Fonar scores another victory in GE patent infringement battle

Supreme Court denies GE's request to delay payment

Fonar has moved a step closer to securing a multimillion-dollar judgment in its MRI patent infringement case against GE Medical Systems. Supreme Court Chief Justice William Rehnquist has denied GE's request to delay payment of a $103 million judgment against GE that was upheld in March by a federal appeals court.

Rehnquist's May 28 ruling enables Fonar to ask Judge Leonard Wexler, the U.S. District Court judge who presided at the original trial, to turn over a $74 million bond from GE before the final disposition of the case is known, according to Fonar attorney Ronald Schutz. The bond has been held in escrow by the federal district court in Hauppauge, NY, since June 1995, when GE was found guilty of violating a Fonar patent covering multiangle oblique MRI imaging (SCAN 6/7/95).

Rehnquist's ruling does not affect GE's right to appeal the multiangle oblique verdict or the Washington D.C. appellate court's affirmation of another lower court jury finding against GE for violating Fonar's so-called basic patent. The basic patent governs the use of an MRI device to diagnose cancer, Schutz said. The jury awarded Fonar $35 million for that infraction. Its verdict was reversed by Wexler and reinstated by a federal appellate court in March (SCAN 3/5/97).

GE has until mid-August to file its Supreme Court appeals, Schutz said. The Supreme Court then has another 30 days to respond to GE's petitions. If the justices deny GE's petition, the case could be closed late this year, according to Schutz. Acceptance of GE's appeal would lead to a protracted round of deliberations.

In unrelated news, Fonar announced in June that Dr. Stephen Pomeranz, director of advanced imaging at Christ Hospital in Cincinnati, has coordinated the purchase of three Quad 12000 scanners. The first of the 0.6-tesla open MRI systems has been shipped to Cincinnati and will be operational by early July, according to Tim Damadian, Fonar vice president. The second system will be shipped in July or August, he said. A delivery timetable for the third unit has not been established. Pomeranz will release further details when a nondisclosure agreement relating to the project expires in mid-July.

An association with Pomeranz should help Fonar, which suffers from lacking ties with mainstream radiology. As founder of MRI Education Foundation, Pomeranz is well connected. He is well known among MR practititioners for his publishing and educational enterprises. He is also a founder of the Clinical Magnetic Resonance Society, an association of community-based MRI practitioners.

Fonar posted a $4 million loss on sales of $2.6 million for the third quarter (end-March). The loss was attributed to a 29,000-square-foot addition to its Melville, NY, manufacturing plant, staff expansion, and increased R&D spending. For the first nine months of fiscal 1997, Fonar reported revenues of $8.1 million, down 26% from the first three quarters of fiscal 1996. Net income totaled $369,000, down 42%.