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Life Image v. Brown (Noncompete Mass. 2012)

Life Image v. Brown (Noncompete Mass. 2012)

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rrfte
MassachusettsLaw~porter
Citeas29MASS.
L.
RPTR.
No.2!'427(April16,2012)
427
lifeImage,Inc.v.MichaelS.Brownet
al,
SuperiorCourt,Suffolk,SSNo.SUCV201103764MemorandumDatedDecember22,2011Contracts-Construction-NoncompeteAgree-ments-OpinionGrantsaPreliminaryInjunctionAgainstaComputerSystemManufaeturer'sFor-merVicePresidentofProductDevelopment,Lim-itedinTimetoOneYearandGeographicallytotheUnitedStates.MasterandServant-EinploymentAgreements-NoncompeteAgreements-OpinionGrantsaPre-liminaryInjunctionAgainstaComputerSystemManufacturer'sFormerVicePresidentofProductDevelopment.LimitedinTimetoOneYearandGeographicallytotheUnitedStates.
Thisopiniongrantsapreliminaryinjunctionenforcingnon-competeandnon-solicitationclausesofanemploy-mentagreementbetweenastartupcompanythatdevelopedandmarketsacloud-basedcomputersys-temformakingmedicalradiologyimagesavatlabletouserswithotherwiseincompatibleoperatingsys-tems,andtheplaintiffsformervicepresidentofbusinessdevelopment.The.agreementprecludedthedefendantfromworkinganywhereintheworldforoneyearfromtermination,foranymanufacturerofanyproductcompetingwithanyproductmadebytheemployerduringthedefendant'stermofemploy-ment.Theagreementenforcestheagreementforthefullone-yeartermbutlimitsthegeographicscopeoftherestrictiontotheUnitedStates.
Contracts-Construction-CovenantsNottoCom-pete-WhetherTwoBusinessesArein"Competi-tion"IsBasedontheNeedsofTheirCommonCustomers,NottheIdentityofTheirProducts.MasterandServant-EmploymentAgreements-CovenantsNottoCompete-WhetherTwoBusi-nessesArein"Competition"IsBasedontheNeedsoftheirCommonCustomers,NottheIden-tityofTheirProducts.
Thefocusfordeterminingwhethertwobusinessesarein"competition"withinthemeaningofacovenantnottocompeteshouldbebasedontheneedsoftheircustomersratherthanontheidentityoftheirproducts.Thisopinionholdsthatamanufacturerofaspecializedcomputersys-temisin"competition"withasimilarmanufacturerifthetwocompaniesselltoamarketwithcustomersthatmaypurchaseoneortheotherbutnotbothproducts,tosatisfythesameneed,eventhoughthecompanies'productsarenotidentical.
Contracts-Construction-NoncompeteAgree-ments-RapidlyChangingConditionsintheCom-puterMarketJustifiesaOne-yearLimittoaNoncompeteClauseofanEmploymentAgree-ment.MasterandServant-EmploymentContracts-NoncompeteAgreements-RapidlyChangingConditionsintheComputerMarketJustifiesaOne-yearLimittoaNoncompeteClauseofanEmploymentAgreement.
Anoncompeteagreementwithatermofoneyearinanoncompeteagreementbetweenanexecutiveandacomputersystemsdevel-operisreasonablebecauseoftherapidlychangingmarketinthecomputerfield.
Contracts-Construction-NoncompeteAgree-ments-GeographicScopeofanOtherwiseGlobalNoncompeteAgreementBetweenaForeignNa-tionalandaU.S.ComputerSystemsManufacturerIsRestrictedtotheUnitedStatestoAvoidUndueHardshipIftheFormerEmployee'sImmigrationStatusChanges.MasterandServant-EmploymentAgreements-NoncompeteAgreements-GeographicScopeofanOtherwiseGlobalNoncompeteAgreementBe-tweenaForeignNationalandaU.S.ComputerSystemsManufacturerIsRestrictedtotheUnitedStatestoAvoidUndueHardshipIftheFormerEmployee'sImmigrationStatusChanges.
ThisopinionlimitstotheUnitedStatesthegeographicscopeofanotherwiseglobalnoncompeteagreementbetweenastartupcomputersystemdevelopermar-ketinganinternetserviceanditsformervicepresi-dentofproductdevelopment,becauseofthecourt'sconcernthattheformeremployee,aforeignnational,maybeundulyrestrictedifforcedtotheleavetheUnitedStatesduetoachangeinimmigrationstatus,inspiteofthecourt'sacknowledgmentthatcomputersystemdevelopersinvolvedininternetservicesoper-atewithoutgeographicboundaries.McINIYRE,
FRANCES
A.,
J.
ThisproceedingarisesoutofLifeImage,Inc.'sactiontoenforcenon-competitionandnon-solicitationclausesinanemploymentagree-mentwithitsformerVicePresidentofBusinessDevel-opment,MichaelS.Brown.
Mr.
BrownmovedtoMergeHealthcareonOctoberII,2011.BothUfeImage,Inc.andMergeHealthcareareinvolvedinmedicalimagemteroperabthty.!LifeImage,Inc.assertscountsofBreachofContract,MisappropriationofConfidentialInformation,andTakingofTradeSecretsagainstMr.BrownandcountsofObtainingTradeSecrets,ImpliedCovenants,andTortiousInterferenceagainstMerge.Plaintiffseeksapermanentinjunctionandadeclara-toryjudgment.
An
exparte
temporaryrestrainingorderenteredonOctober17,2011.ThesubsequenthearingwassetbyagreementonNovember17,andattherequestoftheparties,helduntilDecember13,2011whenafurtherhearingwasconducted.Afterdueconsideration,themotionforapreliminaryinjunctionis
ALWWED.
FACTUALBACKGROUNDThefactsaredrawnfromtheparties'affidavits.LifeImage,Inc.isastart-upcompanylocatedinMassa-chusetts;itwasfoundedin2008.HamidTabatabaieistheChiefExecutiveofficer.Hehasmanyyearsofexperienceinradiology,imageandinformationman-
 
