Trionix takes legal swing at ADAC

December 25, 1991

A dispute that has been brewing between two nuclear medicine competitorsfor several years came to a head at the RSNA meeting. TrionixResearch Laboratory revealed during the show that it has filedsuit against ADAC Laboratories on grounds of technology

A dispute that has been brewing between two nuclear medicine competitorsfor several years came to a head at the RSNA meeting. TrionixResearch Laboratory revealed during the show that it has filedsuit against ADAC Laboratories on grounds of technology infringementand unfair competition grounds.

ADAC responded that the suit has no merit and is a form ofharassment in itself.

"We are preparing a vigorous response, which we will filesometime in January," said Stanley Czerwinski, ADAC presidentand COO. "We not only intend to defend ourselves, but alsoto seek damages from Trionix and its principals. This is anotherexample of abuse of the legal system."

ADAC of Milpitas, CA, only recently escaped from another boutof litigation--and at some expense to the company. It took a $1.75million charge against earnings earlier this year resulting fromsettlement of a shareholder class-action lawsuit (SCAN 8/28/91).

The infringement aspects of Trionix's suit filed in the courtof common pleas in Summit County, OH, relate to ADAC's use ofnuclear camera technology originally developed by Johnson &Johnson. Following J&J's decision to shut down its Technicaremedical imaging company in 1986, nuclear patent rights were licensedto former Technicare employees who founded both Trionix and OhioImaging (subsequently acquired by Picker). Trionix is based inTwinsburg, OH.

The nuclear technology was not supposed to be passed beyondOhio Imaging or Trionix by any of the three companies, Trionixmaintains. Individual contracts to that effect were signed betweenJ&J and the two camera developers.

Ohio Imaging initiated a relationship with ADAC to supply theGenesys camera on an OEM basis, but, in 1989, ADAC purchased rightsof tooling, documentation and manufacture for the camera. ADACsubsequently switched production of the unit to its own facility(SCAN 6/7/89).

ADAC licensed J&J's nuclear technology last year throughthe British Technology Group, which has obtained exclusive rightsto sublicense J&J's non-MRI medical imaging patents (SCAN10/10/90).

The Trionix technology infringement allegations made againstADAC relate to the period when the latter was manufacturing Genesyswithout the J&J license, said David Huston, Trionix directorof global market development.

Allegations regarding business interference on the part ofADAC, however, cover a five-year period and the practice is continuing,he said.

"There has been a pattern of activity (on the part ofADAC), and it has accelerated over the last several months. Wefeel it is time to take it to the courts and let them decidewhether there is wrongdoing on their (ADAC's) part," Hustonsaid.

Trionix alleges that ADAC improperly hired Trionix employeesin violation of their nondisclosure and noncompetition agreements.Trionix maintains that this is "part of a systematic campaignto induce an important group of Trionix employees away from Trionixwith an intent to cripple (its) business."

Trionix has asked the Ohio court that ADAC be enjoined fora year from manufacturing, selling and servicing equipment basedon the Technicare technology, enjoined for five years from hiringTrionix personnel with knowledge of the company's trade secrets,and generally prohibited from defaming Trionix or disclosing itstechnology to others. It also seeks an undisclosed amount of punitivedamages and reimbursement for lost profits.

ADAC has hired only four field service engineers from Trionix,Czerwinski countered. That is not high-level raiding, and rotationof engineers within the industry is common practice, he said.