A federal jury ordered Medtronic Inc. on Tuesday to pay a Los Angeles surgeon $400 million in punitive damages in a dispute over implants that he invented to treat spinal injuries.
Those damages came on top of $110 million in compensatory damages the jury awarded two weeks ago to Dr. Gary K. Michelson and his licensing firm, Karlin Technology Inc., after finding that Medtronic, which sold the implants, breached several licensing contracts.
The jury also ruled that the medical equipment maker infringed patents held by Michelson and must pay him 10% of its sales on those products -- royalties that could boost the total damages to more than $1 billion over the next 20 years, said Robert Krupka, a Los Angeles lawyer who represents Michelson.
"This is one of the best days of my life," said Michelson, who practiced at Centinela Hospital Medical Center in Inglewood for two decades and holds hundreds of patents for spinal surgical techniques, implants and devices. "I have a deep sense of awe, really awe, that this jury could get it so right."
Minneapolis-based Medtronic called the award "unjustified and excessive" and said it would appeal the ruling against its subsidiary Medtronic Sofamor Danek Inc. The company expressed confidence that it would be vindicated.
"We do not believe today's verdict will have any material impact on our ability to supply products to our customers or to continue to innovate," said Bob Hanvik, spokesman for Medtronic, which does $9 billion annually in global sales of medical devices.
Analysts said the cash-rich company could handle the award, if it sticks. An appeals court could reduce the damages or overturn the jury decision.
Medtronic shares fell 9 cents to $51.09 on the New York Stock Exchange.
The legal battle began in 2001 when Medtronic sued Michelson, alleging that he was interfering with its business by trying to sell his devices to competitors.
Michelson countersued, alleging that Medtronic invented its claim in an effort to scare off other firms from doing business with the doctor in order to gain a stronger position in its own negotiations with him. He also claimed that Medtronic had cheated him out of royalties and infringed some of his patents.
The trial was held in U.S. District Court in Memphis, Tenn., home of the Sofamor Danek unit.
