Cordis Corp, a Johnson and Johnson subsidiary, did not infringe on a patent owned by a radiologist in making its Cypher stents, an appeals court said on Thursday, reversing a ruling by a lower court that ordered Cordis to pay $482 million.
The Court of Appeals for the Federal Circuit reversed a ruling from a Texas jury, which found Cordis guilty of infringement and ordered the payment.
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The appeals court ruled that Cordis had not infringed.
Johnson & Johnson's shares closed slightly higher at $82.41.
The radiologist, Bruce Saffran, filed a lawsuit in 2007, accusing Cordis of infringing a patent he obtained in 1997 to make its Cypher brand drug-eluting stents. A jury ruled for Saffran in 2011. Cordis asked the judge to toss the ruling out, but he declined and added $111 million in interest, bringing the total award to $593 million.
Cordis appealed to the Federal Circuit, which hears patent appeals. The appeals court reversed the lower court on Thursday.
"We are pleased the federal court of appeals reversed the jury's decision and held that Cordis did not infringe (the) plaintiff's patent," said Cordis spokeswoman Sandy Pound in an email.
Paul Taskier, lead counsel for Saffran, said they were disappointed in the ruling.
"We are considering an appropriate course of further action," he said in an emailed statement.
Stents are tiny mesh tubes used to prop open arteries that have been cleared of blockages. Drug-eluting stents are coated with medicine designed to prevent reclogging of the treated blood vessel.
J&J was the first company to sell a drug-coated stent with its Cypher. The field became fiercely competitive as rival devices entered the market, such as Abbott Laboratories' Xience model, widely considered to be superior to Cypher.
In 2011, J&J decided to get out of the heart stent business and the diversified healthcare company announced it would stop selling Cypher.
The case in the U.S. District Court for the Eastern District of Texas was No. 07-CV-0451. The case at the U.S. Court of Appeals for the Federal Circuit is Bruce Saffran v. Johnson & Johnson and Cordis Corp., No. 2012-1043.
(Reporting by Diane Bartz and Bill Berkrot; Editing by Gerald E. McCormick and Andre Grenon)