reasonable to patients who, as of the date of this order, were enrolled in clinical
studies conducted in connection with the ACS deal, and
4) The court shall retain jurisdiction over any dispute regarding compliance with

this order or Cook’s compliance with the Angiotech agreement.

CR oe Phen oa

Charles P. Kocoras
Chief Judge
United States District Court

Dated: October 1, 2002

-19-



goal is to market ACHIEVE commercially. We are satisfied that the current test
subjects will continue to get necessary medical care and that other technologies are
available,

We point out that there will be other drug-coated stents available soon, Johnson
& Johnson is forecasted to come out with the stent CYPHER six months before
ACHIEVE and TAXUS is only three months behind ACHIEVE in the regulatory
process. Cook has not provided any conclusive evidence that cutrent test patients for
ACHIEVE or other current heart disease patients will face any additional health risks
as a result of the proposed injunction.

We also note that the public interest is served by enforcing contracts. See
Caterpillar, Inc. v. Jerryco Footwear, 880 F. Supp. 578, 593 (C.D, Tl. 1994) (stating
that “[t]he public has an interest in seeing that parties that enter into commercial
agreements honor those agreements... .””); Varco, Inc. v. Eastland, 584 F. Supp. 1259,
1262 (D.C. Kan. 1984) (referring to policy favoring enforcement of valid contracts
when deciding to enforce non-competition clauses). We must also strive to ensure that
the public has confidence in our willingness to enforce contractual obligations. We fail
to provide such confidence if we permit Cook to ignore its contract with BSC in order

to advance its own interests and then escape the consequences by proclaiming that it

is doing the people’s work.



is not relevant because under either the federal standard or the Washington standard an
injunction is warranted.

Under federal law in deciding whether to grant a permanent injunction the court
should consider: (1) whether the party seeking the injunction has succeeded on the
merits; “(2) whether the [party seeking the injunction] will have an adequate remedy
at law or will be irreparably harmed if the injunction does not issue; (3) whether the
threatened injury to the [party seeking the injunction] outweighs the threatened harm
the injunction may inflict on the [other party]; and (4) whether the granting of the
injunction will harm the public interest .” Plummer v. American Institute of Certified
Public Accountants, 97 F.3d 220, 229 (7th Cir. 1996); See also Lovers Lane & Co. v.
Village of Libertyville, 128 F. Supp. 2d 1126, 1128 (N.D. Ill. 2000). Thus to obtain a
permanent injunction the party seeking the injunction must show that it has no
adequate legal remedy, but is not independently required to show an irreparable harm
if the injunction is not granted. See Crane by Crane v. Indiana High School Athletic
Ass’n., 975 F.2d 1315, 1326 (7th Cir. 1992) (stating that unlike with a preliminary
injunction, irreparable harm is not an independent element, but is only “one basis for
showing the inadequacy of the legal remedy”); see also Walgreen Co. v. Sara Creek

Property Co., 966 F.2d 273, 275 (7th Cir. 1992) (stating that when a permanent



further involvement with the Angiotech agreement subject matter. This case is based
on a contract and we based our findings specifically upon the terms of the Angiotech
agreement. Therefore, the injunction shall only restrict activities that would violate the
Angiotech agreement. If Cook and ACS or any other party can restructure their
relationship in a manner that does not violate the Angiotech agreement, then it will not
be a “scam” as BSC asserts, We note however, that any attempt at restructuring will
not only have to comply with the explicit terms of the Angiotech agreement, but will
also have to comply with applicable contract principles and our summary judgment
opinion. It appears that BSC included number 2 in the proposed order in an attempt
to head off future attempts by ACS or other parties to alter their position in order to
comply with the Angiotech agreement. We will deal with any such issues on an
individual basis as cases arise.

