J&J, Boston Scientific, And Guidant Going To Court

After extensive legal wrangling, a lawsuit filed by Johnson & Johnson (J&J) against Boston Scientific’s subsidiary Guidant in 2006 may now move to trial. Interestingly, J&J is crying foul over a deal that would have lost them billions of dollars if it had been completed successfully.

“To see that you’ve got J&J, who should be thanking Boston Scientific for preventing them from doing that deal and saving J&J from massive losses, is now trying to have its cake and eat it too? It’s over the top,” Steve Kozachok, a healthcare merger lawyer at Briggs & Morgan, said in a Minneapolis Star Tribune (MST) article. “I think somebody very high up at each of the companies really doesn’t like the other person, and it’s more of a personality spat than anything else.”

The issue stems from 2006 when Boston Scientific outbid J&J to acquire Guidant for $27 billion. According to Law360, J&J was under the impression that Boston Scientific would need to go through an onerous and expensive antitrust process in order to acquire Guidant. All antitrust proceedings were cleared, however, when Abbott Laboratories bought Guidant’s vascular business. According to J&J’s allegations, Guidant leaked confidential information to Abbott, thus violating the terms of J&J’s proposed $21.5 billion merger and clearing the way for Boston Scientific to acquire the company.

Since then, Boston Scientific has had to write off about $6.3 billion in Guidant’s fair market value, as the company’s pacemaker and defibrillator business experienced a significant slump, according to the MST.

In July of this year, a motion from Guidant for a summary judgment was denied, and the company expressed continued interest in defending itself in court, according to Law 360.

"This does not limit Boston Scientific’s ability to successfully defend the case at trial, which we intend to do," said Boston Scientific spokeswoman Kelly Leadem, according to Law 360.

The trial is scheduled for Nov 20, according to the MST, although some wonder if it will actually move forward.

“Typically a settlement would be likely in a high-stakes case among industry titans,” the MST reported. “And indeed observers say it may still happen before the start of the two-week trial in Manhattan.”

In order to win the suit, J&J must demonstrate that they were financially damaged and that the damage was caused by willful breach of confidentiality, according to the MST. Those allegations may be difficult to prove.