UPDATE: Oct. 13, 2020: Amwell is reviewing Teladoc's allegations, but believes the claims lack merit and plans to "defend against them vigorously," a spokesperson said.
- Telehealth giant Teladoc is suing rival Amwell over alleged patent infringement, setting up what's likely to be a high-stakes legal battle as the two stake out territory in the growing telehealth sector.
- In a lawsuit filed in a Delaware district court on Monday, Teladoc argues Amwell's digital scope, stethoscope and telemedicine carts directly and indirectly encroach on intellectual property Teladoc acquired when it merged with startup InTouch earlier this year. Teladoc first threatened legal action in September, saying it would turn to the courts if Amwell didn't stop making and marketing the products.
- The lawsuit asks for triple damages plus court fees, as well as an injunction against Amwell. Teladoc did not say if it was pursuing a specific figure, per Teladoc VP of Communications Chris Stenrud. Amwell has previously denied the claims, but did not respond to a request for comment by time of publication.
The legal clash between two of the biggest names in telehealth comes as mounting consumer and investor interest begins to outline just how large the digital health industry could grow. Telehealth has seen adoption skyrocket during the COVID-19 pandemic.
Teladoc bought InTouch in a deal that closed in July, valued at $600 million. With the acquisition, Teladoc nabbed a portfolio of more than 130 patents and patent applications — nine of which it's alleging were violated by Boston-based Amwell. The nine contested patents, filed between 2010 and 2019, include a telehealth cart with thermal imaging and touchscreen and a documentation system for remote visits.
Teladoc claims Amwell willfully violated the patents with four iterations of telemedicine carts, its Horus HD Digital Scope System and its Thinklabs One Digital Stethoscope.
As a result of the infringement, Teladoc "has suffered and will continue to suffer damages," the suit reads. "Teladoc is entitled to recover from Amwell the damages adequate to compensate for such infringement in an amount to be determined at trial."
Teladoc also seeks reimbursement for attorney and legal fees, and any other relief the court decides.
Teladoc first threatened the suit in a Sept. 14 letter to Amwell CEOs Ido and Roy Schoenberg first obtained by Stat. That letter outlined the alleged patent infringements and said if Amwell didn't comply with Teladoc's demands to stop selling and making the products by Sept. 18, Teladoc would take legal action.
Amwell, which announced its intention to go public in August, said in a Sept. 15 filing with the U.S. Securities and Exchange Commission the claims "lack merit" and "if Teladoc attempts to bring these claims to court, we intend to defend against them vigorously."
Losing the devices in question might not significantly harm Amwell. In the same filing, Amwell said its Carepoints devices and technology business, the category of products in question, represent only about 5% of its revenue.
The two have clashed over patents before. In 2015, Amwell sued Teladoc for allegedly encroaching on a 2007 patent, though the suit was eventually dismissed a year later.
Purchase, New York-based Teladoc has continued to be acquisitive as the pandemic drives unprecedented telehealth adoption. Teladoc bought chronic care management player Livongo for $18.5 billion in August, in the sector's first megamerger. Though the merger is not yet closed, the two had their first cross-sale to a major health plan in Florida announced Monday.
For its part, Amwell nabbed a $100 million investment from Google concurrent with its IPO, and raised total gross proceedings of about $742 million in its initial offering in mid-September.