2 March 2009IEOR 190GVivian Tang

Background Boston Scientific Bruce Saffran Drug-Eluting Stent

Technology Patent Case Verdict

Boston Scientific Corporation (BSC), is a worldwide developer, manufacturer and marketer of medical devices whose products are used in a range of interventional medical specialties, including interventional cardiology, peripheral interventions, neuromodulation, neurovascular intervention, electrophysiology, cardiac surgery, vascular surgery, endoscopy, oncology, urology and gynecology.

Boston Scientific is well known for the development of the Taxus Stent, a drug-eluting stent which is used to open clogged arteries.

Boston Scientific's main competitors are Johnson & Johnson, Medtronic, and St. Jude Medical. The company recently acquired longtime competitor Guidant for approximately $27 billion. The former Guidant was split between BSC and Abbott Laboratories.

Bruce Saffran, MD, PhD. is a board certified radiologist who trained in Interventional Neuroradiology at Massachusetts General Hospital and the Harvard University Hospitals. He performs all aspects of general and interventional radiology, and has a certificate of added qualification in neuroradiology.

Sometimes referred to as a “coated” or “medicated” stent, a drug-eluting stent is a normal metal stent that has been coated with a pharmacologic agent (drug) that is known to interfere with the process of restenosis (reblocking).

So far, the drug-eluting stent has been extremely successful in reducing restenosis from the 20-30% range to single digits.

There are three major components to a drug-eluting stent: Type of stent that carries the drug coating Method by which the drug is delivered (eluted) by

the coating to the arterial wall (polymeric or other) The drug itself – how does it act in the body to

prevent restenosis?

In addition, there are several decisions made by the interventional cardiologist that result in a successful stent placement, whether of the drug-eluting or bare metal variety: Correct sizing of the stent length to match the length of the lesion,

or blocked area Correct sizing of the stent diameter to match the thickness of the

healthy part of the artery Sufficient deployment of the stent, making sure that the stent, once

placed at the optimum site in the blocked artery, is expanded fully to the arterial wall – under-expansion can result in small gaps between the stent and arterial wall which can lead to serious problems such as blood clots, or Sub-Acute Thrombosis (SAT)

United States Patent No. 5,653,760 Method and Apparatus for Managing

Macromolecular Distribution Inventor(s): Saffran; Bruce N. (Brookline, MA)

1. Single-layered, flexible, minimally-porous sheet having macromolecular restrainment means

4. Interfragmentary space or chamber

5. Minor fracture fragment6. Staple7. Major fracture fragment

1. Single-layered, flexible, minimally-porous sheeting having macromoleclar restraining means

12. Treating material affixed to single-layered flexible, minimally-porous sheet

18. Atherosclerotic plaque

The TAXUS® Liberté® Paclitaxel-Eluting Coronary Stent System is engineered specifically for consistent drug elution and impressive performance. Enhanced deliverability features allow access to the target lesion, because first you have to get there. Uniform stent geometry

promotes even and consistent neointimal coverage

Thin struts and enhanced stent delivery system improve deliverability

Proven performance of paclitaxel supported by the rigor of the TAXUS clinical program

Unique Uniform Cell Geometry •Supports even drug delivery and distribution •Provides uniform vessel coverage for arterial support •Reduces gaps in drug concentration loaded on the stent

Prosecution:Dr. Bruce Saffran

represented by Dickstein Shapiro and Eric Albritton

Defense:Boston Scientific

represented by Kenyon & Kenyon, along with Melvin Wilcox and Melissa Smith

Saffran's patent claims have application to bone or coronary stents.

Bone stents accelerate healing from a fracture. Heart stents are mesh tubes that prop open coronary arteries after they have been surgically cleared of fatty plaque.

Boston Scientific and Cordis, a unit of Johnson & Johnson, dominate the market for stents, coated with drugs which release to accelerate healing and prevent post-surgical scar tissue from creating new coronary blockages.

