Dueling spinal-implant-makers Synthes (USA) L.P. and Globus Medical Inc. have settled their tradesecrets court dispute, with Globus agreeing to pay Synthes a multimillion-dollar sum to resolve claims of wrongdoing.
Attorneys for both companies declined to disclose terms of the settlement, and Globus' chief executive officer did not return a phone call yesterday seeking comment.
An online publication called Orthopedics This Week is reporting speculation by bloggers that Globus will pay Synthes between $13 million and $35 million. In addition, Globus has agreed not to solicit or hire Synthes employees for a period of time.
Synthes, a publicly held maker of orthopedic devices and implants, with North American headquarters in West Chester, sued David Paul, Synthes' former head of spine-products development, and two other Globus executives. Paul left Synthes in 2003 to create the rival Globus and recruited more than a dozen Synthes employees.
In a lawsuit filed in 2004, Synthes accused Paul and Globus of benefiting from use of trade secrets and confidential information, including product designs, manufacturing methods and regulatory strategies.
A jury began hearing testimony July 25 before U.S. District Judge Lawrence F. Stengel. The civil trial was in recess the week of Aug. 6. Last Tuesday, jurors learned the case was settling.
Late Friday, the attorneys filed a stipulation to dismiss the lawsuit.
Globus attorney John P. McShea said: "The resolution of the case is confidential. I'm honor-bound to stick with that. The case is over."
And Robert M. Rauker, Synthes' chief patent counsel, said: "We're under confidentiality orders not to be talking to anybody. The case has been settled. We're still ironing out a couple of details."
Globus and Paul, its CEO, who could not be reached for comment, contended they did nothing wrong.
Globus said that its success had nothing to do with trade secrets, but instead that it did business "better" and "smarter" than older established Synthes, the No. 3 manufacturer behind Medtronic Inc. and Johnson & Johnson in the $4.2 billion spinal-implant market.
The defense said Paul left Synthes because his entrepreneurial ideas were rebuffed by his former employer.
Globus has grown rapidly, with 180 employees and a 300-person sales force in Audubon, Montgomery County. The firm had revenue of $82 million last year and claims on its Web site to be the largest privately held U.S. manufacturer of spinal implants.
Synthes, a subsidiary of Switzerland-based Synthes Inc., has 1,400 employees in Chester County and $1.48 billion in 2006 revenue. The device-maker told the jury that Globus improperly used resources and information that Paul and Synthes employee Richard Kienzle obtained while working at Synthes, unlawfully recruited its employees who had noncompete or confidentiality agreements, and improperly misappropriated and passed off Synthes' products as its own.
One of three Globus defendants on trial, Lawrence Binder, was accused of downloading 2,300 computer files that were electronic blueprints for Synthes products.
In opening statements, Synthes said that, in September 2002 - four months before leaving - Paul convened a "secret meeting" with a detailed plan for competing with Synthes. Paul took with him employees who had confidential Synthes documents, including patent applications, safety-testing plans, and regulatory filings containing trade secrets, Synthes claimed.
"The testimony was pretty damning for Globus," said juror Mary Ellen Krysko of Warminster. "Synthes produced copies of Globus and Synthes safety testing ratings with FDA. They were word for word, including typographical errors." Synthes also called as witnesses Globus employees "who methodically resigned on Friday and started with Globus the next Monday for eight months in a row."
"The whole thing seemed planned at that September meeting David Paul had at his house," the juror said. "I don't know how the defense could have refuted any of it. I'm not always for the big guy, but I was in this case."