Picker wins round in IES case; third-party firm plans appeal

June 15, 1994

Ruling on antitrust charges could hurt ISOs The wheels of justice moved slowly in a seven-year scanner servicingdispute between Picker International and independent service organization(ISO) Imaging Equipment Services, but they finally took a

Ruling on antitrust charges could hurt ISOs

The wheels of justice moved slowly in a seven-year scanner servicingdispute between Picker International and independent service organization(ISO) Imaging Equipment Services, but they finally took a turnlast month. A court ruling that effectively dismisses IES antitrustcountercharges against Picker will now throw the IES case intoappellate court, with IES willing to continue its fight to theU.S. Supreme Court if necessary.

"We have been confident of the outcome of this case andare pleased by the ruling," said Picker spokesperson MikePeterson.

The decision by Boston-based U.S. First District Court judgeMark Wolf allowing Picker's summary judgment motion to set asidethe charges by IES has serious implications for the entire third-partyservice industry, said Thomas Quinn, IES president.

"If he (the judge) hasn't made an error and we are deniedthe appellate court, that means (the decision) is the rule ofthe land. That is the kiss of death for ISOs," he told SCAN.

On the positive side for IES, the move to appellate court shouldspeed the legal process significantly. An appellate decision willbe based on the court record as it stands, without further opportunitiesfor motions that could delay the process, Quinn said.

Picker first sued IES in 1987 when the ISO hired a former Pickerservice executive, which allegedly violated a non-compete contractthe employee had with Picker. The vendor then filed a second chargeagainst IES for improper use of Picker service documentation andsoftware. IES claimed it had negotiated a license of Picker'smaintenance software, but Picker did not recognize the validityof such a licensing arrangement (SCAN 3/16/88).

It is not yet clear what will happen to Picker's charges, whichare still before the court in Boston. The vendor is clearly moreinterested in setting legal precedents than winning damages. Pickerdoes not stand to gain monetarily if it does win the case. Ratherthan revealing its own service profits in the court case, thevendor has accepted IES profits as the basis for damages, Quinnsaid.

"Our profits were zero during the time period, so theissue of monetary damages is moot," he said.

The ruling against IES is a setback for third-party servicefirms in their efforts to compete in the substantial scanner maintenancemarketplace. OEM imaging system suppliers, faced with sluggishnew unit sales, are increasingly focused on service revenue earnedfrom their installed base to fill the gap.

All is not rosy for Picker, however. The vendor lost a scannerservice case with now-defunct ISO Etek two years ago. That decisionhelped fuel an investigation by the Department of Veterans Affairsinto service issues related to the large number of Picker CT systemsinstalled at VA hospitals (SCAN 8/26/92)The VA investigation hasapparently resulted in an internal recommendation to the JusticeDepartment, according to Quinn. IES has also supplied informationto assist separate government investigations of Picker's servicebusiness at both Justice and the Department of Defense, he said.Results against Picker in any of these investigations could haveimplications for the IES case.