1
`Case 1:10-cv-00039-SLR-MPT Document 275 Filed 09/20/12 Page 1 of 108 PageID #: 5994
`
`IN THE UNITED STATES DISTRICT COURT
`IN AND FOR THE DISTRICT OF DELAWARE
`- - -
`
`CIVIL ACTION
`
`NO. 10-39 (SLR)
`
`:::::::::::
`
`CORDIS CORPORATION,
`Plaintiff,
`
`vs.
`BOSTON SCIENTIFIC
`CORPORATION and BOSTON
`SCIENTIFIC SCIMED, INC.,
`Defendants.
`
`- - -
`Wilmington, Delaware
`Friday, May 11, 2012
`9:18 o'clock, a.m.
`- - -
`BEFORE: HONORABLE SUE L. ROBINSON, U.S.D.C.J.
`- - -
`
`APPEARANCES:
`
`ASHBY & GEDDES
`BY: STEVEN J. BALICK, ESQ.
`
`-and-
`
`Valerie J. Gunning
`Official Court Reporter
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`Page 001 of 108
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`
`Case 1:10-cv-00039-SLR-MPT Document 275 Filed 09/20/12 Page 1 of 108 PageID #: 5994
`
`IN THE UNITED STATES DISTRICT COURT
`IN AND FOR THE DISTRICT OF DELAWARE
`- - -
`
`CIVIL ACTION
`
`NO. 10-39 (SLR)
`
`:::::::::::
`
`CORDIS CORPORATION,
`Plaintiff,
`
`vs.
`BOSTON SCIENTIFIC
`CORPORATION and BOSTON
`SCIENTIFIC SCIMED, INC.,
`Defendants.
`
`- - -
`Wilmington, Delaware
`Friday, May 11, 2012
`9:18 o'clock, a.m.
`- - -
`BEFORE: HONORABLE SUE L. ROBINSON, U.S.D.C.J.
`- - -
`
`APPEARANCES:
`
`ASHBY & GEDDES
`BY: STEVEN J. BALICK, ESQ.
`
`-and-
`
`Valerie J. Gunning
`Official Court Reporter
`
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`APPEARANCES (Continued):
`
`SIDLEY AUSTIN LLP
`BY: DAVID T. PRITIKIN, ESQ.,
`WILLIAM BAUMGARTNER, JR., ESQ.,
`LINDA R. FRIEDLIEB, ESQ. and
`ANTHONY BALKISSOON, ESQ.
`(Chicago, Illinois)
`
`-and-
`
`SIDLEY AUSTIN LLP
`BY: PAUL J. ZEGGER, ESQ.
`(Washington, D.C.)
`
`-and-
`
`JOHNSON & JOHNSON.
`BY: MICHAEL J. TIMMONS, ESQ.
`SENIOR COUNSEL
`(New Brunswick, New Jersey)
`
`Counsel for Plaintiff
`
`YOUNG CONAWAY STARGATT & TAYLOR LLP0
`BY: KAREN L. PASCALE, ESQ.
`
`-and-
`ARNOLD & PRTER LLP.
`BY: MATTHEW M. WOLF, ESQ.,
`EDWARD HAN, ESQ.,
`JOHN NILSSON, ESQ. and
`SARA P. ZOGG, ESQ.
`(Washington, D.C.)
`
`Counsel for Defendants
`- - -
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`P R O C E E D I N G S
`
`(Proceedings commenced in the courtroom,
`beginning at 9:18 a.m.)
`
`THE COURT: Good morning, everyone.
`(Counsel respond, "Good morning, your Honor.")
`THE COURT: Familiar territory, but I will look
`forward to hearing what you have to say interest everything.
`Why don't we start with introductions and then
`we'll move forward.
`MR. BALICK: Good morning, your Honor. How are
`
`you?
`
`Your Honor, Steven Balick from Ashby & Geddes
`for Cordis Corporation, and from the Sidley Austin firm,
`David Pritikin.
`MR. PRITIKIN: Good morning.
`THE COURT: How are you?
`MR. BALICK: William Baumgartner, Paul Zegger,
`Linda Friedlieb.
