Court disallows two patents in Medtronic-Boston Sci suit

A federal judge said the Fridley medical device maker misled the patent office. The $186 million award was cut by 90 percent.

By SUSAN DECKER, Bloomberg News

Last update: August 29, 2008 - 9:14 PM

A federal judge on Friday threw out two of the three patents at the center of a Medtronic Inc. lawsuit against Boston Scientific Corp. -- a decision that slashed the damages Boston Scientific would have to pay by almost 90 percent.

Medtronic improperly obtained the two patents by misleading the U.S. Patent and Trademark Office, U.S. District Judge T. John Ward ruled in Marshall, Texas. His opinion will cut the jury award to Medtronic to about $19 million, Boston Scientific said in a prepared statement. Medtronic, based in Fridley, said it will appeal.

A jury had found that Boston Scientific infringed three Medtronic patents for balloon catheters and systems to insert heart stents that prop open arteries after they are cleared of fat. The jury originally awarded $250 million, an amount later reduced to $186 million.

Boston Scientific, based in Natick, Mass., with stent operations in Maple Grove, said it will appeal the remaining $19 million.

In his ruling, Ward said an in-house patent agent for Medtronic purposefully withheld information about earlier inventions, called prior art, that could have affected the analysis by the patent examiner. He rejected Medtronic's argument that the information wasn't important and said the action "exceeds that of gross negligence."

Shares of Boston Scientific fell 28 cents Friday, or 2.2 percent, to close at $12.56. Medtronic fell 61 cents, or 1.1 percent, to $54.60.

Medtronic's patent agent "cultivated deliberate ignorance of what a reasonable examiner would consider material art," Ward ruled. "To hold otherwise would condone, and in fact encourage, those with a duty of candor to act in such a manner."

The only appropriate punishment for Medtronic's actions, he said, is to prevent the company from enforcing the patents -- against Boston Scientific or anyone else.

Review is underway

Medtronic spokesman Joe McGrath said the company is "in the process of reviewing the ruling in detail as part of evaluating our options for appeal."

"We respectfully disagree with the court's finding, and remain confident in the enforceability" of the two patents, McGrath wrote in an e-mailed statement.

Medtronic is pleased that the judge rejected Boston Scientific's request to also find the third patent unenforceable, he said.

Award cut to $19.1 million

With that patent, Ward had earlier thrown out infringement claims involving some of the catheter models sold by Boston Scientific.

The jury had awarded $83 million in damages on the patent, and the award was cut to $19.1 million after the judge said the two most popular of the nine catheter models in the case didn't use the Medtronic invention.

The lawsuit in Texas is one of five between the two device makers.

Medtronic this month sued Boston Scientific and Abbott Laboratories, accusing the companies of infringing a stent patent.