Delaware court orders J&J to pay $1 billion for surgical robot breach

A Delaware court has mandated Johnson & Johnson to pay over $1 billion in damages due to a breach of its acquisition agreement with Auris Health Inc. The court found that J&J failed to prioritize the development of surgical robots, which was a key promise made during the acquisition. The judge noted that J&J's actions significantly delayed the achievement of regulatory milestones that Auris was on track to meet. Instead of supporting Auris's iPlatform, J&J diverted resources to compete against its own robot, Verb, which ultimately hindered progress. This internal competition, referred to as Project Manhattan, was detrimental to Auris's objectives and allowed J&J to avoid paying an additional $2.35 billion earnout to Auris shareholders. J&J's defense claimed that the merger agreement allowed for broad discretion in integrating products and that delays were due to unforeseen technical difficulties. However, the court found these arguments unconvincing, stating that the technical issues were anticipated and manageable. The judge ruled in favor of J&J on some claims, dismissing fraud allegations related to misleading Auris about meeting regulatory milestones. The ruling highlights the importance of adhering to acquisition agreements and the potential consequences of failing to prioritize promised developments.