`MR. ZEGGER: Good morning, your Honor.
`MS. FRIEDLIEB: Good morning, your Honor.
`MR. BAUMGARTNER: Good morning, your Honor.
`THE COURT: Good morning.
`MR. BALICK: And Anthony Balkissoon.
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`MR. BALKISSOON: Good morning.
`MR. BALICK: We're also joined today by Michael
`Timmons from Johnson & Johnson.
`MR. TIMMONS: Good morning, your Honor.
`THE COURT: Good morning.
`MR. BALICK: Thank you.
`THE COURT: All right. Thank you very much.
`MS. PASCALE: Good morning, your Honor. Karen
`Pascale from Young Conaway for Boston Scientific. I'd like
`to introduce co-counsel from Arnold & Porter. This is Matt
`Wolf.
`
`MR. WOLF: Good morning, your Honor.
`MS. PASCALE: John Nilsson.
`MR. NILSSON: Good morning.
`THE COURT: Good morning.
`MS. PASCALE: Ed Han.
`MR. HAN: Good morning.
`MS. PASCALE: Sara Zogg.
`MS. ZOGG: Good morning.
`MS. PASCALE: Also in the courtroom, your Honor
`knows from Boston Scientific, Peter Gatner.
`THE COURT: Good morning.
`All right. Give me a minute to get in my
`computer so I can be taking my notes.
`Are we going to start with claim construction,
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`as we usually do?
`MR. BAUMGARTNER: Your Honor, Bill Baumgartner
`
`for Cordis.
`
`The parties had some discussions before the
`hearing what about an appropriate order would be and we have
`a suggestion for your Honor's consideration that I can hand
`up.
`
`THE COURT: All right.
`(Mr. Baumgartner handed a document to the
`
`Court.)
`
`THE COURT: Thank you.
`MR. BAUMGARTNER: Thank you.
`So for three of the claim terms we would propose
`just submitting that on the papers, and then what we've done
`is start with the summary judgment motion, unauthorized
`sale, and then proceed to the claim construction issues one
`by one with the related summary judgment motions being
`argued after the relevant claim term.
`THE COURT: All right.
`MR. BAUMGARTNER: So that's the concept.
`THE COURT: All right. Is everyone in
`
`agreement?
`
`MR. WOLF: Yes, your Honor.
`THE COURT: All right. Wonderful. Well, let's
`start with BSC's motion.
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`MR. WOLF: Thank you, your Honor.
`I apologize, your Honor. We have a technical
`
`glitch.
`
`THE COURT: Oh, that's all right. I'm still
`getting myself set up.
`(Pause.)
`MR. WOLF: Wolf your Honor, we're going to do it
`the old-fashioned way.
`THE COURT: I understand that. My computer
`isn't working either, so all right.
`MR. WOLF: Good morning, your Honor.
`THE COURT: Good morning.
`MR. WOLF: Matthew Wolf for Boston Scientific.
`We are going to start by talking about a
`threshold issue in this case, one that, if we are correct,
`obviates everything else you're going to hear today. And
`it's the notion of authorized sale.
`And Sara?
`The principle is relatively straightforward.
`The authorized sale of an article that substantially
`embodies a patent exhausts the patentholder's rights and
`prevents the patentholder from invoking patent law to
`control post-sale use of the article.
`Simply put, if there's a sale that is authorized
`of a patented device, patent law ceases to care after that
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`sale what happens next, and that's precisely what's going on
`in this case.
`Next slide.
`In 2001, plaintiff, Cordis, granted Abbott a
`very broad license to manufacture and sell any products
`covered by a certain set of patents. Here we see the rights
`granted. Cordis hereby grants to Abbott and its affiliates
`worldwide nonexclusive rights, and then we see the laundry
`list of patent rights, make, have made, use, offer for sale,
`sell and import.
`So anything that could arguably be touched by
`the patent law, Cordis authorized Abbott to do. And what
`did they do it with regard to?
`Well, here's an identification of some of the
`patents, and it's undisputed that among the patents licensed
`in the 2001 agreement between Cordis and Abbott are the
`patents at issue in this case. We see the '604 patent. We
`see the reference to the stent having a multiplicity of
`undulating longitudinals, and, of course, it refers to
`continuations, continuation applications, et cetera.
