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A Heartfelt Agreement: Boston Scientific and J&J Settle for $1.7 Billion

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By Tanya Roth, Esq. on February 03, 2010 1:08 PM

Today, Boston Scientific, a medical devices company, announced in a press release a major settlement with rival Johnson & Johnson over patent infringement claims on coronary stents. Boston Scientific has agreed to pay J&J $1.7 billion this year, with the initial payment of $1 billion made today and the balance to be paid by this time next year. Stents are the tiny mesh cylinders inserted in blood vessels to keep them propped open after blockages are cleared.

The claims settled by today's agreement can be traced back to a 2003 suit brought by J&J claiming that Boston Scientific's stents infringed on its patents and a competing claim by Boston Scientific that J&J's stents infringed on its own patents. According to a report by the New York Times, the liability phase of the patent trial found J&J's own attorneys arguing that it's product could not possibly be an infringing device because it caused blood clots, while the Boston Scientific product allegedly did not. This tortured logic was used to little or no effect, as in 2005, juries found that both companies had infringed on the patents of the other.

This strange sounding conclusion is possibly just one side effect of what some have termed a "patent thicket." As described by TechDirt in a blog on burgeoning IP laws in the developing markets of India and China, a patent thicket is "a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology." As TechDirt points out, ownership rights can encourage innovation, but too much ownership will stifle it. According to the Times, the stent market has been ripe for such a thicket to thrive, as it is one where small adjustments can have potentially important therapeutic effects. Hence, many patents are granted for similar devices, providing fertile ground for competing claims. 

Today's settlement may well have hacked a sizable hole in the stent claims thicket linking Boston Sci and J&J. According to the press release from Boston Scientific, in the past year, the company has settled 17 suits with J&J as well as additional suits with other companies and the U.S. government. "We believe today's settlement -- while substantial -- is in the best interest of the company and its shareholders,'' Boston Scientific's President and CEO Ray Elliott said in a released statement.

The global market for coronary stents has been predicted to reach $7.2 billion by 2012.

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