ATL makes hay with Acuson case

April 10, 1991

A permanent injunction was issued in Seattle Federal Court lastmonth enforcing a binding arbitration decision in ATL's deceptivemarketing practices lawsuit against ultrasound competitor Acuson. Although both companies are enjoined from certain sales

A permanent injunction was issued in Seattle Federal Court lastmonth enforcing a binding arbitration decision in ATL's deceptivemarketing practices lawsuit against ultrasound competitor Acuson.

Although both companies are enjoined from certain sales andmarketing activities, the arbitrator decided largely in favorof ATL. ATL was awarded $6.3 million plus legal fees in the dispute(SCAN 1/16/91).

The injunction requires Acuson to send a letter to its customerswithin 30 days, acknowledging that it does not have inside informationon ATL's product development plans. A central charge in ATL'ssuit, filed two years ago, was that Acuson had spread the wordamong ultrasound users that ATL planned to obsolete its high-endUltramark 9 system with a radically different UM 10 unit.

"I don't foresee that this injunction is going to haveany impact on our business or customers," said Samuel H.Maslak, Acuson president and CEO.

Appropriately enough, considering the nature of this dispute,Acuson took issue with statements made by ATL in a press releaseannouncing the injunction.

"I think the press release mischaracterizes the injunctionsignificantly. It is inappropriate for ATL to engage in that typeof mischaracterization, especially at this late date after thearbitrator's decision was made," Maslak said.

Acuson contests three statements made by ATL in its descriptionof the injunction:

  • The ATL release said Acuson has been prohibited from"26 different types of promotional practices."

There are 26 provisions against Acuson in the injunction, butthey are mostly narrow prohibitions against the use of certainstatements, Maslak said. Half of those statements came from twoletters written by Acuson sales representatives, which the vendorhas acknowledged were improper.

  • Acuson was enjoined from using a specific advertisementlabeled "Fact vs. fiction," which compared phantom imagesfrom ATL and Acuson scanners.

ATL said it had proved that this advertisement "did notfairly or accurately represent the respective image quality ofthese competing systems."

"We argued that the phantom images were accurate and thatAcuson stood behind their accuracy," Maslak said. There isno evidence that the arbitrator disagreed with that perspective.The issues centered around the ability of physicians to evaluatethe types of resolution information provided by the phantom measurements."

  • ATL was enjoined against the use of specific promotionalmaterial referring to a study at the University of Californiaat Los Angeles, which also used comparative phantom images.

"This was the only injunction provision in the court orderdirected toward ATL," the vendor said in its press release.

There were actually three provisions related to this promotionalmaterial, according to Maslak.

BRIEFLY NOTED:

  • GE Medical Systems' orders exceeded $3 billion for thefirst time in fiscal 1990 (end-December), according to GE's annualreport. GEMS' backlog of unfilled orders increased 12% to $1.7billion at the end of 1990. Of that backlog, 86% is scheduledfor shipment this year, the report said.

GEMS is a unit of GE's Technical Products and Services industrysegment. Revenues rose 5% and operating profits 1% from 1989to 1990 in this segment. That performance was below GE's corporate-wide7% increase in revenues and 9% increase in net earnings last year.