Yesterday, the Philadelphia Inquirer (article here) reported that Synthes and Globus have settled their long running legal dispute for an undisclosed amount. The agreement stipulates that Globus that it will not solicit or hire Synthes employees for one year. This resolves all 6 cases currently pending between the two companies.
The size of the payment by Globus to Synthes was eventually announced to be $13.5 million. Until late this morning, tight lipped attorneys and company executives were silent on the matter.
So that's it. We were surprised by the speed and the fairly large amount of the settlement, but not the outcome. Although this has been a long running dispute, it only went to trial last month. With so much precedent in the industry, we thought this would be the usual war dance involving years of courtroom wrangling. Alas, this was not to be. Note also the reversal from trend where Goliath slips David a check. In the past we've seen Medtronic pay Dr. Michelson (2005), ArthroCare win an injunction against Smith & Nephew (2004), and many, many others.
This time, Globus paid the settlement. Maybe that's no surprise based on the courtroom allegations and the nature of the suit. The speed on the other hand, is unusual. A private company flush with cash from a recent financing round could easily withstand a lawsuit of this nature for years especially if they were in the clear. The $13.5 million settlement is also somewhat large (e.g. as a % of Globus $82 million in revenues) for business-as-usual stuff like trade secrets and non-competes. Some people would rather fight if they were in the right. The speed and size of settlement smells like Globus was dealing a significant competitive blow to Synthes or looking to clean up its contingent liabilities for some kind of exit strategy. Conjecture on on that last point, but at least we can be sure that the next phase in Globus' development has already begun.
