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In a lawsuit, Medinol Ltd. of Tel Aviv accuses Boston Scientific, a Natick company, of taking its cutting-edge stent-making machine, pictured here, and making an unauthorized copy of it.
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Suit accuses stent-maker of copying designsPage 4 of 5 -- Boston Scientific alleges the Israeli firm was intentionally slow to deliver the machine and that it was "subject to daily breakdowns" while it was being tested in Israel, according to a Boston Scientific company memo among the court filings.
Boston Scientific had no choice but to surreptitiously build its own machine, it asserts in court filings and interviews. The company argues that when Medinol failed to deliver the machine as agreed, Boston Scientific had the right to "cover," or arrange for substitutes for the goods that a seller had promised, according to the Uniform Commercial Code, a series of state laws that govern contracts. Boston Scientific launched the secret project in April 1997, when its lawyers incorporated an Irish firm called Forwich. That June, Forwich hired an outside consultant to run the company "to shield Boston Scientific from being associated with the project activities," according to an internal company chronology that Tobin gave the Richters in April 2000 when he told them about the secret project. Forwich conducted business under the name BBD "as another level of protection," according to the chronology and other documents. The name BBD was chosen "to signify 'Bringing a Better Deal' " to Boston Scientific, according to the official company chronology. Throughout the Boston Scientific documents, the names Project Independence and BBD are used interchangeably. Forwich set up a bank account, registered with local tax authorities, and leased a "ghost office with phone receptionist," according to the chronology. Another company document said there needed to be "no traceable links" to Boston Scientific Ireland Ltd., the company's official subsidiary in Galway. In June 1997, Paul Redmond, director of engineering and research and development at Boston Scientific Ireland, told Aiden Flanagan, an engineer who worked on much of the secret operation, that the purpose of the exercise was "to copy the machine," Flanagan said in his deposition. Boston Scientific Ireland ordered the folder-welder from Medinol on July 1, 1997, according to a purchase order in the court filings. It was shipped on July 20, according to a packing slip filed in court documents, and arrived in Ireland July 25. When the machine arrived at the official facility at the Ballybrit Business Park, it wasn't even unpacked from its crate, Flanagan said in a deposition. Instead, it was immediately reloaded onto another truck and shipped 135 miles to Dublin. Only two people in the Galway facility even knew the machine had arrived from Israel, Flanagan said. In Dublin, officials from BBD hired two engineering companies to take the machine apart and reverse-engineer the complex device. BBD also sought suppliers for the steel panels that would provide the raw material for the stents. To hide that it was making stents, BBD told its suppliers it was making "heat exchangers," a common engineering term for devices such as those used to keep electronics components cool. Continued... |