VI. Section 271(e)(1)

Cook claims that neither Cook nor ACS needs to exercise any licensing rights
to collect clinical trial data or to use it for FDA approval. Cook claims that it is
authorized to use the data under 35 U.S.C. § 271(e)(1) which states that: “it shall not
be an act of infringement to make, use, offer to sell, or sell... a patented invention .
.. Solely for uses reasonably related to the development and submission of information

under a Federal Jaw which regulates the manufacture, use, or sale of drugs... .” BSC

-17-



BSC does not have an adequate remedy at law due to the difficulty in determining the
amount of damages.
Il. Harm to the Parties

Cook claims that if an injunction is issued, it will suffer extreme hardship and
Cook will never recover. According to Cook, once testing is stopped the data collected
would be worthless. Also, hospitals may have ethical concerns with repeating the
clinical trial and randomizing the control arm patients to a placebo known to be less
effective than the device being studied. BSC disputes this claim, stating that if Cook’s
stent is superior, any new coated stent could be tested against an established coated
stent or against published data. Cook also claims that it will be harmed because the
injunction will nullify Cook’s own work in developing the stent before the ACS
agreement. Cook claims that had it developed ACHIEVE solely on its own, ACHIEVE
still would be closer to release into the market than the stent of BSC. Cook claims that
prior to the ACS agreement it spent nearly $100 million developing paclitaxel-eluting
stent technology, was well on its way to getting FDA approval on its own, and had
conducted extensive studies and developed its own technology. In making this
argument, Cook also brings up the contract law principle that a remedy for a breach of
contract is supposed to put the parties back in their original position prior to the

contract and not award a windfall to either party. By nullifying Cook’s past efforts on

~9-



environment in a section entitled “Inadequate Legal Remedy” and indicates that
irreparable harm relates to when the legal remedy would be inadequate due to the fact
that the injury “by its nature cannot be compensated by money damages.” Jd. at 69.
We note also that the court includes as one instance when legal remedies would be
inadequate when “the damages cannot be ascertained with any degree of certainty.”
Id.
DISCUSSION

I, Damages Based on Speculation

BSC argues that damages would be inadequate because any calculation would
be too speculative. According to BSC, the size of the overall drug-coated stent market
will have to be determined, but it is uncertain at what rate the stents will supplant older
technologies and how many will be eventually sold. Also it will be impossible to
predict the decline rate as newer technologies supplant the stents. It is not even known
when the new technology will arrive at the market place. BSC also claims that it would
be impossible to determine its market share with and without the ACS deal. At the
moment no one has any market share as none of the products are on the market yet.
To determine market shares, the Court will have to speculate as to when ACHIEVE
and other competitors enter the market place and the success of their products. Also

in addition to determining Cook’s market share, the court will need to determine what

-6-



injunction is considered, the question is whether damages would be inadequate, not
whether there would be irreparable harm).

Under Washington state law a party seeking an injunction must show; “(1) that
he has a clear legal or equitable right, (2) that he has a well-grounded fear of immediate
invasion of that right, and (3) that the acts complained of either are resulting in or will
result in actual and substantial injury to him,” and (4) there is not a “plain, complete,
speedy and adequate remedy at law.” Kucera v. Dept. of Trans., 995 F.2d 63, 68
(Wash. 2000). In deciding whether to grant an injunction the court must also balance
the hardships on the parties and consider the interests of the public. Jd. at 68.

We note that Cook has incorrectly cited Kucera, claiming that it stands for the
proposition that the party seeking an injunction must show “that it has no adequate
legal remedy and that it would be irreparably injured absent an injunction,”
emphasizing the “and” in the statement. Cook seems to base its argument on this rule
when it argues that BSC has not shown it would suffer an irreparable injury. Cook
misstates the rule in Kucera. The four factor standard listed above for granting an
injunction is taken from Kucera. Jd. Nowhere in Kucera does the court state that a
party must show an inadequate legal remedy and irreparable harm, Having an
inadequate legal remedy and facing irreparable harm are not necessarily mutually

exclusive. In fact, in Kucera the court discusses possible irreparable harm to the

-5-



is correct to point out that § 271(e) is not applicable in this case because this case does

not involve a patent infringement, and we are not convinced by Cook’s assertion that

the public policy behind § 271(¢) applies equally to this case.

