J&J feels Decision Diagnostics' sting in glucose strip patent fight

A judicial panel hit Johnson & Johnson ($JNJ) with a potentially vexing setback in its patent fight against tiny rival Decision Diagnostics ($DECN) over its upstart glucose test strips.

Decision makes Genstrip, a disposable glucose testing strip that hit the U.S. market in early 2013 for use with J&J's LifeScan Ultra glucose meter as an alternative to J&J's own branded strips. J&J has tried to quash the product through its patent lawsuit. But as Forbes reports, Decision has filed counterclaims that may draw blood. Those blows challenge J&J's main patent, and also accuse the global conglomerate of falsely advertising that its own market-dominating glucose testing strips are superior to the competition. And now a four-judge panel with the U.S. Patent and Trademark Office ruled that Decision's challenge to J&J's main patent may have merit, Forbes noted, with the panel determining that it "established a reasonable likelihood" it would win its case.

Usually, when a giant company sues a tiny rival in a patent fight, these things don't last long. Larger companies have deeper financial pockets, after all, and they can win, in part, with overwhelming financial pressure. But the Forbes story reminds us that this patent battle has gone on since September 2011. A court placed an initial injunction against Genstrip, but Decision won a stay to lift the injunction, pending its appeal of that particular ruling, Forbes explains.

J&J has plenty to lose. As Equity Brief notes in a new report issued earlier this month, Johnson & Johnson remains a leader in the multi-billion-dollar glucose-monitoring sector with a commanding market share of more than 30%. But the analyst firm also notes that "Genstrip has superior performance and pricing than the current generation of test strips on the market" and is also about 50% cheaper than other name brand strips.

Even worse for J&J, Decision is rolling out its next-generation Genstrip iteration, Forbes points out.

What will come next? J&J could just as easily keep up the court battle with its deep financial pockets. But as the article reminds us, the company could just as easily seek to avoid the legal fight by trying to snatch up Decision Diagnostics outright.

- read the full Forbes story
- here's the Equity Brief report summary