Since Linda Lenox began designing medical devices in her garage in 1987, she’s invented and patented four products and developed hundreds more. When she inked a distribution deal with Medtronic Inc. (NYSE:MDT) to distribute the revolutionary bone mill made by her firm, Lenox MacLaren Surgical Corp., she hoped the deal would provide the scale to put the devices in every orthopedic surgical suite in the world.
But the deal allegedly came to naught after Medtronic only bought about 500 of the mills and used them in an ambitious loaner program to create a thriving demand for them, even as it worked to develop its own mill to usurp the Lenox MacLaren device, according to a lawsuit filed in the U.S. District Court for Colorado.
Bone mills are used to grind bone samples taken from patients into uniform pieces, which are then packed into a bone void or fracture during spinal fusion procedures to help the damaged vertebrae heal. Louisville, Colo.-based Lenox MacLaren’s hand-cranked device was an advance because it created uniform pieces, no matter how fast it was cranked, leaving the individual bone cells intact, according to court documents.
Medtronic executives liked the device so much that it signed an exclusive distribution deal with Lenox MacLaren in 2000, telling Linda Lenox that “together, Medtronic and Lenox MacLaren could sell two Lenox MacLaren Bone Mills to every operating room in the world,” according to the documents. The terms of the deal called for Lenox MacLaren to make the mills and gave Medtronic, using its worldwide sales army, the exclusive right to sell the devices. But there were problems almost from the beginning, according to the lawsuit.
“Unbeknownst to Lenox MacLaren until 2006, MSD USA, with the help of the other Medtronic Defendants, was loaning Lenox MacLaren Bone Mills to surgeons and hospitals, rather than selling them as intended by Lenox MacLaren’s relationship with Medtronic,” the lawsuit alleges. “The Loaner Program achieved twin purposes for Medtronic: cultivating widespread interest in a bone mill while preserving the relevant market space for the upcoming Midas Rex Legend electric bone mill to fill.”
And once the Midas Rex Legend was ready for the market, Medtronic allegedly issued an “improper” recall of the Lenox MacLaren mill, clearing the way for its own device to take over the market, according to the documents.
A Medtronic spokesman told the Twin Cities Pioneer Press that the issues in the case were already settled in a previous lawsuit filed by Lenox MacLaren, which was dismissed after an arbitration panel agreed with the Colorado firm on one claim and awarded about $322,000 to Lenox MacLaren.
“We do not comment on pending litigation,” Brian Henry, a spokesman for Fridley, Minn.-based Medtronic told the newspaper. “However, it does not appear that there is anything raised that was not already resolved in the first case.”