Boston Scientific: Court Refuses Johnson & Johnson Subsidiary’s Patent Appeal

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Boston Scientific’s Guidant LLC unit was charged with over-billing private hospitals in the US for defibrillators and heart pacemakers. (Photo: Vangelis Thomaidis)
Boston Scientific’s Guidant LLC unit was charged with over-billing private hospitals in the US for defibrillators and heart pacemakers. (Photo: Vangelis Thomaidis)

BUSINESS

  • US Court of Appeals concurs with Delaware infringement ruling
  • Boston Scientific paid out $9.25 million in Guidant lawsuit for over-billing
  • Lobbying costs for Boston Scientific stand at $810,000 to date in 2011

A federal appeals court ruled against Johnson & Johnsons’s Cordis unit’s appeal for a lower court ruling that had found Boston Scientific Corp did not infringe upon one of Cordis Corp’s patents. The original court hearing, in Delaware, ruled against Cordis’s claim that Boston Scientific had infringed a patent protecting an expandable metal stent granted in 1999. The US Court of Appeals for the Federal Circuit, headquartered in Washington, concurred with the Delaware court ruling.

The ruling is good news for the medical leader who recently shelled out $9.25 million in a lawsuit that charged Boston Scientific’s Guidant LLC unit with over-billing private hospitals in the US for defibrillators and heart pacemakers.

Ex-sales agent Robert A. Fry, who filed the lawsuit, received close to $2.5 million in the ruling.

It was alleged that Guidant failed to respect US Department of Veterans Affairs credit repayments for replacing devices under guarantee and that the company over charged hospitals for the units, which meant that hospitals in turn over charged Medicare.

Boston Scientific Pays Out $810,000 in Lobbying Costs

Also contributing to an expensive year for Boston Scientific, the second fiscal quarter of 2011 saw the company rack up a $410,00 bill lobbying legal constraints on its medical implant trade. Lobbying expenses rose from the company’s first-quarter bill of $400,000, but represented $70,000 less spending than the second quarter of 2010.

Boston Scientific’s lobbying was against a health care bill clause involving a tax of close to 2.5% on specified implants. The tax, effective from 2013, is intended to generate revenues in excess of $20 billion over a ten-year period, expected to fund health insurance to people currently going without cover.

While the medical industry has voiced concerns that the tax levied on their devices will lead to job losses to counteract higher expenses, government officials say the move will prove positive for medical device companies in the long-term because extended cover will mean more business as a greater number of patients will be able to afford the devices.

The Food and Drug Administration’s medical device review system also contributed to Boston Scientific’s lobbying bill. The company is reacting to changes in the FDA review system.

Though the FDA has traditionally approved devices closely matching already existing units on the market more quickly than brand new devices, it has been overhauling its system. The FDA has been coming under fire for approval of devices deemed too speedy to have gone through satisfactorily thorough medical testing.

Boston Scientific claimed the FDA’s device review system is already too lengthy, driving up costs before devices can gain access to the market.

Boston Scientific has lobbied on a range of issues in 2011 including trade, patent, and educational matters. Targets for the company’s lobbying include the Patent and Trademark Office, and the FDA.

Key Statistics – Global Intellectual Property (source: World Intellectual Property Organization; as of September 2011)

  • Intellectual property protection applications filed by India, Japan, china and the Republic of Korea represent close to 40% of overall applications.
  • International trademark registrations under the World Intellectual Property Organization rose 4.5% in 2010 and the preceding year, to 37,500.
  • China represented half of the overall number of industrial design trademark applications filed in 2009, up over 12% on 2008.
  • Trademark applications from China grew at a rate of almost 21% between 2008 and 2009.

By Ellsy O'Neill for
Ellsy O'Neill is a Paris-based writer, proofreader and translator. She covers industry, culture and current affairs.

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