What happened

Shares of cardiovascular-health company Shockwave Medical (SWAV) fell on Thursday after the Patent Trial and Appeal Board ruled that two of its patents are invalid. The stock ended the day 6% lower. But it had dropped 11% earlier in the day.

Shockwave has been issued 40 U.S. patents so far, and shareholders would like to see it keep all of them. The more it can distinguish itself with proprietary solutions, the better its chances to continue beating the market as it's done since it went public.

SWAV Chart

SWAV data by YCharts.

So what

Previously, fellow healthcare-company Cardiovascular Systems (CSII) challenged two of Shockwave Medical's patents and asked the U.S. Patent and Trademark Office to look into it. The '371 patent adds a couple of electrodes inside a balloon catheter to help break up calcification in blood vessels. That patent makes 17 claims, and 16 of them were ruled as unpatentable. One claim was deemed valid.

However, the '091 patent was ruled completely invalid on all claims. This patent helps regulate the voltage delivered to the catheter device.

Intellectual property is important for medical device companies, so it's not surprising to see Shockwave Medical stock fall today on this news. Cardiovascular System stock was slightly down for the session, as well.

A nervous woman covers her mouth while looking at a computer.

Image source: Getty Images.

Now what

After the ruling, Shockwave CEO Doug Godshall said, "[W]e believe we have strong arguments supporting the validity of all claims of both our '371 and our '091 patents and we intend to appeal this decision with the expectation that we will prevail in our appeal." 

In other words, this isn't over yet. Shockwave will now prepare for round two of this battle. It's something shareholders of this healthcare stock should continue watching.