Stent Makers Settle Three Patent Disputes for $1.7 Billion


February 1, 2010

February 1, 2010 – Three patent disputes between Boston Scientific Corp. and Johnson & Johnson (J&J) were settled today with Boston paying $1.7 billion.

The disputes date back to 2003 and cover Boston Scientific’s Jang patent and J&J’s Palmaz and Gray patents, all of which involve intellectual property in the cardiovascular arena.

The first dispute involved a claim by J&J that Boston Scientific’s Express, TAXUS Express and Liberté 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. With the settlement deal, those trials will no longer take place.

The third dispute involved a claim by J&J that Boston Scientific’s TAXUS Liberté stent infringed its Gray patent. That matter was scheduled for trial in September, but will no longer take place.

“We have recently made a concerted effort to mitigate risk throughout the company, including litigation risk,” said Ray Elliott, president and chief executive officer 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. While we still have a number of litigation matters remaining, this recent settlement has materially reduced our financial risks going forward. We will continue to manage carefully our outstanding litigation, as part of our ongoing and comprehensive effort to reduce risk. 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 the company by J&J to be invalid. J&J alleged that Boston Scientific’s

PROMUS Everolimus-Eluting Coronary Stent System infringed on its Wright/Falotico patents. A trial on those patents, which was scheduled to begin Feb. 9, will not proceed.

Under the settlement, Boston Scientific will pay J&J $1 billion today and the balance on or before the first week of January 2011.

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