Boston Scientific (NYSE:BSX)was dealt another setback this week after an appeals court declined to review a lower court’s decision denying summary judgment in a royalties dispute with 1 of the pioneers of coronary stents.
The case dates back to 1999, when Dr. David Jang won approval from the U.S. Patent & Trademark Office for patents covering a stent design featuring lateral struts linking parts of the stent. 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 in the U.S. District Court for Central California, alleging breach of contract and other claims. BSX 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.
Judge Virginia Anne Phillips 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 BSX’s favor. After Jang appealed, the Federal Circuit in 2012 vacated the Phillips ruling and remanded the case back to the Central California court.
A Patent Office re-examination last year 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.
"As a general proposition, our court grants interlocutory review in these multi-faceted patent cases only rarely. In this case, we decline to grant such review. There are several reasons why this case is not appropriate for such review. It is not clear that the legal issues identified in the questions will in fact be controlling, and each question depends on the resolution of factual issues not yet addressed by the district court," Judge Richard Linn wrote for the court. "Without taking any position on the merits of the issues presented, we conclude that the limited circumstances under which an interlocutory appeal might be permitted are not met in this case."
That sets the stage for trial "at the earliest opportunity," according to Phillips, who stayed the trial until the Federal Circuit’s decision on the appeal.