CONCLUSION

For the foregoing reasons we grant BSC’s motion for a permanent injunction and

hereby order that:

1)

2)

3)

No person or entity shall render any performance under or attempt to enforce the
ACS deal, which consists of agreements dated August 16, 2001 between Cook,
Inc. and Advanced Cardiovascular Systems, Inc., and

Neither Cook, Inc. nor its affiliates shall directly or indirectly sell or transfer
paclitaxel-coated stents to another party, or distribute paclitaxel-coated stents
through another party in a manner inconsistent with the Angiotech agreement
dated July 9, 1997, and

No information, data or technology generated or gathered in connection with the
ACS deal shall be used for any commercial purpose, including the purpose of
obtaining regulatory approval to sell paclitaxel-coated stents in the United States
or elsewhere. Notwithstanding the foregoing, physicians may use such

information, data or technoloy to provide medical care that they deem

-18-



court will be speculating if it grants an injunction because it is uncertain whether BSC
will suffer any damages. Also Cook argues that it cannot be assumed that BSC’s
product will perform well in the marketplace. Neither can it be assumed that
ACHIEVE will be successful and thereby take business away from BSC. Cook’s
argument misses the point for under such an approach there would be no certainty that
BSC would suffer damages until BSC actually began suffering damages. The nature
of an injunction is that a court can take a proactive preemptive step, particularly where
damages will not provide an appropriate remedy later, to try and prevent a harm before
itoccurs. It is not a prerequisite that the party seeking the injunction already be in the
process of suffering damages. Cook admits that it is doing everything in its power to
get ACHIEVE approved and into the marketplace for commercial gain. We find that
to be sufficient to characterize the harm to BSC as likely and imminent.

Cook also argues that the unknown variables associated with calculating BSC’s
damages will be known by the time the appeal is completed. At that time, if Cook is
unsuccessful on appeal, the stents will be in the marketplace and the damages can be
readily determined. This argument ignores the fact that on August 7, 2002, we denied

Cook's motion for a stay. Cook concedes that there are no hard numbers currently

available that would help solidify a damages determination. We therefore find that



Minute Order Foun (06/97)

a

United States District Court, Northern District of Llinois

Name of Assigned Judge Charles P, Kocoras Sitting Judge if Other
vr Magistrate Judge than Assigned Judge
CASE NUMBER 01 C 9479 DATE 10/1/2002
CASE Cook Incorporated vs. Boston Scientific Corp.
TITLE
[In the following box (u) indicute the purty filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintit?, and (b) state briefly the nature

MOTION: of the motion being presented. |

DOCKET ENTRY:

q) oO Filed motion of [ use listing in “Motion” box above.]

Q oa Brief in support of motion due

(3) Oo Answer brief to motionduc ___.. Reply to answer brief due,

(4) 0 Ruling/Hearing on set for at

(5) Oo Status hearing[held/continued to] [sct for/re-set for] on set for at

® OO Pretrial conference[held/continued to] [set for/re-set forlon .__ set for at

(7) oO Trial[set for/re-set for] on at

(8) Oo [Bench/Jury trial] [Hearing] held/continued to al

(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) OlLoval Rule 41.1 OOFRCP41(a)(1) [1 FRCP41(a)(2).

(10) =x [Other docket entry] ENTER MEMORANDUM OPINION: Boston Scientific Corporation’s
motion (Doc 80-1) for permanent injunctive relief is granted. All matters in controversy having been
completed, final judgment is entered accordingly.

(di) ff [For further detail see order attached to the original minute order.]

