Both GE Medical and R Squared Scan Systems won victories of sorts in the settlement of their scanner servicing litigation this month (SCAN 3/13/91).
Antitrust claims against GE were dropped and the company maintains proprietary rights to service software that can give it a competitive edge. R Squared, on the other hand, has been assured access to basic scanner software and a new, friendlier relationship with the world's largest medical imaging vendor.
Although GE claims that independent service organizations have always had access to operating and basic scanner software via the equipment owners, the vendor has apparently made a tactical retreat on the basic software issue in order to protect more advanced service programs.
GE created a flurry among hospitals and ISOs three years ago when it introduced new language into its standard condition of sale, a document used for all products and services the medical vendor sells. The wording appeared to severely restrict access to basic scanner software (SCAN 2/3/88).
"Buyer agrees not to copy operating software and to limit access to operating software to those of its employees having a need to use the operating software in connection with the equipment for a health-care purpose," the document read.
Without access to basic scanner software, ISOs cannot write service software of their own, said Paul Thomas, senior vice president of R Squared.
R Squared objected to the restrictive language in the GE documentation and in late 1988 filed for court injunction to prevent its use. GE agreed out of court to change the wording so that customers would have a right to allow others to use the operating software in the scanner, Thomas said.
No matter how GE's contractual language might have been interpreted, the vendor did not intend to restrict the access of ISOs to its equipment, said Douglas Stoner, patent counsel for GE.
"We have never objected to a third-party service provider using operating and basic service software," he said.
Litigation between the vendor and the third party began in 1987, when GE sued R Squared for copyright violation of software used to service Technicare CT systems. Johnson & Johnson, Technicare's parent, signed over rights to the software to GE when it shut Technicare down. R Squared countersued, alleging antitrust violations. GE later introduced copyright issues concerning its own software into the litigation.
Part of R Squared's antitrust case was an "essential facilties" claim, stating that a facility (the software, in this case) is essential if a company cannot stay in business without it, said Jeff Schaper, GE general manager of service marketing.
By permitting access to basic software, GE allows the ISOs to perform their job and cannot be accused of forcing smaller competitors out of the business in a monopolistic fashion. The settlement, however, allows GE to maintain copyright claims on more advanced software that can do the job faster and reduce scanner downtime.
"GE's position is that we supply sufficient software and tools to repair the equipment. We will keep efficiency enhancement (software) for our own," Schaper said.
GE decided not to fight over rights to the Technicare CT software because it was five years out of date and the installed base of systems is small and declining. The vendor reclassified all of the Technicare software as basic, making it fully accessible, Schaper said.
Although ISOs can gain access to operating and basic scanner software by receiving permission from the clinical user, the legal position of ISOs regarding scanners they own themselves was unclear. R Squared requested rights to use the basic software on scanners that it owned, and GE granted the license, he said.
R Squared has had to return to GE copies of advanced software for use on 9800 scanners. The ISO is in the process of writing its own advanced diagnostics programs, Thomas said.
The agreement allowing R Squared access to basic software in GE equipment is also valid for magnetic resonance imaging and x-ray equipment. The ISO has obtained rights to use certain portions of GE software in its own scanner maintenance software as well, said Jim Hunt, R Squared president.
While R Squared did not receive compensation for attorneys' fees and other expenses it incurred, the firm was satisfied with gaining the additional access to GE equipment, he said.
