Court Rules in Favor of Former NASS President in Royalties Suit

A New Jersey appeals court stood by a lower court’s ruling that Neil Kahanovitz, M.D., is owed royalties from Electro-Biology Inc. and EBI LLC, two subsidiaries of Fair Lawn, N.J.-based orthopedic surgical device company Biomet Inc. The subsidiaries owe the former president of the North American Spine Society $2.7 million in royalty payments, but it stopped paying in 2008.

Kahanovitz sued the Biomet subsidiaries and won a breach of contract claim on appeal in 2011. He had signed a royalties deal worth $250,000 a year in 1992, but eventually stopped actively consulting for them. The contract called for the payments to continue “during the term of this agreement and for so long as Kahanovitz is performing services within the agreement field,” according to the appeals court. The contract had an expiration date of November 2008.

“The issue is whether the annual $250,000 payment was due even after the November 30, 2008 date referenced in the 2004 Agreement so long as Kahanovitz continued to practice as an orthopedic surgeon,” according to court documents.

When the lower court decided Kahanovitz was still owed royalties, it took into consideration testimony from current and former executives from Electro-Biology and EBI who made the original deal with the surgeon. Former EBI CEO James Pastena testified that the agreement was meant to reward Kahanovitz as long as he continued to proactive orthopedic surgery, whether he was consulting for the companies or not.