By Cat Johns

Seyfarth SynopsisAegis Spine Inc. has agreed to pay $8,000,000 to fellow spinal implant manufacturer Life Spine Inc., following Life Spine’s suit in the Northern District of Illinois alleging Aegis had misappropriated Life Spine’s trade secrets to create a “knockoff” competitive implant.

Life Spine, based in Illinois, develops and manufactures medical devices aimed at treating various spinal disorders. Its principal line of products is its ProLift Expandable Spacer System, which consists of small implants inserted into the spinal disc. The ProLift is used to alleviate nerve pain and improve spinal alignment. Aegis is a medical device manufacturer and distributor headquartered in California.

In 2017, Life Spine entered into various agreements with Aegis by which Aegis would sell and distribute ProLift devices while maintaining as confidential all proprietary information related to the devices. Aegis would receive ProLift devices on loan in order to demonstrate them to prospective customers. In the summer of 2019, while the parties were negotiating a distribution agreement, Aegis terminated its relationship with Life Spine, a decision Life Spine described as “abrupt.”

hortly thereafter, Life Spine uncovered what it deemed a “scheme” by Aegis to develop and sell “an almost identical” product to ProLift, a device called the AccelFix Lumbar Expandable Cage System. In investigating Aegis’s conduct, Life Spine discovered that, while negotiating the distribution agreement with Life Spine, Aegis filed a 510(k) premarket notification with the Food and Drug Administration to begin marketing AccelFix, listing the ProLift as the “substantially equivalent” “Primary Predicate Device” for the product. Based on this “troubling evidence,” Life Spine contended that Aegis used Life Spine’s confidential information to create the AccelFix and purporting to continue negotiations with Life Spine only to cover up its wrongdoing.

Life Spine filed suit in October 2019, alleging Aegis had violated its agreements with Life Spine, committed fraud, and misappropriated Life Spine’s trade secrets under federal and state law. Litigation continued for years, with Aegis raising unsuccessful counterclaims.

On December 20, 2023, the parties filed a stipulated settlement agreement by which judgment would be entered in Life Spine’s favor, and Aegis would pay $8,000,000 to Life Spine by June 1, 2026. Should Aegis fail to pay the full amount, it could owe Life Spine up to $17,500,000. The settlement allows Aegis to restart sales of its existing inventory of implants, which had been prohibited per a March 2021 court order, though it may do so only for a year, only in territories outside the United States, and with no global advertising for the product.

Ultimately, the settlement presents a cautionary tale about the business and financial ramifications of misusing confidential information.