Biomet units lose $2.7M royalty dispute with spine surgeon

August 27, 2013 by Brad Perriello

An appeals court in New Jersey upholds a $2.7 million judgment against 2 Biomet subsidiaries in a royalties dispute with spine surgeon Dr. Neil Kahanovitz.

Biomet loses royalties dispute with spine surgeon

Two Biomet subsidiaries are on the hook for some $2.7 million in royalty payments to a prominent spine surgeon it stopped paying in 2008, after a New Jersey appeals court upheld a lower court's ruling in Dr. Neil Kahanovitz's favor.

Kahanovitz, the former president of the North American Spine Society, sued Biomet units Electro-Biology Inc. and EBI LLC, winning a breach of contract claim on appeal in 2011. He'd inked a royalties deal worth $250,000 a year in 1992, but stopped actively consulting for them in YY, according to the decision by the New Jersey Superior Court's Appellate Division.

The contract called for the payments to continue "during the term of this agreement and for so long as Kahanovitz is performing services within the agreement field," according to the appeals court, with the contract set to expire in November 2008.

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"The issue is whether the annual $250,000 payment was due even after the November 30, 2008 date referenced in the 2004 Agreement so long as Kahanovitz continued to practice as an orthopedic surgeon," according to court documents.

The court agreed with Kahanovitz that the lower court was correct in considering the testimony of the Electro-Biology and EBI executives who made the deal with the surgeon, according to the documents. Then-EBI CEO James Pastena told the lower court that the agreement was meant to reward Kahanovitz for as long as he practiced in the spine surgery field.