No notices required, advised in open court.
No notices required. sumiber of notiogs
Notices muiled by judge's staff.
Notified counse! by telephone.
wv | Docketing to mail notices,
Y¥ | Mail A0450 form. > oes
Copy to juplgetmagistrate jude.

courtroom
deputy’s
initials

scr

*" “Dato/time received in

central Clerk's Office aaiting deputy initials



Although it is regrettable that Cook’s research efforts may be nullified and the
trial data will be rendered useless, Cook has unilaterally put itself into this position.
Cook cannot complain when BSC seeks to do nothing more than uphold its rights
under the Angiotech contract. By involving the ACS deal in its development ofa stent
in violation of the Angiotech agreement, Cook tainted its trial data, We cannot go back
in time and set Cook on its way prior to the ACS deal and thus allow Cook to avoid
wasted efforts. Cook has chosen its own path in this affair and now it must live by its
decision. Also, it is important to note that BSC is not seeking to foreclose Cook from
ever again developing paclitaxel-coated stents. Cook will be allowed to restart its
independent development program which it halted in March 2002. BSC has spent
more than 150 million dollars in the last five years developing a paclitaxel-coated stent
delivery system and the system is its most important product currently in development,
In equity a court must strive to be fair and do justice. In this case we have Cook
claiming that it will be harmed because it will be denied the fruits of its own wrong
doing. On the other hand we have BSC, whose most promising product in
development will be substantially disadvantaged by Cook’s beating it to the market.

Justice clearly falls in BSC’s favor.

-li-



its own to develop the stent, the court is destroying a competitor of BSC and is
therefore putting BSC in a better position than it was before the contract. Cook also
states that it will be harmed because it is seeking an appeal and will be harmed by the
injunction if there is a reversal. As stated above, we denied Cook’s motion for a stay
and are not obligated to sit on our hands while Cook proceeds through the appeal
process.

BSC acknowledges that the injunction will constitute a setback in Cook’s
development ofa paclitaxel-coated stent. However, BSC vehemently denies that Cook
would have beaten it to market without the unlawful aid of ACS. BSC also claims that
Cook’s loss as a result of the injunction is the direct result of Cook’s own wrongdoing.
Cook’s only response is that it will yet be determined on appeal if Cook is in the wrong,
and so it is premature to punish them in a manner that could cause them irreparable
harm. We made a final ruling in this case when we granted BSC’s motion for summary
judgment and we denied Cook’s request for a stay. We have already determined that
Cook is in the wrong and are not obligated to wait until Cook exhausts all its appeals
before we make any further decisions in this case. We think that ACS did accelerate
the development of ACHIEVE ahead of BSC. If Cook devoted so much time and
effort into development prior to the ACS deal, then its harm from the injunction should

be minimal as it claims that it was well on its way to FDA approval on its own.

-10-



impact ACS’s superior sales force had on BSC’s market share. Finally, the court will
need to multiply the number of sales lost by the profits on each sale. However, the cost
per stent is unknown as BSC has not yet brought them into full production and
production costs will fluctuate over time. Additional guessing would need to be done
regarding the amount of sales other than stents that BSC will lose as a result of ACS’s
ability to offer a wide range of other related products along with the stents. What
makes all of the above determinations even more difficult is that we are dealing with
anew product with no history of revenues or costs on which to base predictions. BSC
also argues that its goodwill and reputation will be harmed which is difficult to
quantify in damages.

We agree that in attempting any calculation of damages for BSC that we would
be pulling numbers out of the air and basing our finding on pure conjecture. Not only
would we need to determine the amount of the market share that will be lost to Cook
we will need to determine what other products’ sales were lost by BSC as a result of
ACS’s bundling other products with ACHIEVE. Additionally we would be making
those predictions concerning products that have not even been approved by the FDA
yet and have no market history.

Cook responds that BSC is suffering no damages now and the earliest that

ACHIEVE might enter the market is in the latter half of 2003, According to Cook the

-7-



ACS and Cook will be able to “bundle” other related products, such as guide wires and
guide catheters, with a sale of stents and they will also take away a portion of the
market of other products that BSC would normally “bundle” with its stent sales, BSC
also claims that ACS provides Cook with a far superior distribution system and will
further unnaturally increase Cook’s market share. According to BSC, when ACHIEVE
is sold to physicians, contracts as long as 24 months will be signed, thus potentially
foreclosing portions of the drug-coated stent market for years. Also, according to BSC
once ACHIEVE is on the market, physicians are not as likely to change to a similar
new product such as TAXUS unless there is a good reason such as a significant
difference in price or effectiveness.
LEGAL STANDARD

