The accord ends a rancorous 10-year relationship between America's
largest life sciences company and Medinol, a pioneering Israeli firm
that was once its chief supplier of stents -- tiny devices that
doctors use to prop open arteries after clearing them of blockages,
one of the most common surgical procedures in America.
Medinol's lawyers asked for more than $4.5 billion in damages,
claiming that Boston Scientific used its technology to design its
current top-selling Taxus Express line of stents.
Boston Scientific says the stent's design is original, and had
countersued Medinol for $400 million, saying the company's delays had
cost it business.
The settlement reached in New York ended both suits and formally
cancelled the contract between the companies. Boston Scientific also
gave up a 21 percent ownership share in Medinol that it had taken as
part of the original contract, and the companies agreed that future
disputes or royalty demands would be resolved through arbitration.
The two companies signed a deal in 1995 under which Medinol, an
Israeli firm founded by husband-and-wife team Judith and Kobi
Richter, would develop and manufacture stents for the Natick company.
The deal gave Boston Scientific a foothold in the important and
fast-growing area of the medical-device market.
In 1997, however, Boston Scientific set up a secret factory, which it
called Project Independence, to copy Medinol's technology. Medinol
claims the Natick company was trying to produce its own stents and
squeeze it out of the contract, but Boston Scientific said later that
the scheme was allowed because Medinol had become such an unreliable
supplier.The coronary stent business has changed dramatically in the
past two years, since Johnson & Johnson and Boston Scientific each
introduced a drug-coated version of the metal device. The drug
coating prevents the body's natural healing mechanism from reblocking
the arteries while they heal.
The highly profitable drug-coated stents have fueled explosive growth
for Boston Scientific, accounting for nearly half of its $6.3 billion
in annual sales.
Boston ScientificCorp. (BSX:NYSE) has agreed to pay $750 million to
settle claims that it broke its contract and stole technology from
Israeli company Medinol, in the late 1990s.