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Case Narrative and Supporting Documents

9 January, 2015 - 09:41
Available under Creative Commons-ShareAlike 4.0 International License. Download for free at http://cnx.org/contents/3d8499e9-08c0-47dd-9482-7e8131ce99bc@11.15

Biomatrix Abstract

Biomatrix manufactures a medical product called Synvisc, a lubricant injected into the knee to take the place of natural lubricants that disappear with age. Synvisc was developed in the late 1990s to help patients suffering osteoarthritis, a condition that leads to immobility in the knee caused by the disappearance of natural lubricating fuids and the deterioration of the cartilage that cushions the knee's movement. As individuals age the natural chemical lubricants in the knee lose their elasticity. Synvisc is designed to slow this process. Manufactured from the comb of roosters, it mimics the chemical structure and properties of the knee's natural lubricants. Injected into the knee in a treatment called visco supplementation, it provides patients with immediate though temporary relief from osteoarthritis. In many cases it has helped postpone difficult and painful knee surgery.

Cybersmear

  • From April 1999 to August 2000, three individuals posted over 16,000 messages critical of Biomatrix in a financial discussion forum provided by Yahoo. Using 23 pseudonyms, they made several unsubstantiated claims:
  • that Synvisc produces harmful side effects
  • that Biomatrix covered up negative financial and product information
  • that Biomatrix and its corporate officials had connections to the Mafa
  • that the publicly announced friendly merger between Biomatrix and Genzyme was a ruse and would never take place
  • that the CEO of Biomatrix was under investigation by famous Nazi hunter, Simon Wiesenthal, for crimes committed in Germany during the second world war
  • that a top level Biiomatrix corporate officer routinely sexually harassed employees

The Outcome

All of these claims were successfully refuted during legal proceedings initiated by Biomatrix. Yet this false information may have had a negative impact on the financial well being of the company. During the period in which the messages appeared in Yahoo, Biomatrix stock dropped from 35 to 21 dollars per share. Other factors may have contributed to this loss. (Biomatrix mentions difficulties with FDA regulations and protecting its patents in its report to the Security Exchange Commission.) But Biomatrix took direct legal action to stop the flow of negative information, find those responsible, and seek compensatory and punitive damages. They initiated a John Doe lawsuit that asked the court to subpoena Yahoo to identify the authors of the defamatory messages. Yahoo complied revealing two former Biomatrix employees, Raymond Costanzo and Ephraim Morris. A third participant, Richard Costanzo who was Raymond's twin brother, was also identified. These three, who called themselves the BXM Police, failed to substantiate the claims they made in their 16,000 messages. Biomatrix legal counsel petitioned the court for summary judgment. On August 2, 2000, the court found Costanzo, Costanzo, and Morris guilty of defamation.