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Thursday, May 30, 2013

Doctor claims $200M in damages from Cyberonics

May 29, 2013, 11:53am CDT Updated: May 29, 2013, 12:11pm CDT

Doctor claims $200M in damages from Cyberonics

Cyberonics is involved in an ongoing dispute with a doctor about royalty payments.
Reporter- Houston Business Journal
A Miami Beach, Fla. doctor claims Houston-based Cyberonics Inc. (Nasdaq: CYBX) owes him $200 million in damages and $613,000 for unpaid royalties, according to regulatory filings.

Although Dr. Jacob Zabara's complaints against Cyberonics date to 2012, this is the first time he has allotted a value to the alleged damages.

The medical device company said in a May 28 regulatory filing that Zabara alleges he is entitled to royalties on products that use his patents, which were licensed to the company under a 1988 license agreement.

Zabara initially inquired about his royalty payments in 2012 in a letter, his attorney, William Helfand of Houston's Chamberlain Hrdlicka, told Houston Business Journal.

"In response to his inquiry about why he wasn’t being paid his royalties, this company sued him seeking a ruling of the court that it did not owe him," Helfand said.

Cyberonics filed a lawsuit in the U.S. District Court Southern Division of Texas against the doctor in April last year, seeking a declaration that Zabara is not entitled to any royalties.

"Dr. Zabara has been paid tens of millions of dollars of royalties since the inception of the license," according to Cyberonics' original complaint. "In July 2011, however, that royalty stream ended as the original patents expired. No further royalties are due for Cyberonics' current devices."

Helfand disagrees, however, and said "payments were not properly calculated." In addition, Helfand alleges the company did not comply with a requirement to market some of Zabara's other inventions.

Earlier this month, a district court ruled Cyberonics breached the license agreement by "failing to pay the $9,000-per-quarter minimum royalty since July 2011," according to a regulatory filing.

A trial in the dispute over the agreement has been set for June 10.

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