Bos Sci settles long-standing stent patent disputes with J&J for $1.7B
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The disputes date back to 2003 and cover Boston Scientific's Jang patent and J&J's Palmaz and Gray patents, which involve intellectual property covering cardiovascular stents.
According to Boston Scientific, the first dispute involved a claim by J&J that Boston Scientific's Express, Taxus Express and Liberte stents infringed its Palmaz and Gray patents. The second involved a claim by Boston Scientific that J&J's Cypher, BX Velocity and Genesis stents infringed its Jang patent.
In 2005, there were liability trials on these two matters, and both parties were found to have infringed the other's patents. Those findings were upheld on appeal. Damage claims from these two rulings were scheduled to be decided by two jury trials slated for this month in U.S. District Court in Delaware. The third dispute involved a claim by J&J that Boston Scientific's Taxus Liberte stent infringed its Gray patent. That matter was scheduled to be tried in September.
The pending trials will no longer take place, said the Natick, Mass.-based Boston Scientific.
"We have recently made a concerted effort to mitigate risk … including litigation risk," said Ray Elliott, president and CEO of Boston Scientific. "In the past year, we have significantly reduced the volume of outstanding litigation, having now settled 17 lawsuits with J&J, as well as disputes with other competitors and the government. We believe today's settlement—while substantial—is in the best interest of the company and its shareholders.”
“It resolves major litigation without exposing Boston Scientific to the uncertainties of a jury trial and a potential damages award that was impossible to predict,” Elliot continued. “While we still have a number of litigation matters remaining, this recent settlement has materially reduced our financial risks going forward. With the resolution of these matters, there are now no material judgments or jury verdicts pending against the company."
In addition to the matters resolved in the settlement, the District Court last month found all four patents in a lawsuit brought against Boston Scientific by J&J to be invalid. J&J alleged that Boston Scientific's Promus everolimus-eluting stent system infringed its Wright/Falotico patents. A trial on those patents, which was scheduled to begin Feb. 9, will not proceed.
Under the settlement, Boston Scientific said it will immediately pay $1 billion and the balance on or before the first week of January 2011. The company plans to post a $745 million letter of credit, which will cover the $725 million balance and interest. The payments will not have an appreciable impact on the company's debt covenants. After the payments, the company will still have significant liquidity under its credit facilities, and it continues to expect to refinance its 2011 debt maturities in the middle of this year. The company expects to fund the $725 million remaining balance from cash on hand, unless it refinances at an earlier date.