L.A. a battleground for robotic surgery. (Inside the Books--Banking & Finance Special Report).

If he weren't in an operating room at Cedars-Sinai Medical Center, Ted Khalili might seem to be engrossed in the latest, most advanced computer game.

Wearing 3-D glasses and staring at a high-definition computer screen, Khalili is picking up tiny hollow beads and moving them into a tray by manipulating two miniature, plier-like instruments.

The instruments are used to perform abdominal surgery, using cameras to guide the surgeon and avoiding large incisions. But instead of controlling the tools at the operating table, he is seated several feet away where he has grasped two electronic arms that allow his every move to be mimicked in the patient.

"This machine can do things your own wrist cannot do," said Khalili, a general surgeon and director of research for the hospital's minimally invasive surgery unit. "And I don't have to be in the same room. I could be in another state."

It's the world of computer-assisted, or robotic, surgery -- and it's also become a fiercely competitive business that already has spawned litigation.

Two publicly traded California companies have developed competing devices: Santa Barbara-based Computer Motion Inc., creator of the Zeus robot purchased by UCLA Medical Center and Cedars-Sinai; and Sunny vale-based Intuitive Surgical Inc., whose daVinci robot was purchased for USC's Keck School of Medicine. The firms are involved in a bitter patent dispute that has spawned a pair of lawsuits.

Last week, a jury in one of those cases ordered Computer Motion to pay $4.4 million to Intuitive and its partner, International Business Machines Corp., for infringing on a patent. But the trial has a second phase that could result in that decision being overturned.

"It's a small niche now, but in my view it's absolutely inevitable, not just likely, that surgical (robotics) will become the standard of care," said Dr. Alexander Arrow, an analyst for Landenburg Thalmann & Co. "There is a lot at stake for both companies."

The battle began when Intuitive objected to several Computer Motion patents and requested a review by the U.S. Patent Office. Then, in 2000, Computer Motion filed a lawsuit in U.S. District Court in Los Angeles that challenges seven Intuitive patents in a case scheduled for trial next year.

Intuitive responded with its own suit in U.S. District Court in Delaware challenging one Computer Motion patent, resulting in last week's ruling. Both companies declined to comment on the ruling, citing a gag order placed on them by the judge, who still must hear the rest of the case.

Mimics man

Europeans have been using the systems since their introduction five years ago, and last year a team of surgeons in New York used a remote-controlled robot to assist surgeons in France in removing a gallbladder.

But the systems, which can sell for $1 million each, have only recently become popular in the United States, where the Food and Drug Administration was slower to approve their use.

USC was the first to introduce robotic surgery last year when surgeons at Keck began performing surgery using its daVinci. The robot was purchased by Tenet Healthcare Corp., which operates USC University Hospital.

USC surgeons so far have repaired heart valves on 17 patients. Traditional valve surgery requires the surgeon to split the breastbone to reach the heart, while the robot allows them to reach the valve via three small holes.

Without the robot, valve surgery was too hard to conduct laparoscopically, according to Dr. Vaughn Starnes, chair of the school's Department of Cardiothoracic Surgery. "It's a very technical type of repair," he said. "We have done it for years with the chest being open. It's too hard to do the suturing."

The daVinci, like the Zeus, makes such surgeries easier because the computer mimics the surgeon's movements, removes hand tremors. Both systems also allow the speed of the surgical tools inside the patient's body to be scaled down, moving at a tenth the rate of the surgeon's movements.

Fred Dear, an associate registrar at USC, underwent heart valve surgery last July with the daVinci. He was out of the hospital in days and back at work in five weeks. Recovery from traditional open-heart surgery could have lasted months.

"I was in the recovery room for two days, and there was another patient in the bed next to me who had conventional surgery," recalled Dear, 61. "It looked like he was having a lot more trouble walking around. I am a lucky man."

Starnes said doctors at USC chose the daVinci system after testing out both robots. The systems are similar, but there are critical differences.

Instead of the Zeus' open screen interface, daVinci users immerse their faces into a closed screen. Its hand controls are also different. And the daVinci's surgical unit is rolled into place, while the Zeus is modular and attaches to a special operating table.

Starnes likes the daVinci, comparing it to a "1955 Ford" while he considers the Zeus a "Model T." Indeed, the university is so committed to the daVinci that it has become a training center, with Tenet purchasing a second computer just for training purposes.

But the Zeus system has its adherents.

Dr. Carlos Gracia, chief of minimally invasive surgery at UCLA Medical Center, says Zeus has smaller tools. And because the surgeon does not have to immerse his face into a computer screen, it's easier to teach other surgeons how to use.

"They are two distinct systems and competition is good, but the Zeus is a low-profile system I know I can incorporate into teaching," he said.

Gracia, who came to UCLA this summer to pursue the advancement of computer-assisted surgery, is one of the leading robotic surgeons using the Zeus system. He has performed about 40 gastrointestinal, gall bladder and vascular surgeries with it, including many outside the United States.

Surgeons at UCLA used the Zeus for the first time earlier this year to repair a kidney problem on a university student, and just last week Gracia performed gastrointestinal surgery on a patient. Cedars Sinai is the only other hospital to have one in the area, and hopes to start performing surgeries with it next month.

Because Zeus has not been approved, both surgeries were done under strict federal protocols. The surgical robot is not expected to come into wider use until the FDA approves it, which may come for general surgical procedures later this month.

Battle for share

The daVinci has been approved for wider use for more than a year, an advantage Intuitive Surgical has used to forge ahead of Computer Motion.

Intuitive Surgical has placed 102 robots in use, including 62 outside of the U.S., while Computer Motion has placed 60, half outside the U.S. Those being used in the States operate under a special FDA research protocol.

Arrow said Intuitive Surgical, which started up about five years ago using licensed technology, was better capitalized than Computer Motion, which has been around longer.

Still, he sees a future for both systems. Some doctors simply have a preference for the Zeus system, which allows the surgeon to better control the operating room, while others like to be immersed into the picture presented by the daVinci's surgical scope.

"These two products are like Pepsi and Coke," said Arrow. "These two machines are positioned in such a way that there will be a demand for both."