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United States v. Boston Scientific Corp.
Citations: 214 F. Supp. 2d 167; 2002 U.S. Dist. LEXIS 14642; 2002 WL 1822166Docket: CIV.A. 00-12247-PBS
Court: District Court, D. Massachusetts; August 8, 2002; Federal District Court
Boston Scientific Corporation's motion for reconsideration regarding Count V was denied by the court. The company contended that it did not breach the Interim Supply Provision of the FTC Order between March and May 1998 because the redesigned Discovery 2.6F/40 MHz catheter was first sold on June 3, 1998, after the provision expired. The Interim Supply Provision mandated that Boston Scientific supply IVUS catheters to the Licensee for up to three years upon request. The court previously determined that this obligation expired on May 5, 1998, and was triggered upon request, not contingent on the date of the first sale. The summary judgment record disclosed key undisputed facts: Boston Scientific began marketing the Discovery catheter as early as March 1997, with internal approval for release on February 25, 1998, and a commercial introduction in March 1998. The company engaged in promotional sales until March 31, 1998, and shipped at least 364 catheters as samples during that period. Production records indicated 404 catheters were manufactured in the first quarter of 1998, and 7,418 in the second quarter. There were documented sales to foreign customers in March and sales to Swedish hospitals in late April 1998. Although there were disputes regarding whether domestic distributions generated revenue, evidence suggested that some units were delivered as free samples, potentially due to a database error. Amid these developments, Boston Scientific identified issues with the Discovery catheter and began redesigning it in March 1998. A report from the same month highlighted a deficiency in the Discovery catheters, noting that several were evaluated in human trials and found to have a softer distal sheath that could kink upon resistance. Prior testing indicated potential variability in material and dimensions between production lots. To address these issues, the catheter tips were redesigned, which would delay the project by six to eight weeks, with modifications approved on May 12, 1998. The first invoices for the redesigned catheters were issued on June 3, 1998. Despite the redesign, the original catheters were produced and marketed in early 1998, with distribution occurring in March and April. There is a disputed fact regarding whether these catheters were free samples or revenue-generating units; however, this is deemed immaterial as they were part of a sales effort and should have been provided to HP upon request. The FTC demonstrated a violation of the Order because HP asked for the catheter, it had been manufactured, and it was being marketed. BSC’s argument that the obligation to provide catheters only arose upon the transfer of title or invoicing was rejected, as it contradicted the Order's intent to foster competition. The motion to reconsider was denied. The Discovery catheter was later recalled temporarily due to tip issues and permanently recalled a year later.