Surgeon sues J&J’s DePuy in royalties dispute

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DePuy Synthes Spine's MountaineerA surgeon who helped Johnson & Johnson (NYSE:JNJ) subsidiary DePuy Synthes Spine develop instruments and implants for spine procedures wants a Massachusetts federal court to overturn an arbitrator’s ruling that the company doesn’t owe royalties on the products, according to a lawsuit filed last week in the Bay State.

Dr. Carl Lauryssen and his company, Jordan Consulting, helped develop the Mountaineer OCT spinal system and thethe C1 drill guide for occipito-cervico-thoracic spinal fusion procedures. The parties inked the development deal in 2003, but by November 2014 the arrangement had soured, leading Lauryssen and Jordan to file for arbitration. They alleged that DePuy breached the contract by underpaying royalties owed on the Mountaineer system and failing to pay royalties for the C1 drill guide, according to an Oct. 27 complaint filed with the U.S. District Court for Massachusetts.

DePuy’s counterclaim alleged that the royalties arrangement ended in March 2010 and sought to recoup royalties paid to Jordan and Lauryssen. Last month the arbitrator denied all of Jordan and Lauryssen’s claims and agreed that the royalty deal expired in March 2010, but denied DePuy’s bid to recoup any royalties, according to the complaint.

“Although the arbitrator’s final award stated that it denied Jordan’s counts for breach of contract, the final award clearly stated that Jordan was contractually entitled to patent royalties when the Mountaineer screws and rods were used with the cross-connector during the period November 4, 2008 to March 2010. It was undisputed that Jordan had not been paid patent-based royalties on said items when used with a cross-connector,” the plaintiffs alleged. “Notwithstanding the foregoing, the arbitrator also denied Jordan’s request for an accounting that would have required DePuy to calculate the amount of DePuy’s underpayment of royalties and did not present Jordan with any further opportunity to address the damages resulting from DePuy’s breach of contact.”

The plaintiffs asked the Massachusetts court to vacate the arbitrator’s ruling and remand the case for another round of mediation, according to the complaint.

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