The dominant player in the Telehealth industry, Teladoc is accusing its closest competitor, Amwell of infringing on its patents. In a letter to Amwell founders, the Schoenberg brothers Ido and Roy, Davis Polk & Wardwell LLP claims that the telemedicine carts and peripheral devices used with them such as the Horus HD Digital Scope System and the Thinklabs One Digital stethoscope are infringing on a patent portfolio owned by Teladoc following its nearly $600 million acquisition of InTouch Health.
Amwell in response reported in a recent filing “Our patent portfolio consists of approximately 38 patents and eight pending patent applications related to our software and technology. The Company does not currently consider any of its patents to be material to its business...even if we were found to infringe upon any valid claim of these patents, our revenues from the Carepoints products approximated 5% of our revenues in 2019”.
This is not the first time these two have clashed on patent issues. Back in June 2015, a Massachusetts federal judge agreed with Teladoc that Amwell’s patents are unenforceable and broad citing methods such as “'automate or otherwise make more efficient” is too broad that it would reduce competition without necessarily having the details of the technology that would automate or make more efficient. This was a blow to Amwell, but the management team felt the ruling was inconsequential to their business, despite initiating the lawsuit against Teladoc.
Why this is important: With Google now partnered with Amwell, the technology related to automated Telehealth processes is important as it looks to build out new methods to do so through the use of chatbots and AI. AI will play a very important role with the telemedicine cart and peripherals that allow for remote examinations by specialists. If we imagine a world where patients are visited by nurses or aids who bring with them equipment capable of taking a full physical exam and transmitting the data back to a virtual Amwell provider, we can imagine how the primary care visits, specialist visits, pretty much all outpatient visits and even urgent non-emergent visits call all be done at home. This is a big piece of the market, and even though today it only accounts for 5% of revenue for Amwell, it will play a bigger and more important role in the future to extend the limited capabilities of a virtual video visit.
Luckily, technology is always progressing and if Amwell loses the patent infringement battle with Teladoc, it will only be a matter of time before it finds other devices to transmit data to its Telehealth platform. It has already partnered and integrated with tytocare which has its own patent portfolio (and which could be an acquisition target). This is the next frontier, and Teladoc knows it, Livongo knows it, and Amwell definitely knows it needs a foothold in that space.