The license holder to the patent that underpins the respiratory products of Flight Medical Innovations Ltd. (TASE: FLGM) has unilaterally cancelled the company's right it use the patent. The patent holders said that the sale of Flight Medical's parent company Medtechnica Ltd. (TASE: MEDI) to Ilex Medical Ltd. (TASE:ILX) was a breach of contract. Medtechnica owns 67% of Flight Medical.
A US company, NMI Inc. bought the patent's from Flight Medical's founder Carmel Adahan in 2003, and was also the distributor of the company's products. When Flight Medical went public on the TASE through a reverse merger, NMI notified the company that the agreement was still in effect. Although Ilex and Medtechnica merged in early 2011, only now did NMI announced the cancellation of the patent license.
Flight Medical is now marketing new versions of its respirators, and NMI no longer has distribution exclusivity, resulting in a commercial dispute between the companies. This is what apparently prompted NMI to cancel the patent license in an attempt to damage Flight Medical.
Flight Medical says that, under the terms of the license agreement, the patent holder does not have the right to object to the transfer of control, except on reasonable grounds. It said that its legal counsel says that NMI's arguments are not reasonable grounds.
In its full-year financial report for 2010, Flight Medical said that the patent license could be cancelled in the event of a change in ownership, control, or management in the company, but that Medtechnica is still the company's controlling shareholder. Only the indirect control in the company changed. Furthermore, Flight Medical CEO Michael Burshtine and Medtechnica CEO Israel Tauber still hold their positions.
Flight Medical's management has considered buying the company from Medtechnica.
Flight Medical's share price is unchanged at NIS 0.10, giving a market cap of NIS 29 million.
Published by Globes [online], Israel business news - www.globes-online.com - on August 14, 2011
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