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Medtronic Inc. ended a long-running patent fight on Friday by agreeing to pay $1.35 billion to a Los Angeles doctor who invented much of its spinal-treatment technology.

Medtronic Inc. ended a long-running patent fight on Friday by agreeing to pay $1.35 billion to a Los Angeles doctor who invented much of its spinal-treatment technology.

The settlement with Dr. Gary K. Michelson and his company, Karlin Technology Inc., calls for Medtronic to pay $800 million to buy spinal-fusion technology and $550 million to settle the legal claims.

Michelson had sought $1.7 billion when he sued Medtronic, and a jury awarded him about $510 million in punitive and compensatory damages last fall, saying Medtronic broke agreements that cover an implant used to treat damaged or diseased spinal discs. He had claimed that Medtronic breached patent agreements he made with spinal implant maker Sofamor Danek a decade ago before it was acquired by Medtronic in 1999.

Under the settlement, Medtronic gets more than 100 patents, 110 patent applications and about 500 foreign counterparts, as well as related contracts and rights.
Medtronic said the deal also gives it ownership of Michelson’s spinal inventions for the next 15 years.

Medtronic chief financial officer Gary Ellis told analysts on a conference call that $550 million would be recorded as a fourth-quarter expense. Another $75 million to $175 million will be accounted for as research and development, with the rest to be amortized over as many as 20 years, he said.

The cash-rich medical device company said the settlement would not hurt earnings.

Medtronic shares fell 25 cents to $50.90 in afternoon trading on the New York Stock Exchange.

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