Johnson & Johnson announced that an arbitration panel has upheld its preliminary finding issued in June that Guidant Corporation's Multi-Link Duet Coronary Stent System infringes a key Palmaz patent of the Cordis Corporation, a Johnson & Johnson company.

This final decision requires Guidant to make a one-time payment of $425 million to Cordis within 90 days. Johnson & Johnson will account for the payment in the quarter in which it is received. No continuing payments or injunction is involved in this proceeding. In April 2000, Cordis and Guidant agreed to cross-license certain patents and to arbitrate outstanding patent claims.

Separately, the Federal Circuit Court of Appeals last week decided in favor of Cordis in its appeal of the Medtronic/AVE case. The decision upheld the validity of key Cordis patents, reversing the trial judge's ruling to overturn a December 2000 jury verdict of $270 million in favor of Cordis, not including interest.

These decisions by the arbitration panel and the Court of Appeals reaffirm the importance and value of Cordis' intellectual property.