Life Image, Inc. v. Brown

29 Mass. L. Rptr. 427
CourtMassachusetts Superior Court
DecidedDecember 22, 2011
DocketNo. SUCV201103764
StatusPublished
Cited by1 cases

This text of 29 Mass. L. Rptr. 427 (Life Image, Inc. v. Brown) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Life Image, Inc. v. Brown, 29 Mass. L. Rptr. 427 (Mass. Ct. App. 2011).

Opinion

McIntyre, Frances A., J.

This proceeding arises out of Life Image, Inc.’s action to enforce non-competition and non-solicitation clauses in an employment agreement with its former Vice President of Business Development, Michael S. Brown. Mr. Brown moved to Merge Healthcare on October 11, 2011. Both Life Image, Inc. and Merge Healthcare are involved in medical image interoperabilify.1 Life Image, Inc. asserts counts of Breach of Contract, Misappropriation of Confidential Information, and Taking of Trade Secrets against Mr. Brown and counts of Obtaining Trade Secrets, Implied Covenants, and Tortious Interference against Merge. Plaintiff seeks a permanent injunction and a declaratory judgment.

An ex parte temporary restraining order entered on October 17, 2011. The subsequent hearing was set by agreement on November 17, and at the request of the parties, held until December 13, 2011 when a further hearing was conducted. After due consideration, the motion for a preliminary injunction is ALLOWED.

FACTUAL BACKGROUND

The facts are drawn from the parties’ affidavits. Life Image, Inc. is a start-up company located in Massachusetts; it was founded in 2008. Hamid Tabatabaie is the Chief Executive officer. He has many years of experience in radiology, image and information man[428]*428agement; Life Image, Inc. is his fourth start-up. The business purpose of Life Image is to address “the void in the market for a system to facilitate the easy and reliable exchange of medical imaging information across the boundaries of healthcare facilities, thereby avoiding duplicate exams, eliminating unnecessary patient exposure to excessive radiation, and ultimately reducing patient healthcare costs.”

Life Image occupies one niche; it has developed a cloud-based medical image-sharing system, chiefly for use in radiologic applications. With this product, radiological images can be stored on a server not owned by a hospital or chain of providers but owned by a third party. Metaphorically, the films are then in a “cloud." Thus, any medical provider properly licensed can access the cloud and the stored images for immediate diagnostic purposes. The products are named variously, but include LINCS, LISA and LILA. The innovation of Life Image is that a medical provider is not limited to viewing images available only at her own associated medical facilities, but can view images across a broad collection of hospitals and institutions who are also accessing the Life Image cloud. Further, the images can be made instantly available to expert radiologists for diagnostic consultation at a geographic remove.

On September 27, 2010, the Wail Street Journal recognized Life Image’s innovation in developing a cloud-based platform for sharing diagnostic images with its Technology Innovation Award. In November 2011, Life Image launched an internet physician referral directoiy at a conference of the Radiological Society of North America. I credit Mr. Tabatabaie’s affidavit and believe that Life Image’s products are, in fact, a dramatic innovation, cost-cutting, and experiencing a positive reaction from its market.

Michael Brown was hired in July 2009 into the position of Life Image’s Director of Business Development; he was one of the first fifteen employees hired by the fledgling firm. This predated the product sales which began in December 2009. The employment offer was contingent on his willingness to agree to confidentiality and non-competition provisions which are customary in his field. The firm’s primary goal for him was to establish early partnerships, international and national relationships, and major customers for Life Image. On February 1,2010, Mr. Brown was promoted to Vice President of Business Development; he always reported directly to the CEO, Mr. Tabatabaie. In the spring of 2011, Mr. Brown indicated to the CEO that he would be leaving Life Image at some future date. Those plans were accelerated in the summer because Mr. Brown’s personal situation changed and he decided to move to Chicago.

Paragraph 3(a) of the Confidentiality, Developments and Non-Competition Agreement (the “Agreement”) provided that, for a period of twelve months following his date of termination, Mr. Brown would not “engage directly or indirectly in any business presently engaged in by Life Image or in which Life Image engaged during the term of his employment.” Under 3(b), he agreed not to solicit or take away customers or potential customers, clients, etc. He agreed to maintain the confidentiality of all confidential information as defined in the Agreement and to hold it in trust for Life Image, per 1(b).

Mr. Brown signed this Agreement on July 31, 2009. Mr. Brown had been in the United States for five years at that point, and had been working at Siemens. He was a member of the Australian Army Reserve. Nothing suggests that his signature was procured under economic or any other form of duress. There is no dispute that the Agreement was made for consideration.

Merge Healthcare is larger and more established than Life Image; its range of products and services is broader. Historically, Merge has offered medical image storing and sharing on a traditional platform, called a vendor neutral archive. Not just radiology-focused, Merge offers solutions for cardiological, orthopedic, pediatric, or ophthalmological settings, but all the systems include medical imaging. It has one group in clinical trial and laboratoiy solutions not having to do with image-sharing.

In July 2011, Merge’s Senior Vice President of Solution Management-Product Strategy and Management Paul Merrild instructed another vice president to prepare a market analysis of Life Image, Inc.’s products and solutions. This resulted in a 58-page slide presentation dated July 27, 2011. A chart within compares Life Image, Inc.’s products with those of Merge. The study notes that “(t]he LINC (multi purpose sharing network) product seems to be the strategic long term direction to eliminate duplicate exams.” A graph within shows that Life Image, Inc. provides “manual cloud based results delivery,” “automatic cloud based results delivery,” “multi purpose sharing network” and “mobile viewing and sharing.” Merge had none of these capabilities to offer hospitals in July 2011.

A fair inference to draw from the presentation prepared by the vice president is that Merge was keenly aware of Life Image’s appeal to the market in an environment of rising health care costs. There are charts in the study that discuss Life Image’s customers, scale, prestige, and activity. The report establishes conclusively that there was knowledge and belief at the highest levels of Merge that Life Image was developing and marketing a powerful internet tool that was groundbreaking. It would reduce patient exposure to radiation, save 10-15 billion dollars in medical care costs, provide for quick consults by expert physicians outside the geographic area and the graph demonstrated that Merge had no equivalent product.

To its customers, Merge historically offered its iC-onnect product which provides radiological image [429]*429sharing that is VNA and not cloud-based. In recent months, Merge has been developing its own cloud-based medical image sharing device and calling it “Honeycomb.” In October 2011, Merge announced Honeycomb to the public, but as of this writing, it is not available to the market. Honeycomb has been developed by Merge in order to enter the cloud-based medical imaging marketplace.

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Bluebook (online)
29 Mass. L. Rptr. 427, Counsel Stack Legal Research, https://law.counselstack.com/opinion/life-image-inc-v-brown-masssuperct-2011.