In a significant legal setback, Johnson & Johnson (J&J) has been ordered to pay over $1 billion in damages following a Delaware court ruling. The pharmaceutical giant was found to have breached its agreement related to its $3.4 billion acquisition of Auris Health Inc., particularly concerning the development and regulatory approval of two surgical robots, the iPlatform and the Monarch.
Delaware Vice Chancellor Lori W. Will determined that J&J failed to honor its commitment to prioritize these projects, significantly affecting the potential of these devices. According to the ruling, J&J’s actions during a competition dubbed “Project Manhattan,” which pitted the iPlatform against the Verb, a rival robot already in development with a Google affiliate, disadvantageously shifted resources away from the iPlatform.
“J&J’s promise to Auris was broken almost immediately,” said Vice Chancellor Will in her 145-page opinion. She further noted that the delays orchestrated by J&J were advantageous to avoid making earnout payments that hinged on the regulatory milestones of the iPlatform.
Despite the ruling largely favoring Auris’ former shareholders, J&J did secure partial victories. The court rejected various contract claims connected to the Monarch robot and certain fraud allegations. However, J&J was found liable on one fraud count related to the Monarch’s development.
The plaintiffs in the case included Auris’ founder, a pioneering figure in surgical robotics, previously associated with Intuitive Surgical Inc., the company behind the widely-used Da Vinci surgical robot. Legal representation for the plaintiffs was provided by firms such as Ross Aronstam & Moritz LLP and Selendy Gay Elsberg PLLC, while J&J was defended by Morris, Nichols, Arsht & Tunnell LLP and Patterson Belknap Webb & Tyler LLP.
For more details, you can read the full article on Bloomberg Law.