Aug. 30 (Bloomberg) -- Johnson & Johnson's $5.5 billion suit over its failed bid to buy heart-device maker Guidant Corp. was scaled back, as a U.S. judge dismissed some of J&J's claims against Guidant and Boston Scientific Corp., the winning bidder.

U.S. District Judge Gerard Lynch in New York also threw out all of Johnson & Johnson's claims against Abbott Laboratories yesterday. Abbott's purchase of Guidant's heart stent business cleared the way for Boston Scientific to buy Guidant for $27.5 billion, Johnson & Johnson said.

Johnson & Johnson sued last year, claiming Guidant violated the companies' merger agreement by providing confidential information about itself to Abbott. The sale of the heart stent business to Abbott cleared away antitrust hurdles that might have blocked the bid by Natick, Massachusetts-based Boston Scientific, Lynch said.

``This case may hinge on a factual question that the parties can surely answer with little difficulty: whether Guidant, BSC or Abbott first made the approach that resulted in Guidant's provision of due diligence information to Abbott,'' Lynch wrote.

Johnson & Johnson, based in New Brunswick, New Jersey, claimed it's entitled to $5.5 billion in damages, in addition to the $705 million termination fee that Guidant paid after accepting the Boston Scientific bid.

Fair Dealing

J&J welcomed Lynch's decision to uphold a breach of contract claim and will continue to pursue the case, said Marc Monseau, a company spokesman. Boston Scientific spokesman Paul Donovan said his company is pleased that most of the suit was dismissed and that Johnson & Johnson's remaining claim is without merit.

Abbott applauded Lynch's dismissal of the case against the company, said spokesman Scott Stoffel in an e-mailed statement.

In his ruling, Lynch dismissed claims that Boston Scientific improperly interfered with the agreement between Guidant and J&J and that Guidant violated a duty of good faith and fair dealing it owed to Johnson & Johnson. Lynch let stand a claim that Guidant violated the merger agreement.

Lynch said that pretrial discovery in the case may go forward, focusing on the timing of when Guidant provided Abbott with the confidential information in relation to the Boston Scientific and Johnson & Johnson bids.

J&J Bid

In December 2004, Johnson & Johnson agreed to buy Guidant for $25.4 billion. After Guidant recalled 109,000 heart defibrillators linked to seven deaths, J&J reduced its offer to $21.5 billion in October 2005. The agreement barred Guidant from soliciting other offers or providing confidential information to another company, Johnson & Johnson claims in the suit.

In December 2005 as the merger awaited regulatory review, Boston Scientific made a $25 billion bid for Guidant. Johnson & Johnson claims Guidant then improperly allowed Abbott to review its finances to see whether Abbott would agree to buy some of its businesses in the event Boston Scientific's bid won out.

Boston Scientific acquired Guidant in April 2006 for $27.5 billion.

``This case arises from a proposed merger that left plaintiff Johnson & Johnson with a broken heart,'' wrote Lynch.

Johnson & Johnson shares fell 26 cents to $61.60 in New York Stock Exchange composite trading. Boston Scientific shares fell 16 cents to $12.69. The shares have fallen 26 percent so far this year.

The case is Johnson & Johnson v. Guidant, 06-CV-7685, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net.

Last Updated: August 30, 2007 17:44 EDT