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Palomar and Candela head to court for patent case

19 May 2011

Judge sets October trial date for laser hair removal case as Candela's parent company Syneron reports a sharp increase in sales.

Patent litigation between Candela, a division of the Israeli company Syneron that specializes in photonics systems for aesthetic applications, and its rival Palomar Medical Technologies is to go to trial in October, after a recent ruling by a US district court judge.

Judge Rya Zobel set a trial date of October 3, after last month dismissing all but one of twelve patent claims by Palomar, which first filed the willful infringement case in August 2006. Syneron CEO Louis Scafuri described that ruling as “a significant victory for Candela”, and is confident that the remaining Palomar claim will be defeated at the trial.

The dismissed claims related primarily to a method used to cool skin, which is used in combination with laser hair removal procedures. Judge Zobel ruled that the opinion of one of Palomar’s expert witnesses was “without factual foundation” in that case.

As a result, the trial will be focused on a single claim within US patent 5,735,844 – which Palomar had originally licensed on an exclusive basis from the Massachusetts General Hospital back in 1995. That claim (Claim 32), refers to the way in which laser light is focused onto a patient’s skin, and centers on Candela’s use of a convex lens in its products.

Speaking after the recent rulings, the Palomar CEO Joseph Caruso indicated that the judgment would not dissuade it from further actions:

“After establishing light-based hair removal as a viable treatment option, many competitors began to use our technology,” he said. “Several competitors properly took licenses while others opted not to at their own risk. We intend to continue our aggressive patent enforcement strategy of our hair removal patents.”

Syneron slashes losses
Meanwhile, Candela’s parent company Syneron has reported a sharp increase in revenues and much-reduced loss for the opening fiscal quarter of 2011, when compared with one year ago.

The Yokneam-based firm posted sales of $49.8 million, up 17.5% year-on-year, and a net loss of $2.3 million – down from a net loss of $22.5 million in the same period last year, and indicating some major cost-cutting measures implemented by Syneron after it acquired Candela in early 2010.

Since then, Syneron has slashed quarterly operating costs by more than $16 million, mostly through reduced administration and sales and marketing spend, as well as some cuts to research and development.

Although it is still making a loss, the company has high hopes for some of its emerging business units, for example through the US launch of its “elure” skin lightening product. It has also recently launched a home-use hair removal system in Europe, and rolled out new dental laser devices under its Light Instruments brand.

Syneron CFO Asaf Alperovitz said that although these efforts are hurting company profitability right now, he expects them to drive long-term revenue growth as adoption increases.

Home-use and consumer products in particular are seen by many medical and aesthetic laser system OEMs as a major growth area, enabled in part by the reduced costs of semiconductor laser and LED components used in those systems.

One recent example of that is the collaboration between Pantec Biosolutions of Liechtenstein and diode laser maker Oclaro. Pantec is using the latter’s 9xx nm high-power diode bars in its new epidermal laser platform, which is based around an Er:YAG laser. Oclaro says that a key part of the development was to deliver a custom quasi-continuous-wave (QCW) sub-assembly at a price that would be compatible with consumer purchasing.

As well as anti-wrinkle cosmetic treatment, the Pantec system can be used for needle-free delivery of relatively large molecules into the skin. The companies say that the approach could be used to give painless vaccinations and even for in-vitro fertilization.

Palomar is also targeting the emerging home-use laser market with its own anti-wrinkle system.

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