Inamed Corporation, a global healthcare company, announced that the company has resolved its patent infringement lawsuit with Ethicon Endo-Surgery Inc regarding various patents related to gastric banding, which Ethicon purchased from Dr. Lubomyr I Kuzmak.

Under the terms of the settlement agreement executed effective June 21, 2004, Inamed will pay Ethicon $17,250,000 by June 26, 2004, and, pursuant to a license arrangement included in the settlement agreement, will pay royalties to Ethicon on future United States sales of the LAP-BAND System, initially at 7.5 per cent.

Prior to this settlement, Inamed has been accruing a royalty on US sales at 1.2 per cent. The 7.5 per cent royalty will be reduced to 5.5 per cent if Ethicon is able to obtain approval from the US Food and Drug Administration (FDA) for the marketing of an adjustable gastric band sometime in the future.

Inamed will also pay Ethicon 3.5per cent on all future foreign sales of the LAP-BAND System. The US and international royalties payable will decrease to 2 per cent after June 20, 2011, and all Inamed royalty obligations will expire no later than May 12, 2013. Inamed's license is to Ethicon's family of gastric banding patents, which were at issue during the litigation.

Inamed will record a charge in the amount of $17,200,000, for the quarter ending June 30, 2004, to reflect the settlement payment to Ethicon and related second quarter litigation costs and expenses.

"We are pleased with the terms of this settlement with Ethicon. The LAP-BAND System is an important product for the Company and for the public, and we are happy to put this longstanding dispute behind us. We intend to proceed with growing the market and driving acceptance of this novel technology for the many patients who are in need of a solution to their obesity-related health issues," stated Nick Teti, chairman, president and CEO of Inamed.