GE settles maintenance litigation with R Squared and two other ISOs

March 13, 1991

Hostilities may be ceasing in the battle between GE Medical Systemsand the independent scanner service industry. Out-of-court settlementshave been reached in three cases, including a long-standing disputewith R Squared Scan Systems. Settlement of the R

Hostilities may be ceasing in the battle between GE Medical Systemsand the independent scanner service industry. Out-of-court settlementshave been reached in three cases, including a long-standing disputewith R Squared Scan Systems. Settlement of the R Squared litigationwas expected to be made official on March 7 by the judge who wouldhave presided at the April court case in Winston-Salem, NC, FederalDistrict Court (SCAN 12/12/90).

The GE/R Squared litigation had dragged on for several yearsin pretrial procedures. GE Medical claimed copyright infringementof diagnostic software used on GE computed tomography scannersas well as Technicare CT systems for which the vendor had takenresponsibility when Technicare was shut down by parent Johnson& Johnson in 1986. R Squared of Pomona, CA, counter-sued,alleging antitrust violations (SCAN 9/30/87).

Dudley A. Rauch, chairman and CEO of MMI Medical, the parentof R Squared, released a statement last week indicating that theagreement would allow the independent service provider to "fullyoperate its existing business without impairment." Rauchrefused to comment further.

Details of the agreement were made available by GE, however.The largest medical imaging vendor agreed to license operatingand basic diagnostic software to R Squared for use on a limitednumber of systems owned by R Squared and located at R Squaredfacilities, according to Jeff Schaper, GE general manager of servicemarketing.

"That operating and basic software comes with the equipmentand has always been available to third party service companiesas agents of health-care providers, but one of the things thatR Squared wanted was to have a direct license," Schaper said.

As a licensee, the company can use the software for training,testing and developing its own, more sophisticated software, Schapersaid. The software GE will license to R Squared is slower thanGE's advanced diagnostics software, he said.

In return for the licensing arrangement, R Squared has agreedto a permanent injunction, effective July 16, preventing the servicecompany from using any of seven GE advanced service software programsfor the GE 9800 CT scanner. Both companies agreed to dismiss allother claims.

GE reached similar arrangements in the past several weeks withtwo other independent service organizations, CRT Internationalof Milwaukee and Mediq's service company in Dallas. These disputeswere settled by agreements that are carbon copies of the one struckwith R Squared. The settlements help ensure that GE's copyrightswill be respected in the service industry, Schaper said.

"The copyright was what this suit was all about,"Schaper said. "GE invests a lot of money in technology. Wespend time and effort to have that technology copyrighted. Andwe think any company, regardless of size, has the right to protectthat investment and that copyright."

The three cases signify a turning point in the battle betweenindependent service organizations and GE, which until recentlyhad refused to license its software to anyone who did not takecare of patients. Schaper stopped short of saying that the legalagreements were part of a broader change in policy or that GEwould gladly license operating and basic diagnostic software toany company that requests it.

"Coming up with a settlement agreement versus a policychange can be a little different," Schaper said.

An appellate decision favorable to GE was also apparently handeddown in the vendor's California litigation with CT Repair Services(SCAN 1/17/90), according to a GE spokesperson. Details of thisdecision were unavailable at press time.