`As I said, Cordis does not challenge the notion
`that the Fischell patents, all three of the Fischell patents
`at issue in this case, were the subject of the license,
`among others.
`Next slide, please.
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`So then here's the final D of the QED. In 2006,
`a transaction agreement was entered whereby Abbott agreed to
`sell to Boston Scientific the stents that Boston Scientific
`in turn sells to the public and that are the subject of the
`infringement claims in this case.
`Abbott was authorized to sell. Boston
`Scientific buys from Abbott. Once that transaction occurs,
`all patent rights are exhausted. There's nothing left to
`talk about. Infringement does not matter. Validity does
`not matter. Claim construction does not matter. These are
`authorized sales.
`Your Honor will recall that last summer we moved
`to file this motion early because we -- we thought that
`would obviate a lot of this work. Just so we are clear,
`your Honor, we meant what we said. We do think this moots
`everything.
`
`Next slide, please.
`So what is Cordis' response? Cordis' response
`centers upon this provision: Further, in the event of the
`merger or consolidation of Abbott with a major competitor,
`the licenses granted herein shall not extend to the business
`of such major competitor without the prior written approval
`of Cordis.
`
`And they argue, Cordis argues that this somehow
`undermines the authorization of the sale. The threshold
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`problem with this argument is that Boston Scientific is not
`buying product from whatever Abbott acquired, from whatever
`subsidiary we're talking about.
`As you saw in the previous slide, and as we
`discussed in the papers, Boston Scientific buys product from
`Abbott itself. Arguably, this provision limits the
`definition of affiliate or what affiliates are granted. If
`Abbott were to have bought Medtronic and Medtronic became an
`affiliate, well, maybe this would say that they don't get
`the benefits of affiliate language of the license, but
`that's not our circumstance here. Boston Scientific buys
`from Abbott itself.
`So this does not apply. Even if this could
`somehow be extended, and by its plain language it can't, to
`suggest that Abbott's rights as opposed to its affiliates
`would be undermined in the case of a merger or
`consolidation, no such merger or consolidation has occurred.
`Next slide.
`It is important to recognize there has never
`been an allegation by Cordis against Abbott that they are
`somehow breaching the license, that somehow their sale of
`product to Boston Scientific is a breach of the provision we
`just saw. So that can't be the argument for why the
`authorized sale doctrine comes into play here.
`Next slide.
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`This is the structure. Abbott purchased a
`business unit, a company, and the question then we must ask,
`if we get past the first two issues, is, does this
`constitute a merger or consolidation?
`Next slide.
`And the contract tells us through what prism we
`must answer that question. I think I just mixed my
`metaphor, your Honor, but you probably understand the point.
`This agreement shall be construed, interpreted,
`and governed by the laws of the State of Delaware, without
`regard to conflict of law principles.
`So we ask under Delaware law, even assuming
`everything Cordis has said so far is accepted, that somehow
`this question is relevant -- and we think it's not because
`it's Abbott directly that's selling -- has there been a
`merger or consolidation with the former Guidant companies
`that Abbott acquired in 2006? And the answer is plainly
`no.
`
`Next slide.
`Your Honor knows better than I do what a merger
`and consolidation is under Delaware law. A merger is when
`two companies become one. Consolidation -- well, when
`Company B merges into Company A and Company A exists and
`Company B ceases to exist. That hasn't happened here
`because Abbott and the former Guidant companies both still
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`exist.
`
`Consolidation is when Company A and Company B
`come together and form Company C. Again, for the very
`reason I just stated, there has been no consolidation.
`Company A, Abbott, Company B, ACS, still exist. There has
`been no merger or consolidation. So even if Cordis could
`somehow find comfort in that provision, it does not apply
`here.
`
`Next slide.
`We see a lot in the briefs about the intention
`of the parties, the intention of Cordis in entering the
`agreement. There are two problems with this argument.
`First of all, we don't have to get to intention.
