February 2, 2010 (FinancialWire) — Medical device maker Boston Scientific Corp. (NYSE: BSX) said it has settled three patent disputes with Johnson & Johnson (NYSE: JJJ). The company will make a $1.725 billion payment to J&J in connection with the settlement.

The disputes date back to 2003 and cover Boston Scientific’s Jang patent and J&J’s Palmaz and Gray patents, all of which involve intellectual property in the cardiovascular arena.  

The first dispute involved a claim by J&J that Boston Scientific’s Express, Taxus Express and Liberte stents infringed its Palmaz and Gray patents.

The second involved a claim by Boston Scientific that J&J’s Cypher, BX Velocity and Genesis stents infringed its Jang patent.

In 2005, there were liability trials on these two matters, and both parties were found to have infringed the other’s patents. Those findings were upheld on appeal.

Damage claims from these two rulings were scheduled to be decided by two jury trials slated for this month in U.S. District Court in Delaware. Those trials will no longer take place.

The third dispute involved a claim by J&J that Boston Scientific’s Taxus Liberte stent infringed its Gray patent. That matter was scheduled to be tried in September; that trial also will no longer take place.

In addition to the matters resolved in the settlement, the District Court last month found all four patents in a lawsuit brought against Boston Scientific by J&J to be invalid. A trial on those patents, which was scheduled to begin February 9, will not proceed.

Under the settlement, Boston Scientific will pay J&J $1 billion TODAY and the balance on or before the first week of January 2011. The company said it plans to post a $745 million letter of credit, which will cover the $725 million balance and interest.

Boston Scientific said that the payments will not have an appreciable impact on the company’s debt covenants. After the payments, the company said it will still have “significant liquidity” under its credit facilities, and that it continues to expect to refinance its 2011 debt maturities in the middle of this year.

Boston Scientific said it expects to fund the $725 million remaining balance from cash on hand, unless it refinances at an earlier date.

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