The U.S. Court of Appeals for the First Circuit has upheld a judgment in the product disparagement case of Vascular Solutions, Inc., (VSI) of Minneapolis, MN, against Marine Polymer Technologies, Inc., (MPT) of Danvers, MA.

According to the Circuit Judges' opinion, both companies sell medical patches of different designs, which are used to stem bleeding after some medical procedures, such as catheterization procedures performed to examine blood vessels in the heart. VSI's product is "D-Stat Dry," and MPT's product is "SyvekPatch." In the jury trial, the jury found VSI entitled to damages of $4.5 million in lost profits in the product disparagement claim. Marine Polymer Technologies had appealed that judgment.

As stated in the court opinion, the products are used like a bandage to stop blood flow at the site of a puncture of a major artery. VSI's D-Stat Dry patch has an active ingredient bovine thrombin--a compound derived from cow's blood. The court also noted the ingredient does seal wounds rapidly, and by the time of the trial, VSI had sold one million patches without reports of severe complications from the use of the device.

VSI began selling D-Stat Dry in September 2003. Several years prior, MPT had won FDA approval for its bandage, now named the SyvekPatch. The court opinion states that during a time of declining sales in 2004, MPT's marketing director prepared an informational bulletin with statements regarding alleged risks of D-Stat Dry, for salespersons to communicate to customers. After a ten-day trial, the jury found certain of those statements to be false and made with malice.

On appeal, MPT challenged the jury's verdict for VSI on two issues: that VSI failed to prove malice and a question of damages. The appellate court independently reviewed the jury's malice determination and found that the evidence supported the jury's finding that the statements were false and sufficient proof exists of malice for at least the principal challenged statements.

Regarding the damages claim, the court was split on proof and ultimately decided on an affirmance of the jury's decision subject to a remittitur (a procedure by which a jury's award is reduced), limiting VSI's recover to $2.7 million apart from interests and costs. The court ordered the case to remand to the trial court, and stated that VSI could accept the $2.7 million figure or opt for a trial as to damages.

Howard Root, CEO of Vascular Solutions, commented in a press release: "We are pleased that the First Circuit has affirmed the jury's verdict on the falsity and malice of Marine Polymer's disparaging statements concerning D-Stat Dry, as well as the continuation of the permanent injunction. In order to conclude this litigation, we intend to accept the $2.7 million award of damages, plus interest, and to forgo the cost and distraction of an additional trial on damages. We expect the final steps in this litigation to be concluded during the first half of 2010, and the approximately $3.2 million in damages and interest to be collected by Vascular Solutions without substantial additional expense."

VSI's press release: http://www.vascularsolutions.com/pdf/contentmgmt/Press%20Release%20Syvek%20Appeal%20Dec%2028%202009.pdf

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