`There's a standard integration clause here. It's clear on
`the four corners of the contract. They said Delaware law
`would apply. We don't look to what they hope to achieve.
`There's a second reason, though. Next slide.
`And that is that Johnson & Johnson/Cordis knew
`exactly how to accomplish the thing they claimed they were
`trying to accomplish here and, quite frankly, failed. In a
`license predating the one at interest, the Cordis/Corvita
`license, they wrote what they wanted in this case. Cordis
`grants to Corvita nonexclusive license under the patents to
`make, use and sell licensed products only to end users or
`independent sales representatives of Corvita who are not
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`themselves manufacturers of medical devices.
`That's the provision they wish they had wrote
`into the 2001 agreement, but they didn't. In fact, there's
`irony here, your Honor, which is that there's nothing in the
`agreement that would have prevented the following. Prior to
`Abbott's acquisition of ACS, the Guidant affiliate, Abbott
`could have, under the agreement, purchased from ACS the
`stents in question because they had have made rights and
`turned around and sold them to Boston Scientific.
`So they're suggesting that something that would
`have been perfectly appropriate, perfectly consistent with
`the agreement before they acquired ACS, somehow they lose
`rights? That's counterintuitive in the extreme. And,
`again, your Honor, fundamentally, they knew how to do what
`they claimed this contract did. They did it before. They
`didn't do it here.
`The final point, your Honor -- next slide,
`please. And this is another threshold question.
`If your Honor feels that there is an ambiguity
`in the contract -- and we, quite frankly, don't believe
`there's anything close to an ambiguity -- but if your Honor
`feels she must resort to extrinsic evidence, if it's
`uncertain what the contract meant by merger or
`consolidation, it's uncertain what the effect of a merger or
`consolidation would be, then the appropriate course is for
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`Abbott and Cordis, or if they refuse, Boston Scientific and
`Cordis, to arbitrate that question.
`The construction of the Abbott/Cordis contract
`is subject to an arbitration clause. And so if we get
`beyond the questions of law under Delaware law, if your
`Honor finds that there's something to do beyond simply
`saying there has been no merger or consolidation under
`Delaware law, we still don't belong here. There must be
`a threshold inquiry done by an arbitrator or arbitration
`panel elsewhere, and then we can see where those chips
`fall.
`
`Thank you, your Honor.
`THE COURT: All right. Thank you.
`MR. BAUMGARTNER: Bill Baumgartner for Cordis,
`
`your Honor.
`
`There were some important facts left out of the
`presentation that you just heard. One of the important
`facts is that Abbott has the benefit of two Fischell
`licenses, one originating at Abbott itself in 2001, and a
`second originating at
`in 2004.
`
`Now, Abbott itself currently sells a stent which is
`identical to Promus called Xience. And Xience infringes the
`Fischell patents.
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`Abbott's position, and Cordis concurs with this,
`is that Xience is licensed under the 2004
`agreement.
`And as a consequence of that, Abbott is not asserting its
`rights under its own 2001 license
`
`license that Abbott relies
`Now, the 2004
`on for Xience, its product, clearly does not apply to sales
`of Promus to BSC because
`
`, and, therefore, the
`license.
`present motion simply ignores the 2004
`Instead, BSC says that the 2001 Abbott license applies to
`the Promus stents that it buys from Abbott.
`THE COURT: Now, tell me when -- all right. And
`the sale of stents from Abbott to BSC postdated both
`agreements?
`
`MR. BAUMGARTNER: Yes. That started some years
`later, your Honor.
`THE COURT: All right.
`MR. BAUMGARTNER: So the chronology here is,
`2001, Abbott licenses the Fischell patents. 2004,
`licenses them. 2006, Abbott buys the Guidant stent
`business. And then the launch date, if memory serves, was
`2008 or thereabouts for both Promus and Xience.
`As I said, BSC contends that the 2001 Abbott
`license applies to the Promus stents that it buys from
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`Abbott, but the actual license of the -- actual language of
`the 2001 Abbott license simply does not support this view.
`There was no license under that agreement for stent products
`that came to Abbott as the result of certain mergers and
`acquisitions. And Promus was developed by Guidant before
`the Guidant stent business was acquired by Abbott.
