Mammography partnership dies hard

September 25, 1991

The breakup of Soredex's U.S. mammography distribution agreementwith Tecnomed of Bay Shore, NY, was a nasty affair, from whichonly the lawyers for each side appear to have benefited. Although the two firms concluded expensive and protracted litigationa

The breakup of Soredex's U.S. mammography distribution agreementwith Tecnomed of Bay Shore, NY, was a nasty affair, from whichonly the lawyers for each side appear to have benefited.

Although the two firms concluded expensive and protracted litigationa year ago, there still appears to be disagreement over whichcompany won--if either did.

Helsinki-based Soredex canceled its five-year U.S. sales agreementwith Tecnomed in February 1988 and granted exclusive North andSouth American distribution rights to AFP Imaging. AFP took oversales of two Soredex products: the Mamex DC, a low-end (128-mAs)system, and the Mamex DC Mag, which has the capabilities of 210mAs, 280 mAs and 350 mAs depending on the tube used. It uses microprocessor-controlled,high-resolution scanner with magnification (SCAN 4/13/88).

After the breakup, Soredex accused Tecnomed of failing to fulfillits agreement to purchase a minimum number of mammography systemsin 1987. Tecnomed countered that Soredex had not fulfilled itspromise to upgrade the Mamex DC installed base and solve problemswith the new DC Mag system.

"Soredex did not live up to its commitments, which createda predicament for Tecnomed. We were unable to sell what was anobsolete Mamex DC and a defective Mamex Mag," said Jean Griswold,former manager of Tecnomed and now a consultant with the company.

According to Tecnomed's version of the events, Soredex choseto launch a multimillion-dollar lawsuit against it on the minimumpurchase issue rather than trying to rescue Tecnomed from itssagging sales. The distributor decided to fight and was vindicatedin court.

"After more than two years of litigation, the courtsin Helsinki, Finland, discounted as worthless all substantiveparts of the Soredex lawsuit. The complete monetary responsibilityof Tecnomed to Soredex by court decree was the payment of about$21 for a diode repair in a tube-head assembly, for which Soredexhad originally billed Tecnomed more than $9000," Griswoldsaid.

Tecnomed issued a press release in the Spring characterizingthe litigation as the successful defense of a multimillion-dollararbitration claim by Soredex against it in Helsinki."

Soredex, on the other hand, paints a picture of two companiesleveling suits against each other with neither obtaining muchfor its efforts.

Tecnomed filed a $5 million lawsuit against Soredex in NewYork, claiming that the cancellation of the distribution agreementwas improper and had caused the U.S. firm financial hardship,said Henry Haarla, a Soredex spokesman.

Soredex filed a $2 million claim against Tecnomed for breachof the distribution agreement, he said.

Both cases were submitted to arbitration in Finland, with theend result that the major claims of both sides were rejected,Haarla said. Soredex's right to cancel the contract was upheld,but its attempt to recover funds from the unfulfilled purchasesby Tecnomed was rejected.

The arbitrators ruled on minor claims in which both sides hadto make relatively small payments, Haarla said.

"Soredex is pleased that the issue was resolved to their(Soredex's) satisfaction," he said.

Following the cancellation of the Soredex agreement, Tecnomedexplored other foreign mammography suppliers, but eventually decidedto manufacture its own system to best meet U.S. clinical requirement,Griswold said.