Orthopedic Surgeon Sues Arthrex Over Royalties | Orthopedics This Week
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Orthopedic Surgeon Sues Arthrex Over Royalties

Source: Pexels/Syed Hasan Mehdi

Litigation is heating up between Stephen S. Burkhart, M.D. and Arthrex, Inc. over a royalties dispute.

Recently retired, Dr. Burkhart is a San Antonio, Texas-based orthopedic surgeon who specialized in arthroscopic shoulder surgery. He is a past president of the Arthroscopy Association of North America and holds numerous patents related to arthroscopic surgical devices and procedures.

Based in Naples, Florida, Arthrex is a private medical device company. According to its website, Arthrex “has pioneered the field of arthroscopy and develops more than 1,000 innovative products and procedures each year.”

The litigation stems from an ongoing relationship between Dr. Burkhart and Arthrex. In the early 1990s, Dr. Burkhart met Arthrex’s CEO Reinhold Schmieding. According to Dr. Burkhart’s complaint: “For over twenty years since, Dr. Burkhart has exclusively dedicated his expertise and inventions to Arthrex.”

Dr. Burkhart filed his complaint last year, alleging in part that Arthrex “intentionally underpaid royalties, assigned arbitrary royalty percentages to products, avoided acknowledging that Dr. Burkhart made significant contributions to products, diverted Dr. Burkhart’s work to others with reduced or non-existent royalty rights, and excluded Dr. Burkhart from product-development initiatives.”

In support of his claims, Dr. Burkhart relies on an audit. According to Dr. Burkhart’s complaint, in 2019 he engaged a “firm of independent public accountants, to conduct an audit of Arthrex’s royalty payments.” The firm identified hundreds of products to which Dr. Burkhart was allegedly owed royalties.

Arthrex has since responded and counterclaimed. In its answer, Arthrex “admits that following the audit, it confirmed 417 products should be included as part of the royalty payments.” However, Arthrex denied Dr. Burkhart’s other allegations.

Where is the dispute if Arthrex admitted that 417 products should be included as part of the royalty payments?

In an affirmative defense, Arthrex claims that Dr. Burkhart “owe[s] Arthrex more than Arthrex allegedly owes Plaintiffs [Dr. Burkhart].” Arthrex is alleging that certain royalty bearing products of Dr. Burkhart “were accused of or found to infringe ‘the intellectual property right of any third person.’” Additionally, Arthrex claims that “[t]hese patent lawsuits, settlements, and judgments have cost Arthrex well over $100 million” and that Dr. Burkhart has purportedly refused to indemnify Arthrex.

The only thing that the parties seem to agree on is their upcoming deadline. If the parties cannot reach a settlement in their non-binding arbitration, then they will be ready for trial by November 2021.


4 thoughts on “Orthopedic Surgeon Sues Arthrex Over Royalties

    1. Dr. Burkhardt saved my left shoulder, performing a surgery no one else would touch. Prior to meeting Dr. Burkhardt, I researched who the best shoulder surgeon in the world was. Time and time again, Dr. Burkhardt’s name came up. Not only did Dr. Burkhardt’s peers praise him, so did an industry that sought him out for his skills.

      Dr. Burkhardt is one of the best Orthopedic Surgeon’s in the world and maybe the best in shoulders. Given Dr. Burkhardt ‘s expertise, his incredible skills, and awesome insight, were sought out by patients and medical device companies worldwide. While in Dr. Burkhardt’s then office, I met individuals from all over the world who traveled to San Antonio for his services.

      Would Michael Jordan sit back and take it if Nike decided on its own he was no longer entitled to a royalty on a shoe he helped develop? I think not. So too should Dr. Burkhardt receive every penney he is owed pursuant to his contract.

      1. Awe! There it is. “In his contract.”
        That’s the question, isn’t it? What does the contract say? That’s the issue with reading an article about these disputes. The only way that any of us could base an educated guess as to who deserves what is to have all of the pertinent information. The only conclusions that one could draw from this article are completely driven by emotions. Emotions based on relationships with either the plaintiff or the defendant, How the author decides to write this piece or the writer’s bias may also influence people. Just remember that feelings are not legally binding. Yet, feelings, based on erroneous or incomplete information, can really damage reputations.
        So there you have it. Dr. Burkhart is someone that you’ve had a positive experience with. So in your mind, he has to be the correct party in this disagreement. I’m not saying that’s wrong. It’s human nature. I have extremely positive feelings about Arthrex because I’ve seen the good they do and their generosity. So we disagree. But the truth is that I don’t know who’s yanking who around. Maybe both party’s are partially right?
        Food for thought:
        If you saw Dr. Burkhart for your shoulder, chances are good that you have some Arthrex products in you that helped mend your shoulder. So maybe they helped save your shoulder, also?

  1. I’ve worked with Dr. Burkhart and he is one of the most honorable men I know. I know first hand how closely he worked with that company and is a very thoughtful surgery. This at the end of the day about principle if you agree to a price then pay the man his money. I’m sure all of the things he designed trialed and put it to market that company is still profiting from today.

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