Johnson and Johnson 2015 Annual Report Download - page 78

Claims for personal injury have been made against Janssen Pharmaceuticals, Inc. and Johnson & Johnson arising out of the
use of XARELTO®, an oral anticoagulant. The number of pending product liability lawsuits continues to increase, and the
Company continues to receive information with respect to potential costs and the anticipated number of cases. Cases
filed in federal courts in the United States have been organized as a multi-district litigation in the United States District
Court for the Eastern District of Louisiana. In addition, cases have been filed in state courts across the United States and
many cases have been consolidated into a state mass tort litigation in Philadelphia, Pennsylvania. Class action lawsuits
also have been filed in Canada. The Company has established an accrual with respect to product liability litigation
associated with XARELTO®. Changes to this accrual may be required in the future as additional information becomes
available.
Intellectual Property
Certain subsidiaries of Johnson & Johnson are subject, from time to time, to legal proceedings and claims related to
patent, trademark and other intellectual property matters arising out of their businesses. Many of these matters involve
challenges to the coverage and/or validity of the patents on various products and allegations that certain of the Company’s
products infringe the patents of third parties. Although these subsidiaries believe that they have substantial defenses to
these challenges and allegations with respect to all significant patents, there can be no assurance as to the outcome of
these matters. A loss in any of these cases could adversely affect the ability of these subsidiaries to sell their products,
result in loss of sales due to loss of market exclusivity, and require the payment of past damages and future royalties, and
which may result in a non-cash impairment charge for any associated intangible asset. The most significant of these
matters are described below.
Medical Devices
In January 2010, Tyco Healthcare Group, LP (Tyco) and U.S. Surgical Corporation (now Covidien plc) filed a lawsuit
against Ethicon Endo-Surgery, Inc. (EES) in the United States District Court for the District of Connecticut alleging that
EES’s HARMONIC®shears infringed three Tyco patents. The case was tried in July 2012, and in March 2013, the Court
ruled that some of EES’s HARMONIC®shears infringed Tyco’s patents and ordered EES to pay damages of
approximately $176 million, but declined to order injunctive relief. EES appealed and in December 2014, the United
States Court of Appeals for the Federal Circuit reversed the District Court’s ruling and found all the asserted claims
invalid. In July 2015, Tyco filed a motion for review with the United States Supreme Court. In July 2014, Covidien filed
another patent infringement lawsuit against EES in the United States District Court for the District of Connecticut seeking
damages and a preliminary injunction, alleging that EES’s newest version of its harmonic scalpels, the HARMONIC ACE®
+ 7 Shears and the HARMONIC ACE®+ Shears, infringed the three Tyco patents asserted in the previous case. The
claims asserted by Covidien in this case are the same claims that were declared invalid in December 2014 by the Court of
Appeals in the Tyco case discussed above. In November 2015, the United States Supreme Court denied Tyco’s petition
for review; therefore, both cases have been dismissed.
In November 2007, Roche Diagnostics Operations, Inc., et al. (Roche) filed a patent infringement lawsuit against LifeScan,
Inc. (LifeScan) in the United States District Court for the District of Delaware, alleging LifeScan’s OneTouch®Line of
Blood Glucose Monitoring Systems infringe two patents related to the use of microelectrode sensors. Roche is seeking
monetary damages and injunctive relief. In September 2009, LifeScan obtained a favorable ruling on claim construction
that precluded a finding of infringement. Roche appealed and the Court of Appeals reversed the District Court’s ruling on
claim construction and remanded the case to the District Court for new findings on the issue. In December 2014, the
District Court ruled in LifeScan’s favor and reinstated the original claim construction. In February 2015, Roche appealed
the ruling, and in February 2016, oral argument took place at the Court of Appeals. The parties are awaiting a decision.
In June 2009, Rembrandt Vision Technologies, L.P. (Rembrandt) filed a patent infringement lawsuit against Johnson &
Johnson Vision Care, Inc. (JJVC) in the United States District Court for the Eastern District of Texas alleging that JJVC’s
manufacture and sale of its ACUVUE®ADVANCE®and ACUVUE®OASYS®Hydrogel Contact Lenses infringe their U.S.
Patent No. 5,712,327 (the ‘327 patent). Rembrandt is seeking monetary relief. The case was transferred to the United
States District Court for the Middle District of Florida. In May 2012, the jury returned a verdict holding that neither of the
accused lenses infringes the ‘327 patent. Rembrandt appealed, and in August 2013, the United States Court of Appeals
for the Federal Circuit affirmed the District Court’s judgment. Rembrandt asked the District Court to grant it a new trial
based on alleged new evidence, and in July 2014, the District Court denied Rembrandt’s motion. Rembrandt has appealed
the District Court’s denial of its motion for a new trial.
In December 2009, the State of Israel filed a lawsuit in the District Court in Tel Aviv Jaffa against Omrix
Biopharmaceuticals, Inc. and various affiliates (Omrix). In the lawsuit, the State claims that an employee of a government-
owned hospital was the inventor on several patents related to fibrin glue technology that the employee developed while he
66 •Johnson & Johnson 2015 Annual Report