Medtronic vs. Michelson
Michelson is most known for the $1.35 billion settlement he received from medical device maker, Medtronic (Sofamor Danek), in 2005. He spent years in litigation over his patents before the settlement was reached.
The dispute grew out of disagreements over obligations under contracts in the early 1990’s covering the licensing of Dr. Michelson’s inventions to Sofamor Danek, a company in Memphis.
Dr. Gary K. Michelson developed procedures that could provide pain relief to patients with relatively non-invasive surgery. The inventions included surgical technologies as well as techniques for spinal regeneration.
The products at the center of the dispute were invented by Michelson to simplify basic spinal surgery, in which a damaged disk is removed and the adjacent vertebrae are fused together.
The devices help patients recover more quickly and spend less time in the hospital.
- 1994 – Michelson licenses his patented spinal infusion inventions to Sofamor Danek
- 1999 – Medtronic Acquires Sofamor Danek
- 2001 – Medtronic started a legal battle by suing Michelson, seeking more than $200 million for breaking their contract
- Medtronic argued that the 1994 agreements gave it rights to all 600 of Michelson’s spinal surgery inventions, while he contended that the contracts did not apply to those he created after the agreement.
- Michelson filed a countersuit alleging that Medtronic underpaid his royalties and infringed his post-1994 patents.
- 2004 – Court Issues Second Ruling on Michelson Counterclaims
- Court Issues Ruling on Initial Medtronic Case, forcing Medtronic to pay damages to Michelson
- Jurors rejected all the claims by Medtronic and found that the company breached license agreements, engaged in wrongful conduct, infringed six patents owned by Michelson and intentionally underpaid royalties.
- Although the jury forced Medtronic to pay damages, it decided the company could still use all of Michelson ‘s pre-1994 inventions, which bring the company about $500 million in sales every year.
- Michelson and Medtronic negotiated a new deal for Medtronic’s use of Michelson ‘s post-1994 inventions.
- 2005 – Medtronic Settlement Concludes Legal Battle
- After the 2004 verdict, Medtronic envisioned “post trial remedies” for what they called, “unjustified and excessive” awards.
- Michelson filed an injunction to stop Medtronic from further patent infringement.
- The two parties settled these remaining arguments out of court, finally ending the legal battle.
- Medtronic and Michelson Finally Settle for $1.35 billion [2005.04.25. John McCormick. HealthPointCapital]
- L.A. Surgeon to Be Paid $1.35 Billion for Patents [2005.04.23. Denise Gellene. Los Angeles Times]
- Medtronic to Pay $1.35 Billion to Inventor [2005.04.23. Andrew Pollack. New York Times]
- Jury Orders Medtronic to Pay Punitive Damages of $400 Million to L.A. Inventor [2004.10.13. Lisa Girion. Los Angeles Times]”
- Medtronic Must Pay Inventor $159 Million [2004.09.29. Barnaby J. Feder. New York Times]