royalty on sales of CoolLipo made prior to the agreement and a portion of Cynosure's legal expenses.  CoolTouch also has agreed to pay a royalty rate of 10% of future net sales for any licensed product sold strictly for lipolysis, and 7.5% of future net sales for any licensed product sold for lipolysis and at least one other aesthetic procedure.  As part of its agreement with Cynosure, CoolTouch has agreed to a Consent Judgment that it has infringed on the 873 patent and that the patent is valid and enforceable.  CoolTouch also has granted to Cynosure and El.En. a royalty free license to any patents or patent applications owned or controlled by CoolTouch related to the treatment of fat and/or cellulite.  

"This is an important victory for Cynosure," said President and Chief Executive Officer Michael Davin.  "In addition to the financial benefits of the agreement, the successful outcome validates the strength of our patent position in the emerging laser lipolysis industry. From our introduction of Smartlipo in 2006 to the subsequent enhancements we have made to the technology, we have established laser lipolysis as the gold standard for the minimally invasive removal of fat.  Today, Smartlipo is the most recognized body contouring brand among U.S. consumers.  The agreement with CoolTouch further enhances that brand and the technology behind our entire Smartlipo family of products."

"Going forward, we plan to continue our strategy of enforcing our licensed intellectual property position around our laser lipolysis portfolio," Davin concluded.  "For the benefit of Cynosure and its shareholders, we intend to pursue licensing arrangements with additional laser lipolysis competitors that we believe have infringed upon the 873 patent."

The 873 patent is a fundamental component of the Smartlipo LaserBodySculpting Workstation, a groundbreaking system designed as an alternative to traditional liposuction in patients with areas of localized fat. Cynosure received U.S. Food and Drug Administration clearance to market the Smartlipo workstation in late 2006. The product, which was launched in early 2007, uses a laser to deliver energy directly to subcutaneous fat cells, causing them to rupture. The emitted fat-melting energy also coagulates tissue, thus inducing collagen retraction and tissue tightening.

Under Cynosure's license agreement with El.En., once Cynosure has recouped all of its legal costs incurred in the CoolTouch case, Cynosure will receive 60% of the future royalty payments from CoolTouch and El.En. will receive 40%.