Cook claims that Washington law rather than federal law governs the issuance
of a permanent injunction because a federal court will apply state substantive law in
diversity cases. See Capital Tool and Mfg. Co., Inc. v. Maschinenfabrik Herkules, 837
F.2d 171, 172 (4th Cir. 1998) (indicating that under Erie state law governed decision
of whether to grant final injunction); Hanger Prosthetics & Orthotics, Inc. v. Morgan,
2000 WL 1843820, *1 (S.D, Ala. 2000) (stating that “[i]n a diversity case, whether to

grant a permanent injunction is governed by state law.”). BSC responds that this issue



IV. Whether Injunctive Relief Standards Warrant Issuance

We believe that both the federal and the Washington standards for injunctive
telief provide the same result. BSC has a legal right that has been infringed upon and
will continue to be infringed upon, and BSC has a well-grounded fear that its tights
will be violated. It is not contested that at this very moment Cook is doing everything
in its power to obtain FDA approval and to proceed to commercialization of ACHIEVE
and that ACHIEVE is forecasted to be released months prior to TAXUS. If Cook beats
BSC to the market, the injury to BSC will be real. Although the amount of harm will
be unclear, by beating BSC to the market a certain share of the market will be occupied
before BSC enters the market. It will be difficult for BSC to take back the market from
ACHIEVE once ACHIEVE is established, Physicians normally sign contracts that can
be as long as 24 months.

Physicians may not be motivated to change from ACHIEVE to a similar product
like TAXUS unless there is some dramatic difference in price or effectiveness. Also,
as stated above, any determination of damages that should be awarded to BSC is not
feasible as it would have to be based on pure conjecture. In addition to the many
unknown variables concerning stent market shares, there would be injuries to BSC’s
goodwill and reputation which would also be difficult to quantify. Although

irreparable harm is not an independent element of either the federal ot Washington

“14.



to ACS orits affiliates, or distribute paclitaxel-eluting stents through ACS, its affiliates,
or any other third party.” Cook points out that this court indicated in its summary
judgment opinion that the ACS agreements would be proper if they were between
Cook and an affiliate. Thus if ACS or another company were to eventually become an
affiliate of Cook, an agreement might be allowable. Cook claims that the proposed
order would foreclose all future relationships between Cook and ACS without scrutiny
in violation of due process,

BSC asserts that Cook is planning to circumvent this court’s summary judgment
ruling. Immediately after this court granted BSC’s motion for summary judgement,
ACS issued a press release indicating that it would be restructuring its relationship with
Cook so as to allow ACS to distribute the stents. BSC points out that in our opinion
we stated that the Angiotech agreement “clearly evinces an intent that only Cook and
[BSC] are to be players in the paclitaxel business.” BSC urges this court make sure
that Cook and ACS are not able to avoid the true intent behind our ruling by making
a cosmetic relationship change.

We find that the language in number 2 of the proposed injunctive order is too
broad. Cook is correct in asserting that it would be unfair to foreclose any possible
involvement in paclitaxel-coated stents by ACS or other parties. BSC claims that the

essence of our summary judgement opinion in this case is that ACS is to have no

-16-



stents to Cook and BSC. Thus we held that another series of agreements between Cook
and Advanced Cardiovascular Systems (“ACS”), which allowed ACS to distribute
paclitaxel-coated stents and aid Cook in getting FDA approval, violated the co-
exclusive agreement. Since that ruling Cook and ACS have continued to prepare their
version of paclitaxel-coated stents named ACHIEVE in violation of the Angiotech
agreement and are approaching the point at which ACHIEVE may be sold
commercially in the U.S. and elsewhere in the world. ACHIEVE is a few months
closer to regulatory approval in the U.S. than BSC’s paclitaxel-coated stents named
TAXUS. Johnson & Johnson is also expected to have a drug-coated stent on the
market named CYPHER approximately six months before ACHIEVE is marketed,
There are currently over 1,000 patients taking part in a FDA-regulated clinical trial
involving ACHIEVE which is in the patient follow-up phase.

