LOS ANGELES, CA--(Marketwired - Jun 2, 2016) - Decision Diagnostics Corp. (OTC PINK: DECN), the manufacturer, quality plan administrator and the exclusive worldwide sales, service and regulatory processes agent for GenStrip™ 50 and the GenUltimate!™ glucose test strips, both designed to work with the market leading Johnson & Johnson's ("J&J") LifeScan OneTouch Ultra family of glucose testing meters, and the in-development GenSure!™ and GenChoice!™ glucose test strips targeted to the U.S. and/or developing world markets, today reports the completion of term negotiations and the signing of a final settlement to conclude all patent litigation filed by J&J against PharmaTech Solutions and its parent company Decision Diagnostics.
As the company's loyal shareholders are well aware, Decision Diagnostics and its subsidiary PharmaTech Solutions were reluctantly drawn into this lengthy patent litigation journey nearly five years ago, with two divisions of Johnson + Johnson. The management team at DECN was deeply knowledgeable and extensively experienced in glucose test strip technology. Prior to market introduction, it was the shared internal opinion that the companies' GenStrip product was independent of any current product patent and infringed on no proprietary intellectual property. Extensive research by expert patent attorneys was contracted by the company and its insurers to corroborate that belief.
Fortified with comprehensive legal assurances, GenStrip was targeted for launch and commercialization. Market planning and projections strongly indicated rapid growth and broad distribution. Contracts were negotiated with critical brick and mortar chain drug and mass merchandisers, as well as pharmaceutical group purchasing organizations. Print and television advertising was created and a supportive promotional campaign was launched. Revenue began flowing and DECN's market awareness quotient was elevating.
Growth and expansion was abruptly interrupted by the now broadly known meritless litigation and intimidation barrage of our customers leveled by the divisions of Johnson + Johnson (LifeScan/J&J). A "scorched earth" campaign of lies, threats and intimidation coupled with tens of millions of dollars in allocated legal expenditures to finance unfounded patent infringement allegations functionally curtailed further GenStrip market expansion. The relentless legal assaults forced our transition from an aggressive, vital market focused entity to allocation of a preponderance of available human and financial resources towards refuting each lie, countering every threat, overcoming false testimony, and defeating all accusations. The corporations' directors and senior management in conjunction with its litigation patent attorneys evaluated the legal and market environment concluding that the only just recourse was to be vindicated by the courts and to ultimately defeat J&J/LifeScan in the marketplace of free competition. It was appreciated at the time that J&J would resort to any tactic in order to prevail. There was no action, lie, provision of false witness, delay or accusation to which they would fail to stoop to defeat our just position as a viable competitor. They were expected to behave egregiously and abominably; they proceeded to exceed all of the worst expectations.
More than four years of searing, vitriolic and relentless attacks and prevarications were not only endured but thoroughly rebuffed. The U.S. Appeals Court for the Federal Circuit on May 10, 2016 finally terminated the J&J/LifeScan meritless and illicit legal campaign through a unanimous rejection of the J&J petition for en banc rehearing requested in a desperate attempt to preserve their foundational patent. That ruling, and the Mandate that followed nine days later, not only rendered any J&J claims to patentability null and void, but also shattered their erected customer intimidation barrier to the GenStrip market reentry.
As has been previously reported, J&J/LifeScan and DECN and PharmaTech were ordered by the district court judge to participate in mandatory mediation to resolve all patent infringement and trademark violation litigation filed by J&J/LifeScan against PharmTech Solutions, the subsidiary of DECN. Those mediation sessions were held on April 26, 2016 and conducted by the Chief Magistrate of the Federal District Court. At the close of the mediation Decision Diagnostics/PharmaTech Solutions agreed in principle to terms that would dismiss all litigation by J&J against the companies.
On May 20, PharmaTech formally agreed to the terms of a final settlement and executed an agreement to that effect. Those actions have brought to a conclusion all litigation by J&J/LifeScan against the company's PharmaTech subsidiary in pursuit of any and all claims of patent and trademark infringement. PharmaTech has been proven to be entirely innocent of each and every accusation leveled against it. J&J will pay the company for their actions a cash settlement in an amount that has been made confidential by the court. It is with great pleasure that the company hereby informs its shareholders, the investment community and followers of our company that GenStrip, GenUltimate! and its family of associated products are now free of any legal constraints, and also all threats of intimidation and retribution targeted to our customers have been removed.
"GenStrip and GenUltimate! are now officially, legally and justly available for sale," Keith Berman, PEO of DECN and President of PharmaTech Solutions, Inc. commented. "It is over and we have unconditionally won. The long, seemingly endless legal carnage that we all have been forced to weather is now behind us. As a company, we faced a crucial decision once the courts had ruled on the veracity of our claims and the legitimacy of our position. We evaluated the benefits of continuing legal pursuit of a maximum settlement of damages in California versus the associated costs of that pursuit in financial and human resource allocation, and also in critical opportunity cost. The decision that was made responded to the fundamental issue that prompted our defense and drove our continued pursuit. This odyssey was governed and sustained by the conviction of our unencumbered right to market our 'Gen' family of test strips to whomever, and wherever, we chose. That right is now undisputed and we have unanimously decided to immediately exercise it. The maximization of penalty and damage collection will appropriately be derived from J&Js own product revenue stream. We intend to beat them in the marketplace, own their market share and capture their earnings."
Although the company believes we had been justly compensated through the settlement, and extended litigation may have expanded the amount, we came to the realization that our singular immediate objective was manufacturing and delivering low priced, quality strips to diabetics. Our entire growing organization is alive and eager to directly engage J&J/LifeScan in a free and open market. The company capitalized on its functional market hiatus by extensively planning and developing a suite of new products and the protection of our own technologies through patent infringement litigation against J&J. These new additions are scheduled for release throughout 2016 with additional product and product line extensions anticipated in 2017.
Mr. Berman concluded, "Once again, we have won a resounding, and frankly, startling series of legal victories. Our little Pharma Tech has crushed a healthcare leviathan. We have metaphorically brought it to its knees and forced it to beg for forgiveness. However, the resources that we were forced to expend in pursuit of this result were far from modest. We learned from this confrontation that we are competing in a litigious landscape dominated by the large and wealthy. As a result, our planned new product introductions will be fortified with an extensive legal defense financial armada and partnership participation by specialty legal (case) financing funds. A large litigation financing fund has been contracted and additional IP defense insurance policies have been established to protect against possible future baseless allegations. In fact, the entire cash settlement award from J&J has been directly transferred at our request into this fund, maintained by our counsels. In effect, J&J is underwriting our future litigation victories and our future litigation defenses. Some might refer to this as justice."
This release contains the Company's forward-looking statements which are based on management's current expectations and assumptions as of May 31, 2016, regarding the Company's business and performance, its prospects, current factors, the economy and other future conditions and forecasts of future events, circumstances and results.