Guidant to Pay Angeion $35 Million in Settlement

Medical device makers Guidant Corp. (Indianapolis) and Angeion Corp. (Plymouth, MN) have settled all ongoing patent litigation.

Under the settlement, Guidant will pay Angeion $35 million for a royalty-free nonexclusive license to Angeion's current and pending patents covering heart stimulation devices.

In a statement, Angeion said that after the payment of legal fees and other expenses associated with the lawsuits it will retain about $30 million of net cash.

Angeion agreed to stop selling the Sentinel Model 2010 implantable defibrillator. Guidant said it agreed not to sue Angeion for future patent infringement regarding sales of the Lyra Models 2020 and 2030 implantable defibrillators. Angeion agreed to pay all third party royalties on sales of these models, but did not receive any rights to Guidant's patents for future generations of products.

Angeion had sued Guidant's Cardiac Pacemakers Inc. unit in June 1996, alleging that CPI's Mini I and Mini II product lines infringed certain Angeion patents. CPI sued Angeion in September 1998, alleging that Angeion's Sentinel product line infringed certain patents issued to Dr. Michel Mirowski that are under exclusive license to CPI.

In related news, Angeion announced that it would cut its workforce of about 160 by 75% as part of a major restructuring, leaving the company with about 40 employees. The company said it is continuing to explore strategic alternatives, including possible license or sale of its assets.

Angeion will be taking a charge against earnings for the restructuring but its level has not yet been determined. The workforce reduction is expected to reduce payroll expenses by $1.8 million a quarter, beginning in the third quarter of this year.

The company said it had decided to limit its participation in the ICD marketplace and redeploy its resources elsewhere. Angeion also said it has begun to appeal a potential de-listing from Nasdaq.