8-KMaterial AgreementsExhibits & Filings

BOSTON SCIENTIFIC CORP 8-K Report, Material Agreement (Aug 1, 2006)

Filed August 1, 2006For Securities:BSX

Summary

Boston Scientific Corporation (BSX) has entered into a significant settlement agreement with St. Jude Medical, Inc. on July 29, 2006, resolving multiple pending litigation matters and limiting the scope of others. This agreement aims to reduce legal entanglements and associated costs for both companies. The settlement includes cross-licensing of certain cardiac rhythm management (CRM) and neuromodulation patent portfolios on a royalty-free basis, with specific exclusions. It also addresses the termination of a distribution agreement in Japan and resolves several specific patent infringement and related claims. This move is likely intended to allow both companies to focus more on their core business operations and strategic growth without the ongoing burden of extensive legal disputes.

Key Highlights

  • 1Boston Scientific and St. Jude Medical have reached a comprehensive settlement agreement to resolve multiple litigation matters, effective July 29, 2006.
  • 2The agreement includes a worldwide, royalty-free cross-license of cardiac rhythm management (CRM) patent portfolios, with some specified exclusions.
  • 3A royalty-free cross-license for patents related to Advanced Neuromodulation Systems, Inc. and Advanced Bionics Corporation litigation is also part of the settlement.
  • 4The scope and available remedies in two significant outstanding cases (Indiana and Delaware) have been limited for both parties.
  • 5Boston Scientific has agreed not to pursue certain claims and damage theories in the remaining cases, such as lost profits and royalty rates exceeding 3%.
  • 6St. Jude Medical has agreed to forego certain defenses and claims for attorneys' fees in the remaining unresolved cases.
  • 7The distribution agreement between Boston Scientific and Advanced Neuromodulation Systems, Inc. for the Japanese market has been terminated as part of the settlement.

Frequently Asked Questions

The settlement is expected to reduce legal expenses and the potential for adverse judgments, thereby improving financial predictability and allowing for greater focus on operational and strategic initiatives. While the specific financial terms regarding unresolved cases are modified, the immediate impact is the resolution of numerous disputes and the reduction of ongoing litigation costs.

The settlement involves a worldwide, royalty-free cross-license of cardiac rhythm management (CRM) patent portfolios. Additionally, patents involved in the Advanced Neuromodulation Systems, Inc. and Advanced Bionics Corporation litigation have also been cross-licensed on a royalty-free basis, with certain limitations and exclusions for specific technologies from each company.

The limitations restrict the types of damages that can be sought (e.g., no lost profits, royalty cap of 3%, no prejudgment interest) and the ability to pursue injunctions in the Delaware case until appeals are exhausted. St. Jude Medical also forfeits certain defenses. This significantly reduces the potential financial exposure and complexity for both parties in these remaining disputes.

While most major litigation with St. Jude Medical is resolved or has its scope limited, two specific cases (Indiana and Delaware) remain unresolved, albeit with significantly constrained remedies and defenses. Boston Scientific also has a potential future obligation regarding a license to St. Jude Medical if St. Jude successfully settles directly with Mirowski Family Ventures (MFV) for those remaining cases.