Forbes • September 11th, 2008
Medical inventor Gary K. Michelson got rich waging lonely battles against big companies. Now he wants to spend much of his $2 billion to save unwanted dogs and cats.
Walking around a city animal shelter in west Los Angeles with Gary Michelson is like doing rounds at a hospital where the doctor knows every patient. The mutts, locked in concrete cells, bark like crazy when he walks by. Many will never find homes and will be euthanized. “The ones that are large, dark or old–they’re dead,” he says, watching two pit bulls bounce up and down. A lab mix snarls and tries to lunge through the bars at the billionaire. “If I brought that dog home for two weeks, it would be normal,” he says.
Strutting around in a tank top that shows off his tanned biceps and popping veins, Michelson gives off a thick cloud of manic energy everywhere he goes. He looks more like an aging Hollywood action hero than a genius inventor. A spine surgeon by training, Michelson got rich by licensing devices and instruments that aided in complicated back surgery. He got megarich by enforcing his patents in two epic legal cases. The last one, won in 2004, resulted in a $1.35 billion settlement with the manufacturer Medtronic . Now he’s nearing 60, childless, divorced and still focused on work. But his passion is no longer surgery, it’s charity. Michelson says he will give away every cent, eventually north of $2 billion. He plans to use a scientific approach and commercial cunning on the problem of unwanted pets.
Six million animals a year are bumped off in shelters. Michelson has three adopted dogs, including a pit bull the size of a small couch. He views feel-good campaigns around adopting pets–the bread-and-butter of the mainstream animal welfare movement–as an important but incomplete part of the solution. Right now he has four dozen ideas that he thinks are more business-savvy and self-perpetuating.
Some are simple but novel, like paying for implantable microchips that will allow owners to reclaim lost dogs. Or paying a cat adopter to take two animals instead of one. Others are more exotic: sterilizing feral cats and then releasing them back to their colonies so they depopulate themselves. Michelson’s Found Animals Foundation is setting up pilot projects in Los Angeles to test some of these ideas. The most ambitious effort is what will be called the Michelson Prize, which he’s never spoken about publicly before. Michelson promises to pay $25 million to the inventor of a safe and effective injectable sterilant for cats and dogs. He will fund not only the prize but also the research that goes into it. That alone, he believes, would empty many animal shelters.
On the menu of philanthropy, pets don’t seem quite so flaky as they once did. There have been advances in handling strays; 40 years ago there were 115 dogs and cats killed by animal shelters for every 1,000 people, versus just 14 today. Now there is even more money pouring into the field, from more than one billionaire. Software entrepreneur David Duffield has donated $300 million since 1999 to a foundation dedicated to no-kill animal control. Hotelier and tax cheat Leona Helmsley died last year and reportedly left her estimated $5 billion estate to her Maltese named Trouble, and dogs generally.
Michelson’s interest in pets started during what he calls a difficult childhood, when his parents divorced (he was 11), money was tight and his dog was a source of comfort. As critics of pet charities are quick to point out, many humans are poor, sick, homeless and uneducated. Don’t they have a better claim on limited resources? Michelson argues that eliminating cruelty and promoting companionship are noble goals for any good society. Animals are like children in that they can’t speak up for themselves. They also receive 0.1% of all gifts. “Art museums do better. And that’s not charity. That’s tax evasion,” Michelson says.
Michelson grew up in Philadelphia, where he says he was initially an indifferent student. His grandmother’s struggle with a painful spinal condition inspired him to become a doctor and to focus on back surgery. At Hahnemann University in Philadelphia he sometimes upset professors by objecting to live animal dissections. He seems to have nursed a bitterness about his life into motivation. “I’ve been on my own since I was 17,” he says.
After graduating from medical school in 1975 and from an orthopedic surgery residency, also at Hahnemann, he followed his dream into what was then considered a backwater field. According to his version, spinal surgery was frequently unsuccessful, so doctors’ practices would fill up with “bent nails”–crippled patients in wheelchairs without much hope. Michelson spent extra time training in back surgery at a fellowship in Houston, then moved to Los Angeles in 1980.
While operating at Centinela Hospital in Inglewood, Calif., Michelson became frustrated by how hard back surgery could be. His big hands didn’t have an easy time maneuvering inside the incisions. He began working at home on ideas for better instruments. In 1983 he hired a machinist to make him new tools. An early one involved a common neck operation, where a painful disc is pulled out of the cervical spine through a tiny incision with a tool called a curette. Michelson says that the curette blocked his view, so he designed one shaped like a bayonet.
Michelson’s daily routine as a young doctor was extreme. Living in Venice Beach, Michelson rose at 5:30 and did Jungian-guided visualization exercises to hone his confidence and focus. “A lot of people are scared to be themselves,” says Michelson, who references books like Self-Parenting and A Course in Miracles. After meditation he drove to work, met with his patients at 7 a.m., operated until 1 p.m., saw more patients in clinic until 6, then came home, walked his dogs, trained for triathlons and then spent much of the night in his garage on his inventions. He gave away his television to avoid distractions. He avoided marriage and fatherhood because he was so busy, and also because he thought he wouldn’t be very good at either. His work paid off. The instruments attracted notice, and soon his machinist was making extra sets for colleagues.
In the late 1980s his tiny manufacturing shop became a technology licensing outfit. Each invention was patented in minute detail, as he employed an entire patent law firm. Over time Michelson won or has applied for 900 patents, including European counterparts. The licensing company he started remained an off-hours activity, run by a former dog walker. Some of the inventions included devices that aid in spinal fusions and a plate used in neck surgery.
The licensing produced litigation. In 1995 he sued a subsidiary of U.S. Surgical (now Covidien) for infringing his patents on a fusion technology. The case won a large settlement that he is not allowed to talk about, although he confirms it was nine figures. His licensing revenue grew to $40 million annually. In 2001, when his dispute with Medtronic began, Michelson had a net worth, he says, of $300 million.
Medtronic had bought a smaller spinal device company that was Michelson’s biggest licensing client. The spine division and Michelson were soon at odds. Medtronic sued Michelson, claiming that he had broken the agreement by marketing his products to other manufacturers. Michelson countered by claiming that Medtronic was not making good on its promises or paying him enough royalties. “They were profoundly cheating me,” he says. The case ended up in a federal courtroom in Memphis, where Michelson spent $62 million on a posse of 36 litigators.
Michelson spent some of his off-hours during the trial playing with stray cats and feeding squirrels, his lawyer Marc Cohen recalls. On weekends he would have another attorney feed the strays. After a five-month trial ending in 2004 the jury awarded him $510 million. The two sides negotiated a deal whereby Michelson would not pull his patents from Medtronic’s spinal division if it paid him up front for all of them. The total bill of $1.35 billion set a record and catapulted him onto The Forbes 400.