`Therefore, Promus came to Abbott as a result of its
`acquisition of Guidant's stent business.
`THE COURT: You know, I just missed a logical
`step in there. Start that phase of your argument again.
`You are saying that it's the 2004 agreement that
`we should be looking at, not the 2001 agreement, but then
`you just skipped back to the 2001 agreement?
`MR. BAUMGARTNER: No.
`THE COURT: Okay.
`MR. BAUMGARTNER: I miscommunicated my position,
`
`your Honor.
`
`THE COURT: Yes.
`MR. BAUMGARTNER: Let me clarify that.
`THE COURT: Thank you.
`MR. BAUMGARTNER: The 2004 agreement is
`completely irrelevant to BSC because it does not apply to
`sales of Promus from Abbott to BSC. What Abbott relies upon
`the 2004 agreement for is to authorize its sales of its
`product, Xience.
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`THE COURT: All right. Well, then, I really
`have missed everything, because I thought you said the
`important fact was that it's the 2004 agreement that I
`should be looking at, not the 2001 agreement.
`So if the 2004 agreement is irrelevant, then
`just focus on the 2001 agreement, and that's what I will
`assume you're talking about. I'm sorry. I got off on the
`wrong foot altogether.
`MR. BAUMGARTNER: Let me tie this up, your
`
`Honor.
`
`The 2004 agreement is relevant in the sense that
`none of the parties to the 2001 agreement, Abbott or Cordis,
`think that that agreement applies to the sales by Boston
`Scientific of Promus. And the reason we know that is that
`there's a royalty that has to be paid under that 2001
`agreement.
`
`Abbott has never paid that royalty to Cordis,
`and Cordis has never asked for it. And the reason is that
`they are in agreement that the merger and consolidation
`language prevents that license from extending to the Promus
`stents that Boston Scientific buys from Abbott.
`So the conduct of the parties to the actual
`agreement is consistent with the language of the agreement
`and all of it points to the same conclusion, that Promus is
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`not licensed.
`And so that's really how it all comes together,
`your Honor, and how all these confusing agreements
`eventually interrelate and reach that conclusion.
`Did that help clarify it a little bit?
`I think it's worth taking time to review the
`critical language in the 2001 license agreement, so let me
`show you that critical language.
`The probably most critical language in the
`agreement is something that wasn't even referred to in the
`BSC presentation, and that's the definition of major
`competitor in Section 1.9. And the definition of major
`competitor is, the divisions or businesses of the following
`entities or their affiliates, and then there's a list of
`entities. One of the listed entities is Guidant, Inc., and
`the other is Advanced Cardiovascular Systems, Inc., which
`was a Guidant subsidiary.
`And it's saying the divisions or businesses of
`the following entities or their affiliates or major
`competitors, defined term. The crucial aspect of this
`definition, your Honor, is that it refers specifically to
`divisions or businesses which could be unincorporated
`entities. And the fact that the parties specifically
`intended major competitors to encompass unincorporated
`entities is absolutely critical for reasons that I will come
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`back to in a minute.
`The second crucial provision in this agreement
`is Section 10.4, which we've reproduced on the screen. And
`it says, "Further, in the event of the merger or
`consolidation of Abbott with a major competitor, the
`licenses granted herein shall not extend to the businesses
`of such major competitor without the prior written approval
`of Cordis, which approval may be withheld without reason."
`So the proper construction of this, your Honor,
`needs to take account of the fact that major competitor is
`defined to include unincorporated entities, like divisions
`or businesses, and Section 10.4 is talking about the merger
`or consolidation of Abbott with such a major competitor. So
`it obviously is contemplating as one possibility a merger or
`consolidation with an unincorporated entity.
`What that means is that merger and consolidation
`is not just limited to transactions between two
`corporations, like a statutory merger, but, instead, merger
`or consolidation is being used in its broad sense to refer
`to any combination of Abbott's stent business with an
`incorporated or unincorporated stent business.
`THE COURT: So you're saying the parties were
`their own lexicographers? They didn't mean to have the
`standard definitions generally applied by Delaware law to
`these very familiar terms?
