A Medical Device Daily

As if a huge debt, a sagging share price, weakened sales and a variety of regulatory problems weren’t enough, a jury has ordered Boston Scientific (Natick, Massachusetts) to pay $431 million in damages to Dr. Bruce Saffran, a New Jersey radiologist who charged that the medical device maker’s drug-eluting stents (DES) infringe a patent that he received in 1997.

The jury award in U.S. District Court in Marshall, Texas, matches the amount of royalties that Saffran sought from sales of two Boston Scientific stents — the Taxus Express and the LIberte — from 2004 through last September, according to his attorney, Eric Albritton.

The total reflects an 8% royalty on U.S. sales, and a 6% royalty on foreign sales, Albritton said.

Boston Scientific’s Taxus Express DES is its top-selling product, available in the U.S. since 2004 and also sold globally. The Liberte is its next-generation DES product sold globally.

Boston Scientific issued a statement calling the verdict “unsupported by both the evidence and the law” and said it will seek to overturn the verdict in post-trial motions before the district court.” If this effort fails, it said it will appeal to the U.S. Court of Appeals for the Federal Circuit.

The company last week recorded a $365 million charge against its 4Q earnings to cover potential losses due to litigation involving the stents.

“We do not intend to record a charge at this time because we believe we will prevail on appeal,” Paul Donovan said.

Saffran, a radiologist from Princeton, New Jersey, received a patent in 1997 involving a medicated fabric coating to help repair bone fractures. The technology included a method to release medication within the body that Saffran argued works in much the same way as the drug coatings of DES devices.

While some bloggers this week termed Saffran a “patent troll” and suggested that the verdict will not stand, Gary Hoffman, an attorney for Saffran with the firm Dickstein Shapiro, told the Wall Street Journal that Saffran “is an independent inventor and his contributions to the advancement of medical technology needed to be recognized and rewarded.”

Saffran sued Boston Scientific in December 2005. Saffran did not request an injunction, so current sales of the stents are unaffected by the verdict.

“We think the verdict is well-supported in the law and in evidence,” Albritton said.

A similar patent lawsuit filed by Saffran is pending against Cordis (Miami Lakes, Florida), maker of the Cypher stent.

In other legalities:

• The Securities and Exchange Commission has filed a complaint in the U.S. District Court for the Southern District of Florida against William Williams for unlawful insider trading in Chemed (Cincinnati) securities.

Williams will pay $28,550 in disgorgement of illegal trading profits, plus $1,156 in prejudgment interest and a civil penalty equal to his illegal trading profits.

The SEC’s complaint charges that shortly before the April 30, 2007, post-closing public announcement regarding Chemed’s quarterly earnings and improved 2007 guidance, Williams used non-public information from a senior financial executive officer and then purchased Chemed stock, thus “realizing illicit profits” of about $28,550.

Chemed is the parent company of hospice service provider Vitas Healthcare (Scottsdale, Arizona).

• Aircraft Medical (Edinburgh, Scotland) reported that it has filed a Revocation Action against Verathon (Bothell, Washington), challenging the validity of its European Patent No. 1307131 (the ‘131 patent).

Aircraft manufactures the McGrath Series 5, which it says is the world’s first fully portable video laryngoscope, able to be carried in the pocket of a paramedic or mobile user. The company says that the McGrath Series 5 is expected to dominate the emerging video laryngoscope market.

Aircraft said it expects a counterclaim in the Edinburgh Court of Session action to result in the restriction or revocation of Verathon’s patent. Aircraft has also lodged defenses at the Court of Session challenging Verathon to set out the basis for its claim that Aircraft infringes the current ‘131 patent.

In related actions raised by Aircraft, the European Patent Office has found Verathon’s ‘131 patent not valid as granted, and the U.S. Patent Office has ruled in its re-examination of Verathon’s issued U.S. Patent (No. 6,543,447) that every claim is invalid.

Matt McGrath, chief executive at Aircraft, said, “Aircraft's non-infringement position is incontrovertible, and Verathon is simply attempting to hinder what is a fast moving and progressive area of medical technology. Today's counter action filed by Aircraft is good news for healthcare and puts further pressure on Verathon.