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In 2002, Boston Scientific Corporation, Boston Scientific Scimed, Inc., Scimed Life Systems, Inc., and Schneider (Europe) GmbH (collectively BSC) sued Johnson & Johnson and its Cordis subsidiary for infringement of several balloon catheter technology patents known as the Kastenhofer patents. Cordis counterclaimed that BSC was infringing three of Cordis’s balloon catheter technology patents known collectively as the Fontirroche patents. In October 2007, a jury trial was held on the matter, after which the jury found that BSC had infringed Claim 7 of Cordis’s Fontirroche patent. The jury also found for Cordis on its contention that BSC’s Kastenhofer patents were invalid, among other things.

After the trial, Cordis sought a judgment on the issue of damages resulting from BSC’s infringement of the Fontirroche patent. The Court found that it would be appropriate to award Cordis equitable relief in the form of either an injunction or an ongoing royalty. To determine the reasonable ongoing royalty to be awarded to Cordis, an evidentiary hearing was held on 2 February 2009.

Cordis retained NERA Senior Vice President Dr. Lawrence Wu to provide economic analysis and testimony concerning the reasonable ongoing royalty to be awarded to Cordis. At the February 2009 hearing, Dr. Wu explained in his testimony that he considered the time it would likely take for BSC to obtain FDA approval of a non-infringing catheter, the nature of competition between Cordis, BSC, and other manufacturers of drug-eluting stents, and Cordis’s capacity to ramp up its manufacturing and sell its products if, hypothetically, BSC were unable to sell its infringing products. Based on his analysis, Dr. Wu concluded that a reasonable royalty for ongoing, post-verdict sales would fall between 5.1 percent and 14.8 percent and that 6 percent would be a reasonable outcome to the hypothetical negotiation. In contrast, BSC’s expert testified that the reasonable royalty would fall between 0.07 percent and 14.8 percent and that a reasonable outcome would be 0.5 percent.

On 9 April 2009, US District Judge Susan Illston found that a reasonable royalty to be awarded to Cordis is 5.1 percent of sales of infringing BSC catheters sold alone or as part of a stent delivery system. Importantly, the Court concluded that the jury finding of infringement by BSC would have strengthened Cordis’s bargaining position had the parties entered into a negotiation at the time of the jury verdict. As Judge Illston states in her opinion, Cordis would have had greater bargaining power because both parties would have known that Cordis could have forced BSC’s infringing product off the market for at least a limited period of time. Judge Illston’s ruling is an important one as there are only a handful of court decisions that touch upon post-verdict remedies after a finding of patent infringement and validity.