Boston Scientific slips $200m patent spat with stent pioneer Jang

Boston Scientific (NYSE:BSX) last week escaped a long-running royalties dispute with coronary stent pioneer Dr. David Jang that could have cost it $200 million.

Judge Virginia Phillips of the U.S. District Court for Central California found Sept. 29 that Jang’s claims covered previous patents, triggering the ensnarement defense barring a patentee from asserting a scope of equivalency that would encompass, or ensnare, the prior art.

The case dates back to 1999, when Jang won approval from the U.S. Patent & Trademark Office for a stent design featuring lateral struts. In 2002, Jang inked a deal worth up to $160 million to license the patents to Boston Scientific; Jang received $50 million up front, according to court documents, but only $10 million of the remaining $110 million in milestone payments.

Jang sued in 2005, alleging breach of contract and other claims. Boston Scientific denied the accusations and filed a counterclaim in 2006 “denying any obligation to make additional contingent payments to Jang on the ground that that the accused stents did not infringe,” and thus were not covered under the deal with Jang, according to court documents.

Phillips initially ruled that the Boston Scientific stents did not infringe the Jang patents, shooting down the breach of contract claim and deciding the other claims in Boston’s favor. After Jang appealed, the Federal Circuit in 2012 vacated the ruling and remanded it to Phillips.

A Patent Office re-examination in 2013 found the Jang patents invalid, prompting Marlborough, Mass.-based Boston Scientific to argue that it shouldn’t be required to pay royalties on invalid patents. Phillips denied that bid for summary judgment, ruling that Jang has the right to demand royalties covering the time up until Boston Scientific asked for the re-examination, according to court documents. Boston then filed its appeal asking the Federal Circuit to review the Phillips decision; the appeals court in September 2014 declined to hear the petition, setting the stage for the current trial.

In June a jury sent up a split verdict in the case, finding that Boston Scientific did not literally infringe the Jang patents, but did infringe under the doctrine of equivalents. That set the stage for the ensnarement defense and Phillips’ ruling last week.

This week, Boston Scientific submitted a proposed dismissal order to Phillips asking that Jang “shall take nothing in this case, and judgment is hereby entered in favor of BSC,” according to court documents.

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