Two prominent companies in the burgeoning telehealth segment are at odds and will likely face each other in court. Teladoc (NYSE:TDOC) is suing American Well (NYSE:AMWL) for patent infringement over a digital scope and stethoscope the latter sells.
Earlier this week it came to light that Teladoc formally accused American Well (also known as Amwell) in a letter sent by its lawyers to Amwell management in mid-September. Teladoc believes that patents it obtained when it acquired healthcare tech specialist InTouch Technologies were infringed upon by two Amwell products, the Horus HD Digital Scope System and the Thinklabs One Digital Stethoscope.
All told, Teladoc is accusing Amwell of violating nine of its patents. In the letter, Teladoc demanded that Amwell immediately cease and desist selling and using the offending products, and respond to its accusations by Sept. 18.
It is not known if or when Amwell sent a formal response. It has not issued an official statement on the matter, although it referred to the letter in the registration statement it filed with the Securities and Exchange Commission prior to its IPO last month. The company wrote that "we believe that these claims lack merit and, if Teladoc attempts to bring these claims to court, we intend to defend against them vigorously."
Amwell pointed out that sales from the products in dispute comprised less than 5% of its 2019 revenue.
That might not be a comforting thought for investors; on Wednesday, they traded Amwell's stock down by 2.9%, a steeper fall than the S&P 500 index suffered on the day.