Syneron Medical Ltd. (NSDQ:ELOS) agreed to pony up $31 million plus royalties for the rights to a pair of Palomar Medical Technologies (NSDQ:PMTI) patents for laser- and light-based hair removal technologies, ending a long-running legal battle.
Syneron inherited the imbroglio when it acquired Palomar’s Bay State rival, Candela Corp., for $65 million in January 2010. The case dates back to a pair of patents Burlington, Mass.-based Palomar licensed from Mass. General Hospital back in 1995 for light-based hair removal.
Palomar had accused Candela (and then Syneron) of willfully copying its technology. Today Syneron and Palomar announced a deal that will see Yokneam, Israel-based Syneron dish out $31 million in up-front cash for the rights to the two patents in the case. Syneron will also pay out royalties on sales of "consumer home-use lamp-based hair removal products," according to a press release.
The royalties are structured to deliver 5.0 percent "up to up to an undisclosed amount of cumulative sales," then 6.5 percent up to another secret milestone and 7.5 percent after that, according to the release. The deal also includes provisions for Palomar to license Syneron and Candela patents royalty-free. Forty percent of of all payments from the deal will go, in turn, to the General Hospital Corp., which owns Mass. General.
"Palomar pioneered the cosmetic light-based industry with the first high-powered laser hair removal system in 1997," Palomar president & CEO Joseph Caruso, said in prepared remarks. "Our intellectual property strategy has proved to be a valuable asset for our shareholders and we will continue to focus on expanding our intellectual property in the future."
“We are pleased to reach a mutually beneficial settlement that effectively ends the patent disputes between Syneron and Palomar," added Syneron CEO Louis Scafuri. "Syneron has a very strong balance sheet and we believe this fully paid-up license is a strategically beneficial utilization of our cash. It eliminates our exposure to continued legal liability in the matter, does not require any additional payments for professional hair removal systems, and supports our ongoing efforts to improve the company’s gross and operating margins.”