Arbitrator sides with ATL in litigation, slaps Acuson with damage judgment

January 16, 1991

A private arbitrator awarded $6.3 million in damages plus legalfees to ATL in the ultrasound vendor's litigation against competitorAcuson. ATL filed suit against Acuson a year and a half ago inFederal District Court in Seattle. The suit charged the

A private arbitrator awarded $6.3 million in damages plus legalfees to ATL in the ultrasound vendor's litigation against competitorAcuson. ATL filed suit against Acuson a year and a half ago inFederal District Court in Seattle. The suit charged the radiologyultrasound market leader with violating unfair competition andantitrust laws (SCAN 6/21/89).

While the suit included many issues of contention, ATL's primaryallegation—upheld by the arbitrator—was that Acuson spread thenotion that ATL would render its top-of-the-line Ultramark 9 systemobsolete by introducing a radically different UM 10 unit.

The arbitrator also ruled against the use of comparison phantomimages in advertisements and brochures. Acuson had run one adusing such images, which it was enjoined against using again.The arbitrator ruled that an ATL brochure containing the imageswas also out of line.

"All of us at Acuson are absolutely astounded and outragedby this decision," said Samuel H. Maslak, president and CEOof Acuson. "We feel it is completely unjustified," hetold SCAN. Acuson is exploring legal options to contest the bindingarbitration decision, he said.

Acuson's conduct had a material impact on sales of ATL's UM9, said Allen W. Guisinger, executive vice president of ATL. Theexecutive has had to make personal appeals to customers to assurethem that the scanner would not become obsolete, he said.

"The main concern we had about their (Acuson's) behaviorwas representations to the effect that we were going to obsoletethe UM 9 and introduce a new system. That terrified potentialcustomers," he said.

Acuson maintains that some of its people did at one time exceedthe boundaries of sales propriety in speculating about ATL plans.The vendor put a halt to such practices before ATL filed its suit,Maslak said.

There is nothing inherently improper about comparing upgradeabilityrecords, Maslak said. However, ATL alleged that Acuson sales representativesled customers to believe they had first-hand knowledge of ATLproduct development plans, he said.

"Acuson never meant to imply in any way that we had suchknowledge. We don't have knowledge of the product developmentplans of our competitors and never have," Maslak said.

ATL, on the other hand, maintains that Acuson purposely misledcustomers and continued to do so until recently.

"It is not something that just happened two years ago.Acuson continued this behavior right up to the injunction. Ifanything, they intensified it last year. It was systematic, plannedand initiated at the highest level of management," Guisingersaid.

Doctors are smart enough not to be fooled by any salespersonclaiming to be an expert on a competitor's technology, Maslaksaid. He pointed out that no charges were made against Acusonregarding false representation of its own technology.

"We are selling to sophisticated, smart people, who areable to understand the instrumentation. (Physicians) make decisionsabout ultrasound instrumentation based on the live demonstration,which we do at virtually every sales situation, and by contactingother physicians for references on the equipment," Maslaksaid.

Nonetheless, doctors need to be more assertive about proprietyin sales calls, Guisinger said.

"The medical community has to insist on ethical behaviorby the sales representatives who serve them," Guisinger said.