Johnson and Johnson 2009 Annual Report Download - page 60

Medtronic, respectively. Medtronic paid $472 million in October
2008, representing the judgment, net of amounts exchanged in set-
tlement of a number of other litigations between the companies.
The net settlement of $472 million was recorded as a credit to other
(income) expense, net in the 2008 consolidated statement of earn-
ings. In September 2009, Cordis settled this case with Boston Scien-
tific together with the Kasenthofer/Fontirroche and Ding cases
described below, for a net payment of $716 million. As part of that
settlement Boston Scientific received a paid up license to the
Fontirroche family of patents worldwide and Cordis received a paid
license to the Kastenhofer and Ding families of patents worldwide
and the parties settled all pending lawsuits worldwide relating to
these patents. The receipt of $716 million, less the impact of other
litigation matters, resulted in a credit to other (income) expense, net
of $386 million in the fiscal fourth quarter of 2009. In addition, in
May 2009, Medtronic paid $270 million to settle additional patent
infringement claims asserted by Cordis based on its vascular stent
patents, which was recorded as a credit to other (income) expense,
net in the fiscal second quarter of 2009.
In January 2003, Cordis filed a patent infringement action
against Boston Scientific in Delaware Federal District Court accus-
ing its Express2™, Taxus® and Liberte® stents of infringing the Pal-
maz patent that expired in November 2005. The Liberte® stent was
also accused of infringing Cordis’ Gray patent that expires in 2016.
In June 2005, a jury found that the Express2™, Taxus® and Liberte®
stents infringed the Palmaz patent and that the Liberte® stent also
infringed the Gray patent. On March 31, 2009, the U.S. Court of
Appeals for the Federal Circuit affirmed this judgment. The case
was remanded to the district court for a trial on damages and will-
fulness. Cordis also filed a lawsuit in Delaware Federal District Court
in October of 2008 alleging that Boston Scientific’s sales of Taxus®
and Liberte® after June of 2005 infringes Cordis’ Gray patent. On
January 29, 2010, these cases together with the Jang case referred
to in the paragraph below, were settled. Under the terms of the set-
tlement, Boston Scientific paid Cordis $1.0 billion on February 1,
2010, and will pay Cordis an additional $725 million plus interest on
January 3, 2011. Cordis granted Boston Scientific a paid up world-
wide license under the Palmaz and Gray patents and Boston Scien-
tific granted Cordis a paid up worldwide license under the Jang
patents for all stents sold by Cordis except the 2.25mm size Cypher.
Cordis has several pending lawsuits in New Jersey and
Delaware Federal District Court against Guidant Corporation
(Guidant), Abbott Laboratories, Inc. (Abbott), Boston Scientific and
Medtronic alleging that the Xience V™ (Abbott), Promus™ (Boston
Scientific) and Endeavor® (Medtronic) drug eluting stents infringe
several patents owned by or licensed to Cordis. In one of the cases
against Boston Scientific, alleging that sales of their Promus™ stent
infringed Wright and Falotico patents, on January 20, 2010 the
District Court in Delaware found the Wright/Falotico patent invalid
for lack of written description and/or lack of enablement. Cordis
intends to appeal this ruling.
PATENT LITIGATION AGAINST VARIOUS
JOHNSON & JOHNSON SUBSIDIARIES
The products of various Johnson & Johnson subsidiaries are the
subject of various patent lawsuits, the outcomes of which could
potentially adversely affect the ability of those subsidiaries to sell
those products, or require the payment of past damages and
future royalties.