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`MR. BAUMGARTNER: Well, they didn't mean
`statutory merger and they didn't mean statutory
`consolidation, yes. I --
`THE COURT: They seem odd words, though, for
`sophisticated businesspeople to use if they don't mean to
`have their normal definitions apply, don't you think?
`MR. BAUMGARTNER: Well, if you look at the
`definition in Black's Law Dictionary of merger/
`consolidation, it gives the statutory merger and statutory
`consolidation definition, of course, but it shows these
`words have broader meanings as well and can encompass,
`as I said, any combination of Business A with Business B.
`And the question is, in the context of the agreement, can
`you tell which of those alternative definitions were
`intended?
`
`THE COURT: Well, if they hadn't specifically
`said Delaware law, I think your argument would be stronger.
`I think given the fact that Delaware law is known for its --
`I mean, corporate law, that one would assume that you are
`talking about the more formal meaning of it.
`MR. BAUMGARTNER: Let me respond to that, your
`
`Honor.
`
`THE COURT: All right.
`MR. BAUMGARTNER: I think the Delaware choice of
`law language is very important in interpreting this
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`contract, but what it's mainly important for, I think, is
`that it gives the rules for contract interpretation that
`must be applied.
`And the rules for contract interpretation that
`must be applied are the Delaware rules, of course, which, as
`your Honor knows better than me, follows the objective
`theory of contracts. And the idea is you interpret the
`contract language as it would be understood by an objective,
`reasonable third party.
`The Court first determines whether the contract
`is unambiguous as a matter of law, given the parties'
`language in the context of the prior agreement, and then if
`there's ambiguity, you can consider extrinsic evidence to
`resolve the ambiguity.
`So I think the first question is, applying those
`principles, one has to look at Section 10.4 and ask the
`question, how would an objective, reasonable third party
`looking at this in the context of that language understand
`it? And certainly this objective third party understands
`that he's applying Delaware contract interpretation rules
`because that's what's required by the choice of law
`provision, but then he interrelates that major competitor
`defined term with the merger or consolidation language,
`and he realizes, I think pretty quickly, that merger/
`consolidation cannot be limited to transactions involving
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`two corporations because, if they were, then the reference
`to divisions or businesses, which are not corporations,
`would be superfluous.
`It is also important to note, your Honor, that
`this term major competitor is used only once in the
`contract, in Section 10.4. That's the only place.
`So there was no reason to define major
`competitor to include unincorporated entities to accomplish
`some other purpose. The only purpose that accomplished was
`to give broad breadth to this carveout for this major
`competitor exclusion.
`Now, BSC makes the argument that the contract
`has an integration clause specifying that all the contract
`terms are laid out in the agreement, and therefore reliance
`on context would violate the integration clause. But that
`sort of misses the point, I think, because in this instance,
`what the context of Section 10.4 juxtaposed with the major
`competitor definition -- what that does is, it illuminates
`what these parties intended by the definition of those
`terms. And even though the contract language, in our view,
`is not ambiguous, if one were to think that there was
`ambiguity, one could then look at extrinsic evidence, and
`the extrinsic evidence is uniformly supportive of the Cordis
`interpretation of the contract language.
`And there are two pieces of extrinsic evidence
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`that are particularly compelling, I think, your Honor.
`THE COURT: I guess I'm -- bring me back to just
`kind of a fundamental, common sense question. Abbott sells
`stents to BSC. BSC is being sued for infringement. Cordis
`isn't taking action against Cordis -- I mean against Abbott?
`I mean, I guess I'm a little confused about that.
`MR. BAUMGARTNER: Well, let me -- that's a good
`question, your Honor, and let me try and answer it.
`Cordis had the ability either to sue Abbott for
`making an unauthorized sale of the Promus stent to Boston
`Scientific, or it had the option of suing Boston Scientific
`because it was selling the unauthorized stent it obtained
`from Abbott.
`
`If the claim had been made against Abbott, it
`would have been subject to a mandatory arbitration clause.
`A claim against Boston Scientific could proceed in court.
`And so there was a strategic judgment which of those avenues
`should be pursued, and the strategic conclusion was this
`Court and the claim against Boston Scientific.
