InSight to buy California center,along with trademark for open MRI

September 11, 1996

InSight to form separate open MRI subsidiaryWhat's in a name? Ask that question of InSight Health Services.The Newport Beach, CA, imaging services provider believes it'sgetting more than just an imaging center with its proposed acquisitionof

InSight to form separate open MRI subsidiary

What's in a name? Ask that question of InSight Health Services.The Newport Beach, CA, imaging services provider believes it'sgetting more than just an imaging center with its proposed acquisitionof Open MRI of Hayward, CA. InSight is also acquiring the company'srights to the "open MRI" trademark, which InSight plansto put to work in forming a separate imaging center subsidiaryspecializing in open MRI.

InSight and Open MRI announced last month that they had signeda letter of intent in which InSight would buy the Hayward center.Open MRI is owned by low-field MRI proponent Dr. Peter Rothschild,who also runs Image Enhancement System, a developer of MRI image-processingsoftware.

Rothschild and Open MRI own the rights to the use of the term"open MRI" for MRI products and services as a resultof a trademark Rothschild obtained in 1993. Rothschild also ownsrights to the use of the 1-800-OPEN-MRI phone number he employsin marketing efforts to promote his center.

Rothschild has aggressively defended his trademark. Open MRIlast year filed litigation against another California imagingcenter, Open MRI of the Desert in Palm Desert, charging the centerwith infringing on the trademark (SCAN 11/8/95). The case wassettled out of court when Open MRI of the Desert agreed to changeits name.

The introduction of new open-magnet designs like Hitachi's Airissystem and Siemens' Magnetom Open has been a shot in the arm forthe otherwise moribund MRI segment. Users of open MRI systemstout the ability of the scanners to image claustrophobic or largepatients who can't be inserted into the narrow bores of conventionalmagnets.

InSight sees the Open MRI trademark as a valuable asset in itsplans for growth, according to CEO Larry Atkins.

"We have put a high degree of value on that trademark,"Atkins said. "For marketing and other reasons, we considerthat one of the assets we're purchasing."

Once the Open MRI purchase is completed, InSight plans toform a separate Open MRI Inc. subsidiary operating within InSight.The subsidiary's mission will be to build, acquire, operate, andmanage open MRI centers.

"We've come to the conclusion that this really needed tohave its own identity, as opposed to being folded into InSight,"Atkins said. "It will leverage off InSight's infrastructure,but it will have its own distinct legal existence."

InSight plans to build its open MRI expertise by acquiringexisting open MRI centers, developing new sites, and adding openMRI capability to existing InSight centers. InSight does not operateany open MRI magnets, according to Atkins. InSight was formedthrough the merger of American Health Services and Maxum Healthearlier this year. Open MRI will become InSight's 29th center.

Rothschild will become medical director of Open MRI Inc. andwill advise InSight in its open MRI strategy, both with the OpenMRI subsidiary and with adding open MRI scanners to existing InSightcenters.

"Our goal is to make this company the leader in open MRI,"Rothschild said. "This is the fastest growing area in allof radiology."

Rothschild will retain ownership of Image Enhancement System,which has developed hardware and software upgrade packages thatreduce background noise in MRI images (SCAN 7/14/93). IES hasbranched out from products for Toshiba low- and mid-field systemsand now offers products for all Hitachi and Shimadzu scanners,as well as GE's 5x Signa and MR Max systems.