BSC brought this motion for permanent injunctive relief because it believes that
it will suffer substantial harm and have no adequate legal remedy if Cook is allowed
to introduce ACHIEVE into the market before BSC introduces TAXUS. BSC claims
that Cook was able to accelerate the development and preparation of ACHIEVE
through the assistance of ACS in violation of the Angiotech agreement. According to
BSC, ACHIEVE will occupy a portion of the market that TAXUS would otherwise

occupy. Also, ACS has a much broader range of products to sell than Cook. Thus,

-2-



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS) ¢**~
EASTERN DIVISION

Dias
oct 12002
COOK INCORPORATED, )
)
Plaintiff, )
) ani
vs. ) 01 C9479
)
BOSTON SCIENTIFIC CORPORATION, )
)
Defendant. )

MEMORANDUM OPINION
CHARLES P. KOCORAS, Chief District Judge:

This matter is before the court on a motion for permanent injunctive relief
brought by Defendant Boston Scientific Corporation. For the reasons stated below, we
grant the motion.

BACKGROUND

On June 26, 2002, we granted Boston Scientific Corporation’s cross-motion for
summary judgement. This case involves a co-exclusive license agreement dealing with
paclitaxel-coated stents that are used to treat heart disease and avoid restenosis. The
agreement is between Angiotech Pharmaceuticals, Inc. (“Angiotech”), Boston

Scientific Corporation (“BSC”), and Cook Incorporated (“Cook”), We found in our

June 26 opinion that the agreement limited the commercial use of paclitaxel-coated

ott



I. Public Interest

An additional factor raised by Cook is the public interest. Where an injunction
would prohibit a certain type of medical treatment, as in this case, we take an extremely
cautious look at the public interest. Cook states that over 1,000 patients are currently
taking part in a FDA-regulated clinical trial involving ACHIEVE. Cook claims that
if it is not allowed to continue those trials, the test patients’ sacrifice in the interests of
medical science would be wasted, We note that Cook does not argue that the current
test patients’ medical care would be compromised in any way under the proposed
injunction. Cook claims that the public needs ACHIEVE because it is a valuable tool
for the treatment of heart disease and ACHIEVE Is far superior to the other stents that
are on the verge of FDA approval. Specifically Cook claims that ACHIEVE is superior
to the other stents coming out because it does not use a drug polymer-mixture.

BSC counters, stating that the injunction specifically allows physicians to
continue to use the data and technology to provide medical care for those 1,000
patients, BSC also claims that volunteers in trial programs know that the drug they are
testing may not be marketed commercially. In addition, BSC points out that there are
other technologies that can be used to treat restenosis which is a chronic condition that
is rarely life threatening. We agree that Cook overstates the public interest in an

attempt to draw the sympathy of the court and overlook the fact that Cook’s ultimate

-12-



standard, BSC would be irreparably harmed because the sales and contracts that Cook
obtains could not be undone, Even if damages were to be calculated in the future after
the stents had a market history, it would still be virtually impossible to determine what
BSC’s market shares in the stents and other related products would have been in the
natural course of events in the marketplace absent ACHIEVE.

Yinally, we do not find any compelling public interest that stands against
issuance of an injunction. Other products similar to ACHIEVE will be on the market
relatively soon. In fact CYPHER should be on the market earlier than ACHIEVE’s
forecasted approval. Also, the 1,000 test patients in the Cook FDA trials will still be
allowed to get appropriate treatment. Although Cook will suffer some setbacks as a
result of this injunction, its harm stems solely from its own wrongdoing. Cook’s harm
is also less than the considerable harm which BSC would face if'an injunction were not
issued. Cook is now free to restart its independent development program which it
suspended. Therefore, under both the federal standard and the Washington standard,
we find that an injunction is warranted.

V. Scope of Injunction
Cook argues that the proposed injunction is too broad because it would foreclose

all future relationships between ACS and Cook. The proposed order states: “2. neither

Cook nor its affiliates shall directly or indirectly sell or transfer paclitaxel-eluting stents