Asylum, Veeco settle AFM patent dispute; National Laser files against Biolase

August 22, 2008 -- As one lawsuit is settled, another begins: The 5-year battle between atomic force microscope (AFM) manufacturers Asylum Research and Veeco Instruments (both of Santa Barbara, CA) is over, but meanwhile National Laser Technology (Indianapolis, IN) has filed suit against Biolase Technology (Irvine, CA). NLT says Biolase is damaging competition and affecting customers in the hard-tissue dental-laser market. Biolase has made counter-claims, and dismisses the charges.

August 22, 2008 -- As one lawsuit is settled, another begins.

The 5-year battle between atomic force microscope (AFM) manufacturers Asylum Research Corporation and Veeco Instruments Inc. (both of Santa Barbara, CA) is over. The litigation began in September 2003. Under the terms of the settlement, Asylum and Veeco have agreed to drop all pending claims against each other and agreed to a five-year, worldwide cross license of each other's patents. They also made a mutual covenant not to sue on patents either party has a right to assert.

Asylum will pay an initial license fee to Veeco plus an ongoing royalty for the five-year term of the cross license. As part of the settlement, Asylum acknowledged the validity of the Veeco patents asserted in the case. Asylum CEO Jason Cleveland said the deal, "will allow both us and Veeco to bring better products to market."

Halfway across the country, National Laser Technology (NLT; Indianapolis, IN), a company that refurbishes dental lasers and sells them to dentists across the U.S., filed a lawsuit this week against Biolase Technology (Irvine, CA; Nasdaq:BLTI), which it says is damaging competition and affecting consumers in the hard-tissue dental-laser market. NLT is seeking compensatory and punitive damages, plus a preliminary and permanent injunction barring Biolase from engaging in anticompetitive conduct, making false and misleading statements, and retaliating.

The complaint alleges that Biolase, which reportedly has a market share of more than 85 percent, uses its competitive standing to coerce dentists to purchase products from Biolase at double the price offered by NLT. NLT alleges that as part of a campaign to put NLT out of business, Biolase threatens dentists by refusing to sell them laser tips and other necessary products if the dentists do business with NLT, and threatens to cut off trainers and other vendors who provide services to NLT customers. The complaint also asserts that Biolase has made false and misleading statements to dentists about NLT's products.

"We have high quality products to sell at low cost to compete with Biolase, but have been limited in our ability to provide these products to dentists because of the actions alleged in the complaint," NLT CEO Alan Miller said. "We reluctantly brought this case because these actions have caused significant harm to NLT and to dentists."

For its part, Biolase says that among other things, NLT sells used Biolase lasers -- but is not an authorized Biolase dealer. "While NLT has yet to provide us with a copy of the complaint it filed against us, based on NLT's press release . . . we believe that the allegations are frivolous and without merit. Biolase intends to defend the lawsuit vigorously, and will explore asserting appropriate claims against NLT," said Biolase CEO Jake St. Philip. "We cannot guarantee the safety, effectiveness, or regulatory compliance of any used Biolase laser sold or modified by third-parties, and we will continue to work hard to protect dentists and patients, which is of the utmost importance to us."

The case is National Laser Technology, Inc. v. Biolase Technology, Inc., 08-cv-1123, (S.D. Ind. Aug. 20, 2008).

Earlier this week, Biolase announced the global launch of a new software product designed to extend the capabilities and useful life of its installed first-generation Waterlase dental laser systems for hard and soft tissue. This upgrade gives the older lasers variable pulse repetition rates (frequency) similar to the company's newest Waterlase MD and Waterlase C100 systems. The upgrade intends to provide smoother tissue cutting and increased patient comfort. Waterlase is used to perform a variety of dental procedures, including cavity preparation, caries removal, tooth etching and a wide range of soft tissue (gum) procedures.

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