Medtronic, the world's biggest maker of heart-rhythm devices, will pay Edwards Lifesciences at least $1.1 billion to settle a patent dispute over their minimally invasive valves.

Edwards will receive $750 million upfront and royalties of at least $40 million a year through 2022, Medtronic said in a statement today. The companies agreed to dismiss all pending litigation over the valves and refrain from filing additional lawsuits for the eight years of the agreement.

The settlement will give Medtronic free rein after months of litigation to develop the market for the valves that it estimates at $2 billion to $2.5 billion a year.

A federal court last month had granted, then stayed, a preliminary injunction that would have prevented Medtronic from selling CoreValve, used to treat aortic stenosis, in the US because it infringed a patent held by Edwards. Edwards sells the rival Sapien valve.

“We see this settlement as a clear financial positive for Edwards,” David Roman, an analyst at Goldman Sachs Group Inc., said in a note. He estimated that royalty payments of $40 million to $60 million would mean a earnings boost of 24 to 36 cents a share this year.

Medtronic, which has operations in Galway and Dublin and employs more than 1,800 people in Ireland, paid $700 million, plus milestone fees, to buy CoreValve in 2009, so the size of this settlement could mean that the company believes that the market for the valves is larger than the $2 billion to $2.5 billion a year it has estimated in the past, said Jason McGorman, an analyst at Bloomberg Industries.

Medtronic also reported fiscal fourth-quarter earnings, excluding one-time items – including a $746 million charge for litigation – of $1.12 a share, meeting analysts’ estimates.

Revenue in the three months to April 25th rose to $4.57 billion from $4.46 billion a year earlier, according to a separate statement.

The company forecast earnings of $4 to $4.10 a share for fiscal 2015. – BLoomberg