A New York federal judge ruled Tuesday that Johnson & Johnson’s Ethicon unit must pay ChemImage Corp. $76.6 million for unilaterally terminating their agreement to develop advanced artificial intelligence imaging technology for surgical applications.
U.S. District Judge Jesse M. Furman issued a detailed ruling awarding ChemImage $40 million in termination fees plus $36.6 million in intellectual property impairment damages. The judge adopted a 17% discount rate on damages as proposed by ChemImage, rejecting Ethicon’s requested 40% rate.
The dispute arose after Ethicon abruptly ended the 2019 contract in 2023 without following agreed termination procedures or receiving a final decision from the joint steering committee responsible for milestone approvals. Following a bench trial earlier this year, Judge Furman found Ethicon liable for the termination fee and additional IP damages related to the project’s premature end.
In his ruling, Judge Furman emphasized that Ethicon’s proposed discount rate overstated development risks and unfairly reduced its liability. The court ordered ChemImage to file a proposed judgment by July 14 and indicated the entry of judgment would not be delayed pending decisions on attorney fees, for which ChemImage has sought $19.8 million or 33.3% of the judgment.
Johnson & Johnson stated it “strongly” believes its actions were justified and will review the judgment carefully, considering all legal options including potential appeals.
The case, ChemImage Corp. v. Johnson & Johnson et al., case number 1:24-cv-02646, is pending before the U.S. District Court for the Southern District of New York.
