Johnson & Johnson: Whew! We Dodged a Bullet

Johnson & Johnson (NYSE:JNJ) won a Federal appeals court victory on Thursday that saved it $482 million from a patent infringement case ruling against its Cordis Corp subsidiary. The lawsuit–which was filed in 2007–alleged that Cordis Corp infringed on the patent of radiologist Bruce Saffron when it produced its Cypher brand stents.

A Texas jury found Cordis guilty in 2011. Cordis asked the judge to reconsider, but instead he added $111 million in interest, bringing the total to $593 million, according to the Chicago Tribune.

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J & J has since left the stent industry in 2011 as it became very competitive. Stents are tiny tubes inserted into clogged arteries to allow blood to flow normally through them. Unlike traditional, mesh stents, the Cypher brand stents were “drug-eluting,” meaning they were coated with medicine to stop the artificially opened arteries from clogging up again.

Besides the patent infringement case, a reason for J & J leaving the stent industry was that rival stent manufacturers like Abbot Laboratories started producing stents like Abbot’s Xience model that were “widely considered to be superior to Cypher,” according to the Chicago Tribune.

According to Bloomberg, the Federal appeals court found that the original verdict was flawed because it relied on incorrect definitions of key terms. Saffron’s patent was directed towards permeable barriers used to heal broken bones but his lawyers argued that that same technology was used in Cordis’s Cypher stents.

The technology Saffron patented was a continuous sheet wrapped around broken bones that could deliver drugs to the right location. However, the three judges that sat on the Federal appeals panel that overturned the verdict found that the technology used in the Cypher stents was “akin to paint on a chain-link fence, not a continuous sheet wrapped around the mesh, and open holes remain between the struts of the accused devices.”

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Cordis spokeswoman Sandy Pound said in an email that, “We are pleased the federal court of appeals reversed the jury’s decision and held that Cordis did not infringe [the] plaintiff’s patent.” On the other side of the case, the lead counsel for Saffron, Paul Taskier, said in an emailed statement that, “We are considering an appropriate course of further action.”

Since the US Supreme Court is unlikely to hear the case, this court decision is most likely final.

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