Medtronic Unit to Pay Doctor in Contract Suit

A federal jury in Memphis on Tuesday ordered a Medtronic Inc. subsidiary to pay about $110 million in a dispute between the company and a Los Angeles doctor who invented some of its spinal fusion technologies.

The jury found that Memphis-based Medtronic Sofamor Danek Inc. breached some parts of its agreements with Los Angeles orthopedic surgeon Gary Michelson and that some of the company’s products infringe his patents. The company may have to pay additional damages on those products.

The damages were partly based on a percentage of income from devices on which the doctor holds patents, and the total could reach about $160 million, said Dan Gagnier, a spokesman for Michelson.

The company also could be ordered to pay punitive damages, to be determined by the jury during a separate phase of the trial.

Thomas Gunderson, an analyst at Piper Jaffray in Minneapolis, called the award a “small dent in the overall Medtronic structure,” adding that the company generates about $150 million in cash every month.

Michelson declined to comment on the judgment.

Michelson’s suit, which went to trial in June, sought a total of $1.7 billion in damages.

Medtronic, a medical technology company based in Minneapolis, issued a statement saying its subsidiary was taking steps to address some of the issues in the case “and will undertake further evaluation of the jury’s determinations to assure compliance with the provisions of our agreements with Dr. Michelson and his company.”

The company also noted that its contracts with Michelson remained in effect.

Medtronic paid royalties to Michelson totaling more than $30 million from 1994 to 2001, company spokesman Robert Hanvik said.

Michelson had accused Medtronic of shortchanging him on royalties and failing to live up to agreements to produce his spinal implants. The jury rejected Michelson’s argument, however, that Medtronic wrongly withheld production of some of his inventions.

The implants invented by Michelson and produced by Medtronic are used to treat patients suffering from damaged or diseased spinal discs.

Medtronic shares rose 35 cents to $50.85 on the New York Stock Exchange.