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February
5,
2010 -- 8:40pm EST
Patent Spending
Big money surrounding legal issues for cars
and stents this week. But most of us have only heard about
the car part: Toyota,
that
is. Current estimates
of Toyota's cost to make good on its brake problems run
anywhere
from one
to
two
billion dollars! And the company's fortunes
have been raked over the headlines in mythic proportions,
such as "fall
from grace" and "payback
for stealing fire from the gods".
But no such hyperbole for this week's stent news.
Instead, on Monday, Boston
Scientific announced (rather quietly) that, rather than go to jury
trial later this month on
patent disputes with Johnson & Johnson / Cordis that date back
to 2003, they've decided to just settle everything
-- for a mere $1.725 billion!
Consider that this price tag is the same quantum as
Toyota's hit, and consider that, as the Wall
Street Journal points out, not only is this amount almost double
J&J's total 2009 sales of drug-eluting stents, it may eclipse
Boston's as well. So one might wonder why, other than a few
scattered articles in the business press, there's
been so little publicity regarding
this
major concession. After all, these disputes have been in the courts
for years, and many millions already have been spent on lawyers'
fees, etc.
One can only assume that Boston Scientific foresaw a
worse outcome from a jury trial and so, decided on the option of
settlement. Perhaps the company saw the futility of trying to challenge
the original stent patents of Palmaz and Gray, patents that time
and again have been upheld. But a worse outcome than $1.725 billion?
Julio
Palmaz, inventor of the original stent design, told me recently that,
if you wanted to be an inventor, you'd better
be prepared to spend a lot of time in court. Over the past two decades,
Palmaz spent years sitting in courtrooms all over the world.
In fact, he sold his patents to J&J in 1998 partly to eliminate
the suspicion of personal gain when he testified on behalf of his
invention. As he told the New York Times in a
2007 profile:
"I see my life in three phases. The
early years in the lab, the middle years on the road training
physicians, and the last third in court."
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Ray Elliott, Boston's new CEO, stated that the company
settled to "mitigate risk" and to resolve "major litigation
without exposing Boston Scientific to the uncertainties of a jury
trial and
a potential damages award that was impossible to predict." But the
price tag is very high and a stock analyst, quoted
in Tuesday's WSJ,
opined, "We
think most investors will be surprised and concerned," by the new deal.
As for Dr. Palmaz, he will no doubt be relieved at being
able to spend February and March elsewhere.
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