Allen P. Schlein, MD, an orthopedic surgeon in Connecticut, helped invent a special seat to position patients during arthroscopic shoulder surgery. Orthopedic Systems, the California-based manufacturer of the Schlein Shoulder Positioner, regularly cut him royalty checks for 20 years. So imagine Dr. Schlein's surprise when the company decided the device had changed so much that payments were no longer necessary, but continued to use his name to market it.

Dr. Schlein sued Orthopedic Systems and received $1.9 million in damages and profits made on the device while it carried his name. He will also be awarded past unpaid royalties at 10% interest, says Gretchen M. Nelson, his attorney. John S. Siamas, an attorney for Orthopedic Systems, did not respond to a request for comment.

In the late 1980s, Robert Moore, the founder of Orthopedic Systems, initially relied on a handshake agreement with Dr. Schlein, saying he'd pay the surgeon 5% of the positioning device's sales in royalties. Before the company was sold in 1992, Dr. Schlein signed a very simple written royalty agreement with the new owners and continued to get paid.

But after the company was sold again in the mid 1990s, the new owners noted the device's design had been tweaked, its name had been altered to the Schlein Ultra Shoulder Positioner and its product identification number had changed. Based on their reading of Dr. Schlein's contract, they decided it was a different product and they didn't need to pay royalties. They ended payments to Dr. Schlein in January 2005, although his name remained on marketing materials for another 7 months.

Orthopedic Systems eventually changed the product's name to the Ultra Shoulder Positioning Device, but court records indicate there was no difference between it and the Schlein Ultra Shoulder Positioner.

Dr. Schlein sued the company for breach of contract and for misappropriating his name after the royalty payments stopped. In trial, the jury determined that the product had not fundamentally changed and there was nothing in the written agreement that directed royalties to stop at any point. In fact, court documents show, although the written agreement had very few specifics, the original handshake agreement stipulated that the company would continue to pay royalties for as long as the product was sold.

Leigh Page