Boston Scientific Settles Longstanding Patent Disputes With J&J
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February 1, 2010 -- Natick, Mass. --
Boston Scientific Corporation (NYSE: BSX) today announced the settlement
of three patent
disputes with Johnson & Johnson (J&J). 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. Boston Scientific will make a $1.725 billion payment to J&J in
connection with the settlement.
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. Those trials will no longer
take
place.
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; that trial also 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 its Wright/Falotico patents. A trial
on those patents, which was scheduled to begin February 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. 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.
Boston
Scientific is a worldwide developer, manufacturer and marketer
of medical devices whose products are used in a broad range of interventional
medical specialties. For more information, please visit: www.bostonscientific.com.
Cautionary Statement Regarding Forward-Looking Statements
This
press release contains forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements may be identified by words like "anticipate," "expect," "project," "believe," "plan," "estimate," "intend" and
similar words. These forward-looking statements are based on our
beliefs, assumptions and estimates using information available to
us at the time and are not intended to be guarantees of future events
or performance. These forward-looking statements include, among other
things, statements regarding litigation, intellectual property, liquidity,
debt management and risk mitigation. If our underlying assumptions
turn out to be incorrect, or if certain risks or uncertainties materialize,
actual results could vary materially from the expectations and projections
expressed or implied by our forward-looking statements. These factors,
in some cases, have affected and in the future (together with other
factors) could affect our ability to implement our business strategy
and may cause actual results to differ materially from those contemplated
by the statements expressed in this press release. As a result, readers
are cautioned not to place undue reliance on any of our forward-looking
statements.
Factors that may cause such differences include, among other
things: future economic, competitive, reimbursement and regulatory
conditions; new product introductions; demographic trends; intellectual
property; litigation; financial market conditions; and, future
business decisions made by us and our competitors. All of these factors
are
difficult or impossible to predict accurately and many of them
are beyond our control. For a further list and description of these
and
other important risks and uncertainties that may affect our future
operations, see Part I, Item 1A - Risk Factors in our most
recent Annual Report on Form 10-K filed with the Securities and Exchange
Commission, which we may update in Part II, Item 1A - Risk Factors in
Quarterly Reports on Form 10-Q we have filed or will file hereafter.
We disclaim any intention or obligation to publicly update or revise
any forward-looking statements to reflect any change in our expectations
or in events, conditions, or circumstances on which those expectations
may be based, or that may affect the likelihood that actual results
will differ from those contained in the forward-looking statements.
This cautionary statement is applicable to all forward-looking statements
contained in this document.
Source: Boston Scientific
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