The Cost of Litigation
The Corner Office
Wayne Moore
9/16/2024
If nothing else, the R2R movement in the medical device space is making lawyers richer and litigants poorer, in so many ways.
The majority of recent lawsuits involving the general heading of Right-to-Repair are centered around the larger issue of intellectual property (IP). Most of these lawsuits, therefore, have been initiated by Original Equipment Manufacturers (OEMs) against third-party service providers (ISOs). It takes little inertia to start a lawsuit; it takes almost forever to end one. As defendants, ISOs respond to the lawsuit by denying all the claims of the OEMs and then listing a host of counterclaims with alleged anticompetitive behavior being the tip of the spear. As arguments on both sides of the lawsuit are developed, they become more complex and the fees for developing them aggregate and grow — just as a small snowball rolling down from the top of the mountain becomes the avalanche. Litigation of this type can often run into multiple millions of dollars and, more often than not, tends to favor the party with the deepest pockets. In my years in ultrasound, and having served as an expert witness in multiple ultrasound related lawsuits, I have witnessed several ISOs (big and small) go out of business under the crush of legal fees coupled with no real prospect of winning the suit (replete with some owners even fleeing the country). We all need to be careful when reading about these lawsuits and not be too quick to comingle Right-to-Repair activities (which are legal) with other after-market activities that may cross the line into potential theft of intellectual property — or even into remanufacturing. With the former, the OEMs may come after you. And with the latter, the FDA may come after you. Either way, you lose. Before you begin a repair activity, you should first take your business model to an IP attorney, explain exactly what you plan on doing and get an expert risk assessment of potential OEM litigation, then read the FDA’s Remanufacturing versus Servicing Guidance several times to understand its implications on your planned activities, then consult with a company that provides FDA guidance evaluations showing them what you are planning to do, and from that interaction develop a risk-analysis document that lays out why your activity is repair and not remanufacturing.
Do these things and you may avoid needing to flee the country (at least for this reason…).
Until next month,
Wayne