In July 2005, a jury in Federal District Court in Delaware found
that the Cordis CYPHER® Stent infringed Boston Scientific’s Ding
’536 patent and that the Cordis CYPHER® and BX VELOCITY®
Stents also infringed Boston Scientific’s Jang ’021 patent. The jury
also found both of those patents valid. In January 2009, the Court of
Appeals for the Federal Circuit held the Ding patent invalid and a
judgment in favor of Cordis in that case has been entered. In March
2009, the Court of Appeals for the Federal Circuit upheld the judg-
ment that Cordis’ CYPHER® Stent infringed Boston Scientific’s Jang
patent. The case has been remanded for a trial on the issues of dam-
ages and willfulness. The Jang case has been dismissed as part of
the January 2010 settlement described in the paragraph above
relating to the Express2™, Taxus® and Liberte® stents.
In Germany, Boston Scientific had several actions based on its
Ding patents pending against the Cordis CYPHER® Stent. Boston
Scientific also had brought actions in Belgium, the Netherlands,
Germany, France and Italy under its Kastenhofer patent, which
purports to cover two-layer catheters such as those used to deliver
the CYPHER® Stent. These cases have been settled as part of the
September 2009 settlement described above.
Trial in Boston Scientific’s U.S. case based on the Kastenhofer
patent in Federal District Court in California concluded in October
2007 with a jury finding that the patent was invalid. The jury also
found for Cordis on its counterclaim that sale by Boston Scientific of
its balloon catheters and stent delivery systems infringe Cordis’
Fontirroche patent. The Court has denied Boston Scientific’s post
trial motions. This case was settled as part of the September 2009
settlement described above.
In May 2008, Centocor, Inc. (Centocor) (now Centocor Ortho
Biotech Inc. (COBI)) filed a lawsuit against Genentech, Inc. (Genen-
tech) in U.S. District Court for the Central District of California seek-
ing to invalidate the Cabilly II patent. Prior to filing suit, Centocor
had a sublicense under this patent from Celltech (who was licensed
by Genentech) for REMICADE® and had been paying royalties to
Celltech. Centocor has terminated that sublicense and stopped
paying royalties. Genentech has filed a counterclaim alleging that
REMICADE® infringes its Cabilly II patents and that the manufacture
of REMICADE®, STELARA™, SIMPONI™ and ReoPro® also infringes
one of its other patents relating to the purification of antibodies made
through recombinant DNA techniques. The court has scheduled a
hearing for Summary Judgment Motions in August 2010.
In April 2009, a bench trial was held before the Federal District
Court for the Middle District of Florida on the liability phase of
Ciba’s patent infringement lawsuit alleging that Johnson & Johnson
Vision Care, Inc.’s (JJVC) ACUVUE® OASYS™ lenses infringe three
of their Nicholson patents. In August 2009, the District Court found
two of these patents valid and infringed and entered judgment
against JJVC. JJVC has appealed that judgment to the Court of
Appeals for the Federal Circuit. On March 22, 2010, the District
Court will hold a hearing on Ciba’s motion for a permanent injunc-
tion. If the judgment is upheld on appeal the Court will schedule
another trial to determine damages and willfulness.
In May 2009, Abbott Biotechnology Ltd. filed a patent infringe-
ment lawsuit against Centocor (now COBI) in the United States Dis-
trict Court for the District of Massachusetts. The suit alleges that
Centocor’s SIMPONI™ product, a human anti-TNF alpha antibody,
infringes Abbott’s ’394 patent (the Salfeld patent). The case has
been stayed pending the resolution of an arbitration filed by Cento-
cor directed to its claim that it is licensed under the ’394 patent. The
arbitration is scheduled for March 2010.
In August 2009, Abbott GmbH & Co. (Abbott GmbH) and
Abbott Bioresearch Center filed a patent infringement lawsuit
against COBI in the United States District Court for the District of
Massachusetts. The suit alleges that COBI’s STELARA™ product
infringes two U.S. patents assigned to Abbott GmbH. In August
2009, COBI filed a complaint for a declaratory judgment of non-
infringement and invalidity of the Abbott GmbH patents in the
United States District Court for the District of Columbia. On the
same date, also in the United States District Court for the District of
58 J O H N S O N & J O H N S O N 2 0 0 9 A N N U A L R E P O R T