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Following Five-Day Trial, Kaye Scholer Secures Win for Medicalgorithmics

August 25, 2016

Victory Comes in Delaware’s Court of Chancery

Kaye Scholer has obtained a significant victory for Medicalgorithmics SA, the developer and manufacturer of a remote cardiac monitoring system known as the PocketECG, in Delaware’s Court of Chancery. Kaye Scholer proved that defendants AMI Monitoring Inc. and Spectocor LLC materially breached the parties’ exclusive licensing agreement by improperly seeking to develop a product to replace Medicalgorithmics’ PocketECG.

In April 2015, Medicalgorithmics terminated its exclusive licensing agreement with defendants AMI and Spectocor based on Medicalgorithmics’ contention that defendants were in material breach of the parties’ exclusive licensing agreement. At the same time, Medicalgorithmics commenced a lawsuit against defendants in the Court of Chancery in the State of Delaware, seeking a declaratory judgment that its termination was proper and damages. Defendants disputed Medicalgorithmics’ termination and filed counterclaims for breach of contract.

Kaye Scholer represented Medicalgorithmics in a five-day trial in March 2016 before Chancellor Andre G. Bouchard, followed by post-trial briefing and argument. Kaye Scholer uncovered substantial evidence, which it introduced at trial, confirming that defendants had materially breached the exclusive licensing agreement from the date it was signed by seeking to develop a competing product, and that the company’s counterclaims of material breach were unfounded. 

On August 18, 2016, Chancellor Bouchard issued an 87-page opinion, holding that Medicalgorithmics was entitled to a declaratory judgment that it validly terminated the parties’ exclusive licensing arrangement. The Court determined that Defendants had materially breached the agreement by secretly developing a product to replace the PocketECG in the United States without first providing the contractually required notice to Medicalgorithmics. The Court also highlighted multiple times the defendants’ bad faith and lack of credibility, finding that the testimony of defendants’ CEO was not credible on many of the key issues in dispute and that defendants had attempted to manufacture evidence to support their claims on at least one occasion. Conversely, the Court found Medicalgorithmics CEO and founder, Marek Dziubinski, to be credible. The Court therefore dismissed all of defendants’ counterclaims against Medicalgorithmics and awarded Medicalgorithmics compensatory damages as well as its attorneys’ fees and costs based on the indemnification provisions of the licensing agreement.

“We at Medicalgorithmics are all very pleased with the Court’s decision,” said the company’s CEO and founder, Marek Dziubinski. “I’m gratified that the Kaye Scholer team was able to assist in vindicating Medicalgorithmics’ rights.”

The Kaye Scholer team representing Medicalgorithmics was led by partner Madlyn Gleich Primoff and included partner Daniel Reisner, counsel Michael Lynn and associates Kyle Gooch, David Giroux and Steven Fruchter.

The case is Medicalgorithmics S.A. v. AMI Monitoring Inc., No. 10948-CB (Del. Ch. Aug. 18, 2016). You can read the Court’s full opinion here.

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