Medical device maker Boston Scientific Corp. (BSX), Tuesday said the Court of Appeals has upheld the District Court's decision that Johnson and Johnson's (JNJ) Bx Velocity and Cypher Stent Systems infringed its patent.
Natick, Massachusetts-based Boston Scientific stated that Court of Appeals, while passing the decree, also declared its stent patent a valid one. The company said that Appeals Court reversed the District Court's decision with respect to the TAXUS Liberte Stent and instructed the latter to dismiss with prejudice the infringement claims against the same.
The Court of Appeals also affirmed the District Court's ruling that Boston Scientific's Express, TAXUS Express and Liberte Stents infringe one J&J patent and that the patent is valid.
Additionally, the Court also affirmed that Boston Scientific's Liberte Stent infringes a second J&J patent and that the patent is valid. The company said that damages will be determined in a future court proceeding.
The legal battle between the makers of heart stents - tiny scaffolds that prop open clogged arteries to relieve chest pain- dates back to a decade. The coronary artery stents which were first marketed in the United States in 1994 have grown into a multi billion dollar worldwide business in which profit margins reach as much as 80%. Considering the money at stake and the complex nature of the product, the business has become a major platform for litigations among all the players involved.
The manufacturer of stents avoids public comments on litigations to ensure that their legal strategies are not disclosed. Major think tanks believe that none of these litigations is likely to be resolved soon. The uncertainty and legal costs corner small players to be acquired by the behemoths.
Similar cases have come up in the past as well. Earlier in 2007, Canadian company evYsio Medical Devices sold exclusive rights to stent design patents to Medtronic. An evYsio patent became the basis for an injunction in France against the sale of the Xience V heart stent from Abbott Laboratories.
Trouble brews when a medical device company claim using different anti-inflammatory compounds on drug-coated stents. As of now, the biggest battle centers on Boston Scientific and Johnson & Johnson. Johnson & Johnson entered the business in 1988 by first licensing a bare-metal stent that Palmaz developed with the help of a cardiologist Richard Schatz. Later in 1998, Palmaz sold complete control of all his patents to Johnson & Johnson.
Control of stent technology has become a prime issue in several nonpatent law suits as well. In 2001, Medinol, an Israeli company sued Boston Scientific with a multibillion-dollar claim in federal court in New York for breach of contract. Boston Scientific ultimately paid $750 million in 2005 to settle the lawsuit.
Earlier in January 2009, Johnson & Johnson won an important round against Boston Scientific Corp. Experts believe that while money involved is a prime issue, the complexity of the instrument is also a factor.
Jim Tobin, President and CEO of Boston Scientific said, We are gratified the appeals court upheld the finding that the BX Velocity and Cypher stents infringe our patent and the patent is valid, and we are pleased the infringement claims against the TAXUS Liberte stent were dismissed with prejudice. We consider the outcome of this appeal to be highly positive.
Boston Scientific closed Tuesday's regular trading at $7.95, down $0.01 or 0.13% on a volume of 10.54 million shares on the NYSE.
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