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In 1986, Johnson & Johnson acquired patent rights to a medical device that would ultimately revolutionize the treatment of coronary artery disease. Dr. Julio Palmaz had invented the device, a stent, which is used to open and keep open clogged arteries in patients with heart disease. Johnson & Johnson invested $100 million in the development of the device, including sponsoring two clinical trials. After the U.S. Food and Drug Administration in 1994 approved their use in coronary arteries, stents produced by Johnson & Johnson’s Cordis Corp. unit swiftly claimed 90 percent of the worldwide market. Three years later, as other companies began developing versions of stents, Cordis’ share of the stent market dropped to less than 10 percent of the market. Johnson & Johnson/Cordis then sued three rivals for patent infringement. In a flurry of decisions in late 2000, Cordis won two of the largest-ever patent infringement jury awards — $324.4 million against Boston Scientific Corp. — Cordis Corp. v. Boston Scientific Corp., No. 97-550-SLR (D. Del.) — and $271.1 million against Medtronic AVE Inc. — Cordis Corp. v. Medtronic AVE Inc., No. 97-550-SLR (D. Del). These patent verdicts illustrate two of the clearest trends in jury verdicts in 2000: Jury awards overall were up substantially, and the most significant rise involved IP cases. And the biggest wins of the year, however, may have been in Johnson & Johnson’s stent victories. Certainly, few trials were more intense. Four separate trials — two on infringement and two on damages — were conducted back-to-back-to-back-to-back in the same Delaware courtroom before the same federal judge. One jury handled the claim of Johnson & Johnson/Cordis against Boston Scientific. Another jury handled the claims of Johnson & Johnson/Cordis against Medtronic AVE. But the same team of lawyers handled all the trials for Johnson & Johnson, with lead counsel Gregory L. Diskant and William F. Cavanaugh Jr. of New York’s Patterson, Belknap, Webb & Tyler working under a tight time limit. They tried the Medtronic case with colleagues Scott Howard and Michael Timmons and the Boston Scientific case with Eugene Gelernter, Howard and Timmons. In the trial against Medtronic, each side was limited to 25 hours to present its case. In the Boston Scientific case, the limit was 27 hours. In the damages portion, parties were limited to 10 hours each in both the Boston Scientific trial and Medtronic trials. The effect, said Diskant, was like “running four consecutive marathons” at sprint speed. “Most trials have down time, where you can catch your breath,” he says. With these trials, “We were constantly shifting gears and worrying about the next step,” he says. The claims against the individual defendants involved the same basic invention, a small, metal cage placed in a coronary artery near the heart (see illustration). The advent of the stent marked a substantial advance in angioplasty, Diskant says. In angioplasty, a small balloon at the end of a catheter was inserted in the artery and inflated, crushing any plaque. But plaque was able to build up again, and the tissue wall could collapse. To solve the problem, Dr. Palmaz came up with the idea of placing a tiny metal cage on top of the balloon. As the balloon expands, the cage expands, too. But when the balloon is deflated, the cage stays open, providing permanent support for the artery, whose new openness also discourages plaque buildup. Palmaz came up with the idea in the late 1970s and began developing it on his own in the early 1980s, first filing for a patent in November 1985. That year, Palmaz teamed up with a cardiologist, Dr. Richard Schatz, who “came up with an idea on how to make the stent more flexible,” said Diskant. Palmaz’s stents were rigidly connected; Schatz developed flexible connectors between segments. Johnson & Johnson acquired rights to the patents in 1986. In 1991, the invention was approved for use in peripheral arteries. In 1994, it was approved for use in coronary arteries. Johnson & Johnson had sponsored two major clinical trials of the device. When the New England Journal of Medicine published results of the trials in August 1994, the FDA swiftly approved the Palmaz/Schatz stent. Johnson & Johnson had half a billion dollars a year in sales by 1996, according to Diskant. THE BOTTOM FALLS OUT Then three rival companies began selling their own stents: Medtronic AVE, Boston Scientific and Guidant Corp. In October 1997, Johnson & Johnson/Cordis filed patent infringement actions against Medtronic, Boston Scientific and Guidant. “All of their products, we alleged, used the basic idea developed by Dr. Palmaz,” Diskant says. Guidant settled last year on confidential terms. Discovery was consolidated for all the cases, but Johnson & Johnson determined not to try the patent infringement charges in one trial. “We thought it was too complex to have both defendants in one trial,” recalls Diskant. In addition, while Johnson & Johnson was claiming infringement on the Palmaz/ Schatz patents in both trials, there were differences in the claims. The lawsuit against Boston Scientific, for instance, also involved another set of patents, covering “an improved kind of connector,” he says. Trying both cases at the same time, he adds, would have been a nightmare when it came to the damages phase. The first trial concerned the infringement claim against Medtronic. In trying a case such as this, with a time constraint, Diskant says, he divided the case in half. The first half was devoted to the opening statement and the direct case-in-chief. The attorneys planned to use no more than 12 to 13 hours for this portion of the trial, he says. “I wanted to save at least half of the time for the cross of their witnesses and summation.” To prevent going over the limit before making all the necessary points, he says, “I kept an eye on my watch at all times and checked with the court clerk several times a day.” The trial team, Cavanaugh adds, “had a paralegal keep precise track of how much time we had.” During