An AI imaging firm says Johnson & Johnson stole its tech. Execs on both sides are expected to testify next week.
ChemImage, a small biotech firm, sued the healthcare giant over a 2019 partnership that went south.
Johnson & Johnson had signed a multibillion-dollar contract with the Pittsburgh-based company.
In 2019, Johnson & Johnson, hoping to compete in the growing surgical robotics field, signed a multibillion-dollar contract with a small biotech company called ChemImage.
Based in Pittsburgh, ChemImage was pioneering AI-powered software that a surgeon could use in order to "see" what a robotic scalpel is doing. The images would help the surgeon form real-time assessments of damaged or cancerous tissue.
On Monday, these former partners — the small biotech company and the global healthcare giant — are set to face off in federal court in Manhattan at a trial over a $1.5 billion breach of contract lawsuit ChemImage filed last spring.
US District Judge Jesse Furman, who will preside over the weeklong bench trial, has since trimmed the allowable damages. If ChemImage prevails, it could win some $180 million in contract-termination penalties and other overdue payments.
ChemImage has also asked the judge to restore all patents and intellectual property it developed under its contract with Johnson & Johnson. This would let the plaintiffs continue using and developing its imaging software.
"This is a case about J&J's decision to retreat from its failed play in surgical robotics, breaking the promises it made to ChemImage to develop its life-saving imaging technology," the lawsuit alleges.
"J&J's decision ultimately killed this family-founded company and its technology that could have vastly improved surgical outcomes for millions of people."
What's undisputed is that two days after Christmas in 2019, ChemImage and the J&J subsidiary Ethicon entered into a 104-page "Research, Development, License, and Commercialization Agreement."
The contract set a payment schedule — ChemImage received $7 million up front — and established milestones for future payments and as much as $1.5 billion in eventual royalties.
Also undisputed is that in April 2023 — with the effort to meld ChemImage's software and J&J's robotics mired in delay and no commercially viable product in sight — the contract blew up.
The judge is tasked with determining whether J&J pulled the contract for good reason — "with cause." If so, ChemImage would be entitled to no damages at all.
Alternately, if J&J pulled the contract for no valid reason — without cause — the healthcare company would have been required to give ChemImage a 120-day notice and a $40 million termination payment, neither of which happened.
ChemImage also alleges that an additional $140 million in incremental development "milestone" payments are due.
Much of the testimony will involve opposing accounts of why the partnership went south after three years.
J&J will present witnesses to show that the contract was terminated for cause, and so ChemImage does not deserve damages. In court papers, they allege that ChemImage failed to meet more than one developmental milestone after more than two years of work, and caused significant cost overruns.
"Plaintiff was harmed as a result of its own conduct," J&J's lawyers wrote in January.
ChemImage counters in court papers that the delays were caused by issues with Ethicon's own technology, employee turnover, and lack of engagement.
Nine current and former J&J executives are on the parties' witness lists, including Hani Abouhalka, the surgery chairman for the MedTech division, and Rocco De Bernardis, the global president of robotic and digital surgery. Peter Shen, the MedTech division's former global head of research, is also on the list.
ChemImage is also expected to call many of its own former executives, including its former CEO, Dr. Jeffrey Cohen.
Read the original article on Business Insider
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