`But you're absolutely right, that the --
`basically, the same claim could have been pursued against
`Abbott in arbitration and it was not. But that does not
`relieve BSC of liability for its own infringing acts, and
`Cordis has elected to proceed against BSC, not Abbott.
`Now, the extrinsic evidence, your Honor,
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`supports the Cordis view pretty compellingly. For one
`thing, as I mentioned before, there's a
`running
`royalty under the 2001 Abbott agreement that Boston
`Scientific relies upon. Abbott has never paid the royalty,
`and Cordis has never demanded it.
`Furthermore, your Honor, there is evidence in
`the record from one of the negotiators of the 2001
`agreement, Robert Croce, the Cordis chairman -- the Cordis
`chairman. And this is the testimony that Mr. Croce gave as
`to what the intent of the parties was in drafting that
`language about merger and consolidation and major
`competitor. And his testimony as to what the parties'
`intent was is a hundred-percent supportive of Cordis' view
`of what that language means.
`Now --
`THE COURT: Kind of a leading question, so I
`don't know how compelling that is, to tell you the truth.
`MR. BAUMGARTNER: There's a factual issue here,
`of course, as to whether, in terms of what was done with
`Guidant in connection with the Abbott acquisition, whether
`that major competitor language was triggered. Was there a
`merger or consolidation with divisions or businesses? And I
`think the evidence here shows that there was.
`What happened in the Abbott acquisition of the
`Guidant stent business was that Guidant bought the stock of
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`certain Guidant subsidiaries, including Advanced
`Cardiovascular Systems, Inc., which, as you'll recall, it
`was specifically identified as one of the major competitors
`that was encompassed within the definition. And then, in
`addition, it bought assets of other Guidant subsidiaries.
`So this is both a stock and an assets transaction.
`At the time of the acquisition, Abbott stated
`publicly that it was combining its stent business with
`Abbott, or with Guidant's. And let me show you some of the
`statements, your Honor.
`There was a press release that talked about
`Guidant's vascular business being combined with Abbott's
`current vascular business. And there was a quotation
`attributed to Abbott's CEO in the press release, which
`referred to the combined Abbott and Guidant businesses.
`Boston Scientific says in its reply brief that
`it is undisputed that ACS did not fuse with, was not
`absorbed into, and did not unite with Abbott. But that
`certainly is disputed, because currently Advanced
`Cardiovascular Systems, Inc. Is part of Abbott Vascular,
`which is an unincorporated division of Abbott. And the
`statements in the record that we have on the screen here are
`evidence that the Abbott stent business and the pre-existing
`Guidant stent business have been combined, and thus trigger
`the merger and consolidation carveout in the license
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`agreement.
`
`And this is a summary judgment context in which
`we're evaluating this evidence, of course, and therefore all
`reasonable and factual inferences must be drawn in Cordis'
`favor. It's certainly a reasonable inference from this
`evidence that the merger and consolidation language applies
`and the carveout prevents the license from extending to
`sales of Promus.
`Now, BSC also makes an argument involving the
`have made language in the contract, and Mr. Wolf gave an
`excellent summary for you of what that argument is.
`Basically, BSC says that the license agreement gave Abbott
`the ability to go to Guidant and have Guidant use its
`technology to make licensed Fischell products before the
`acquisition took place, and therefore it would not be
`reasonable to read the contract as preventing Guidant
`from making licensed products after a Guidant/Abbott
`combination.
`
`There are a couple of answers to that argument,
`your Honor. The first is, reasonable or not, that's what
`the contract says. And courts in Delaware enforce contracts
`as written. In any event, it is reasonable to interpret the
`contract the way Cordis is advocating. And let me explain
`the business background that makes this a reasonable
`construction.
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`At the time of the 2001 agreement, Abbott was
`really sort of a bit player in the stent business, and as
`Mr. Croce explained at his deposition, the business analysis
`of Cordis at the time went somewhat as follows: That if
`they were willing to pay a
`royalty, and if
`there were protections against their license right going
`to the big players, then Cordis was okay giving them a
`license.
`
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