Medtronic Inc. will lighten its wallet by $1.35 billion to settle a patent dispute with surgeon Gary K. Michelson. Medtronic is acquiring $800 million of spinal-fusion technology, and will pay an additional $550 million to settle the patent claims.

Last fall, a federal court jury ordered Medtronic to pay Dr. Michelson $510 million in punitive and compensatory damages for breaking license agreements associated with Michelson's patents. Medtronic had said that it planned to appeal the decision, calling the award "unjustified and excessive." Now it's trumpeting the deal as a strategic acquisition.

In the transaction, Medtronic gets more than 100 patents, 110 pending patent applications and about 500 foreign counterparts, as well as ownership of all inventions conceived or acquired by Dr. Michelson for diagnosis or treatment of spinal injuries. In return, Dr. Michelson gets a smile, and fat wallet.