the infringement phase against Medtronic, Diskant says, “we were running long on direct.” As a result, he says, “We decided that in every cross, to do half of what they did in direct.” The time constraints, Diskant believes, did not put any unusual burdens on the plaintiff. “It’s a wonderful discipline. Any complex case is full of nuance,” he says, “but in many ways, these nuances are just window dressing.” The time limits “force you to focus on what’s important.” The defendants weren’t quite as sure about the fairness of time limits in such a complex matter, says Medtronic attorney William Wallace of the Washington, D.C., office of Morgan, Lewis & Bockius. “The time limits were extremely difficult to deal with. We found ourselves up against the wall.” Because the plaintiff controls the presentation of the case, he believes, “the plaintiff is very much advantaged and the defendant can be put under the gun.” At trial, Wallace says, Medtronic contended that the Johnson & Johnson patents were invalid and not infringed. “Medtronic has its own patents for what is truly a very different design,” Wallace says. To prove Johnson & Johnson’s allegations, says Diskant, the plaintiff opened its case “with our expert cardiologist explaining the nature of the problem, the nature of the invention and how Dr. Palmaz’s work had revolutionized the treatment of coronary artery disease.” The plaintiff’s trial team had prepared an animated picture of how stents work to provide a visual explanation for the jurors; this animation was used during the cardiologist’s testimony. Palmaz was the second witness. “We wanted to let the jury have as much background [as possible] before seeing Dr. Palmaz,” Diskant says. As soon as the attorneys finished the closing argument for this trial, the Johnson & Johnson lawyers were back in the courtroom selecting the jury for the case against Boston Scientific. “We had to pick the jury in the Boston case while the [Medtronic] AVE jury was deliberating,” Diskant reports. As soon as the jury in the Boston Scientific case was selected, he recalls, the jury came in from the Medtronic trial. On Nov. 21, the first jury found infringement on all claims and all products. But, says Diskant, there was no time to celebrate. The Medtronic jury was sent home for a few weeks while Johnson & Johnson began trying its infringement case against Boston Scientific. While they were handling the Medtronic trial, other members of the Patterson Belknap team were arguing motions and preparing for the Boston Scientific trial. One key problem: The attorneys for Boston Scientific and their experts were in the courtroom for the Medtronic trial. “The second defendant was getting a pretty good education” in Johnson & Johnson’s case and strategy, says Diskant. “But there was no alternative.” The claims against Boston Scientific were only slightly different and the time limit was nearly the same. The witness order was identical, with Johnson & Johnson starting with an expert cardiologist, to explain the invention and how it revolutionized the industry, then moving on to Palmaz. “The thing that amazed me,” jokes Diskant, “is that we always referred to the correct defendant by the correct name, and we never pulled out the wrong graphic.” Boston Scientific denied infringement and contended that the Cordis patents were invalid. On Dec. 11, the second jury found that Boston Scientific had infringed on the Palmaz stent patent. This victory, however, wasn’t as absolute as the Medtronic win. “We won on the Palmaz patent, but lost on all other claims,” says Diskant. “But, by winning on Palmaz, that verdict supported damages.” ‘A BUSINESS WAS DESTROYED’ Mr. Cavanaugh was lead counsel for the damages phase against Boston Scientific. He concentrated on the effects of the Medtronic and Boston Scientific products. “Johnson & Johnson’s stent market share was decimated,” he says. “A business was destroyed.” What made this particularly poignant, he adds, was “that Johnson & Johnson had created the market, through the Palmaz work and the clinical trials. The defendants came out with second-generation products and took it away from Johnson & Johnson.” On Dec. 15, the jury ordered Boston Scientific to pay Johnson & Johnson/ Cordis $324.4 million. “Then we had to shift gears again,” says Diskant. He and Cavanaugh had begun preparing for the damages phase of the Medtronic claim while the jury in Boston was deliberating. “I read my summation to remind me what this case was all about.” On Dec. 15, the jury in the Medtronic case awarded Johnson & Johnson $271.1 million. Attorneys for both defendants predicted that the jury verdicts may yet be set aside. In the Boston case, says defense attorney George Badenoch of New York’s Kenyon & Kenyon, “the jury found the patent was not literally infringed.” The jury’s decision for Johnson & Johnson, charges Wallace, was largely based on a faulty instruction by the court to the jury. “Johnson & Johnson Cordis managed to get an ‘essence of invention’ instruction that we think was clearly wrong.” As deliberations began, he says, “all the jurors were prepared to find no infringement.” This instruction, he says, swayed the jurors the other way. The trial is not yet over, Diskant notes. The claims against both defendants were reconsolidated for a bench trial on contentions that the Cordis patents were acquired by inequitable conduct. The bench trial was conducted the week of Feb. 7. Although the results were favorable to their clients, the Patterson Belknap attorneys don’t believe such marathon litigation is the best way to try cases. “The hardest part was keeping the Boston case alive while trying [Medtronic] AVE,” says Diskant. “Usually the last two weeks before trial is a time of intense activity. … By the time you open, the case is humming along. … We were able to do this with [Medtronic] AVE. But we were worried with the Boston case, that it would just sort of start. We had it ready to go, but we were slightly distracted … I don’t recommend ever doing this again.”

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