Given settles patent suit with Olympus. Source: BunkerWorld

Given Imaging has signed a term sheet with Olympus of Center Valley, Pa., outlining a settlement of the patent litigation between the two companies in the United States concerning their respective capsule endoscopy products.

The company said the term sheet includes a payment to Given of $2.33 million and an agreement to cooperate in future joint market development projects.

The term sheet includes certain worldwide cross-licenses under which each party receives a royalty-free license under all existing patents of the other party for its respective existing capsule endoscopy products, according to the Yoqneam, Israel-based Given. The parties also exchanged covenants not to sue on currently available medical device products and agreed to a release of all past causes of action, the company said.

Given said the term sheet also includes a cross-license under existing and future patents of each party for future capsule endoscopy products, which may include the payment of royalties by either party at a rate to be determined through an agreed upon mechanism.

The settlement will become final upon the signing of a formal written agreement, which is currently being prepared and is expected to be signed as soon as possible, Given said. In the interim, the parties have agreed to ask the court to stay all activity in the pending litigation. Following the signing of the formal agreement, Given said the parties will submit to the court a request for dismissal of the lawsuit.

Under the term sheet, Given said that all other terms and conditions are confidential.

The company said it plans to update its fiscal year 2008 EPS guidance, in conjunction with the release of its first quarter 2008 financial results on May 13.