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February 17, 2015

Boston Scientific settles suit by Johnson & Johnson

(UPDATED Wednesday, Feb. 18 at 9 a.m.) Boston Scientific has agreed to pay rival Johnson & Johnson $600 million as part of a settlement of a lawsuit stemming from Boston Scientific’s acquisition of Guidant Corp. nine years ago, the Marlborough life sciences company announced Tuesday.

In the lawsuit, Johnson & Johnson alleged that Guidant broke a deal it had with Johnson & Johnson to merge with that firm, and sought $7.2 billion in damages. Guidant disputed the allegations.

As part of the settlement, BSX said Johnson & Johnson has agreed to dismiss its lawsuit without acknowledgment of liability by Guidant. Also, BSX has agreed not to bring patent infringement or other claims related to three of Johnson & Johnson’s stent products, the BSX statement said.

In 2006, BSX bought Guidant, which manufactures artificial cardiac pacemakers, implantable cardioverter-defibrillators, stents, and other cardiovascular medical products, for $27.2 billion. That came just after Guidant and Johnson & Johnson agreed to a deal. But reportedly, Guidant turned to BSX after it had presented it with a better offer. Guidant paid a $705 million breakup fee to Johnson & Johnson as a result.

The agreement with Boston Scientific means Johnson & Johnson has been paid $1.3 billion over the Guidant controversy.

Johnson & Johnson has since been claiming billions of dollars in damages against Boston Scientific.

"We feel this settlement is in the best interests of the company and its shareholders," Tim Pratt, executive vice president, chief administrative officer, general counsel and secretary for BSX said in a statement. "We are pleased to end this longstanding litigation … and to continue focusing on delivering innovative products and solutions to physicians and patients."

In its own statement, Johnson & Johnson cited the importance of legal agreements.

“This case was about playing by the rules,” said Ernie Knewitz a spokesman for Johnson & Johnson, based in Bridgewater, N.J. The settlement “reflects how important it is for parties involved in merger agreements to fully live up to their obligations.”

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