IBM and PACS partner Genesys clash over Florida installation

October 20, 1993

Cracks are appearing in the relationship between picture archivingand communications systems partners IBM and Genesys. IBM lastmonth fired the Orlando, FL, company from an IBM PACS job at aFlorida hospital. Genesys this month countered with a

Cracks are appearing in the relationship between picture archivingand communications systems partners IBM and Genesys. IBM lastmonth fired the Orlando, FL, company from an IBM PACS job at aFlorida hospital. Genesys this month countered with a lawsuitcharging the computer giant with wrongfully terminating its contractin an attempt to gain access to proprietary software codes.

While attorneys said IBM and Genesys were close to resolvingtheir dispute at press time, the spat raises questions about theability of the companies to work together in the future.

The lawsuit relates to work on a full PAC system being installedat Jackson Memorial Hospital in Miami. IBM is the prime contractoron the job and subcontracted with Genesys to install its ROI softwarefor IBM's RS/6000 workstation.

The work at Jackson Memorial Hospital is a customized versionof the standard IBM/Genesys PACS, according to Genesys presidentRobert E. Watson. The two companies have disagreed about how thesystem has performed since work on the project began in 1990,he said.

According to a complaint filed by Genesys in state circuitcourt in Orlando, IBM terminated Genesys' contract September 9and attempted to claim source codes developed for the Genesyssoftware. Source codes are underlying computer codes that carryout instructions given by the executable codes input by the softwareuser.

The source codes are being held in escrow by a third company.According to the terms of its contract with Genesys, IBM wouldhave access to the codes if the contract were terminated, accordingto Watson.

Prior to firing Genesys, IBM had asked the company to makechanges to the executable codes in the Jackson Memorial software.Genesys made the changes, but they were not to IBM's satisfaction.Changes to the software cannot be made without access to the sourcecodes, so IBM attempted to get access to the codes to make thechanges itself, according to Watson.

"IBM terminated Genesys and barred Genesys from completingthe work in order to create the appearance of a noncompliancewith the subcontract," according to the complaint filed byGenesys. "IBM is attempting to create an appearance of noncomplianceso that IBM can withhold payment from Genesys and gain accessto Genesys' confidential and proprietary trade secrets."

Genesys asked for a temporary injunction preventing IBM fromgaining access to the codes until the court determines whetheror not Genesys complied with its contract with IBM.

The complaint also asks for attorney's fees and damages inexcess of $15,000 for breach of contract. IBM owes Genesys $31,000for its work, which was substantially completed at the time IBMterminated the company's contract, according to the complaint.

An IBM representative declined to comment on the case otherthan to say that the company believes there is no merit to theGenesys suit.

The companies are discussing the case and could settle theissue this week, according to Genesys attorney Timothy Schulteof Zimmerman, Shuffield, Kiser & Sutcliffe in Orlando. Aspart of the settlement, IBM probably will not gain access to thesource codes. Genesys' status as a contractor on the Jackson projectis still up in the air, however, Schulte said.

Even if the dispute is settled, the acrimony raised by thedispute could put the brakes on further work between the two companies.IBM and Genesys have no formal agreement on PACS and work togetheron a project-by-project basis (SCAN 5/20/92). This will continuein the future, according to Watson.

"We see no change (in the relationship)," Watsonsaid. "We are continuing to bid on projects together."