Patent disputes over stents are common; the claims are over small differences in stent design and the drugs they are coated with.

Over a decade ago, radiologist Dr. Bruce Saffran invented a drug-eluting porous sheet, and was granted 5,653,760.

Boston Scientific liked the idea. Imitation resulted in flattery costing $431.9 million: an 8% royalty on U.S. sales, and 6% on foreign sales, from 2004 through last

September. The award was reputedly the sixth largest in history.

BSC raised the affirmative defenses of non-infringement and invalidity.

After jury trial, the jury determined that defendant BSC infringed, directly and/or contributorily, claims 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 13, 15, 16, 17, and 18 of Saffran’s patent, but did not find that any of the asserted claims were invalid.

The jury awarded, and the district court affirmed in a subsequent Final Judgment on February 14, 2008, reasonable royalty of $431.87 million in actual damages, and $69.39 million in pre-judgment interest, for a total award of $501.26 million.

yes on infringement, no question on willfulness, and no on invalidity

$501.26 million

BSC then filed a motion for new trial on damages. Specifically, BSC argued that the damages verdict was against the great weight of the evidence. The crux of BSC’s position is that Saffran’s damages theory was largely based on the assumption that the subject matter claimed in the patent was a significant invention that is necessary to make a drug-eluting stent. BSC claimed that it provided evidence and testimony that more than one hundred companies chose not to license the patent and that Saffran made no significant contributions to the industry.

But the district rejected BSC’s arguments, stating that the verdict was not against the great weight of the evidence. Both parties provided evidence and testimony supporting their positions. The jury found Saffran’s evidence more credible and the court may not supplant its judgment for the jury’s verdict where the evidence in the record can support the jury’s verdict.

BSC further asserted that Saffran was allowed to offer evidence that BSC willfully infringed the ‘760 patent, but that BSC was not able to rebut that testimony. The district court however rejected this argument, stating that BSC failed to show that the district court precluded it from offering rebuttal testimony or evidence.

BSC also alleged that the district court committed error by not including BSC’s proposed curative instruction in the court’s final instructions to the jury. However, BSC never raised that objection to the court’s jury instructions at trial. Consequently, BSC waived its objection.

Additionally, BSC asserted that the district court made prejudicial comments to the jury concerning BSC’s trial misconduct. Again, the district court rejected this argument, stating that it had never had counsel so recklessly disregard its orders before trial. The district court repeatedly warned BSC against violating its orders, but counsel for BSC paid little, if any, heed to the court’s instructions and warnings. BSC repeatedly violated the district court’s orders warranting an instruction from the court. BSC failed to timely amend its invalidity contentions, tried to elicit improper opinion testimony from fact witnesses, and exceeded the scope of direct examination on cross-examination. BSC made a strategic decision not to present evidence to the jury in its invalidity case.

At trial, BSC repeatedly violated the court’s orders in limine despite repeated warnings from the district court. In an effort to guarantee compliance with the court’s orders, the court notified the jury that BSC had violated the court’s orders. During final jury instructions, the court instructed the jury that it, not the court, was the sole fact finder in this case and that the jury should not construe any comments to indicate any view of the court as to which party should or should not win the case.

On the basis of the foregoing, the district court denied BSC’s motion for new trial, and maintained the jury award of $501.26 million in favor of Saffran.

http://www.bloomberg.com/apps/news?pid=20601103&sid=awTNwLYjJbX4&refer=us

http://online.wsj.com/article/SB120282536325262165.html?mod=MKTW&ru=MKTWhttp://www.stent.com/home

http://www.google.com/patents?id=H4cfAAAAEBAJ&printsec=abstract&zoom=4&dq=5,653,760#PPA1,M1

http://www.lawupdates.com/summary/tx_district_court_denies_boston_scientifics_motion_to_overturn_501m_jury_aw

http://www.iht.com/articles/2008/02/12/business/stent.php