428
%.e
iMassachuseu«Law~porter
Citeas29MAss.L..RPrR.No.21,428[April16,2012)
agement:LifeImage,Inc.ishisfourtl;lst~.rtrgp.'rhebusinesspurposeofLifeImageistoa.cldJ;'c::s$"thevoidinthemarketforasystemJoJa.ciUta.tetheeasyandreliableexchangeofmec.lica.limaginginformationacrossthebOUllda.riel3ofbealthcarefacilities,therebyavoidingduplicateexams,eliminatingunnecessarypatientexposllretoexcessiveradiation,andultimatelyredllcingpatienthealthcarecosts."LifeImageoccupiesoneniche;ithasdevelopedacloud-basedmedicalimage-sharingsystem,chieflyforuseinradiologicapplications.Withthisproduct,ra-diologicalimagescanbestoredonaservernotownedbyahospitalorchainofprovidersbutownedbyathirdparty.Metaphorically,thefilmsarethenina"cloud."'rhus,anymedicalproviderproperlylicensedcanaccessthecloudandthestoredimagesforimmediatediagnosticpurposes.Theproductsarenamedvari-ously,butincludeLINCS,LISAandLILA.Theinnova-tionofLifeImageisthatamedicalproviderisnotlimitedtoviewingimagesavailableonlyatherownassociatedmedicalfacthties,butcanviewimagesacrossabroadcollectionofhospitalsandinstitutionswhoarealsoaccessingtheLifeImagecloud.Further,theimagescanbemadeinstantlyavailabletoexpertradiologistsfordiagnosticconsultationatageo-graphicremove.OnSeptember27,2010,the
WallStreetJournal
recognizedLifeImage'sinnovationindevelopingacloud-basedplatformforsharingdiagnosticimageswithitsTechnologyInnovationAward.InNovember20II,LifeImagelaunchedaninternetphysicianre-ferraldirectoryataconferenceoftheRadiologicalSocietyofNorthAmerica.IcreditMr.Tabatabaie'saffidavitandbelievethatLifeImage'sproductsare,infact,adramaticinnovation,cost-cutting,andexperi-encingapositivereactionfromitsmarket.MichaelBrownwashiredinJuly2009intothepositionofLifeImage'sDirectorofBusinessDevelop-ment;hewasoneofthefirstfifteenemployeeshiredbythefledglingfirm.ThispredatedtheproductsaleswhichbeganinDecember2009.Theemploymentofferwascontingentonhiswillingnesstoagreetoconfiden-tialityandnon-competitionprovisionswhicharecustomaryinhisfield.Thefirm'sprimarygoalforhimwastoestablishearlypartnerships,internationalandnationalrelationships,andmajorcustomersforLifeImage.OnFebruary1,2010,Mr.BrownwaspromotedtoVicePresidentofBusinessDevelopment;healwaysreporteddirectlytotheCEO,Mr.Tabatabaie.Inthespringof20II,Mr.BrownindicatedtotheCEOthathewouldbeleavingLifeImageatsomefuturedate.ThoseplanswereacceleratedinthesummerbecauseMr.Brown'spersonalsituationchangedandhede-cidedtomovetoChicago.Paragraph3(a)oftheConfidentiality,DevelopmentsandNon-CompetitionAgreement(the"Agreement")providedthat,foraperiodoftwelvemonthsfollowinghisdateoftermination,Mr.Brownwouldnot"engagedirectlyorindirectlyinanybusinesspresentlyen-gagedinbyLifeImageorinwhichLifeImageengagedduringthetermofhisemployment."Under3(b),heagreednottosoltcitortakeawaycustomersorpoten-tialcustomers,clients,etc.Heagreedtomaintaintheconfidentialityofallconfidentialinformationasde-finedintheAgreementandtoholditintrustforLifeImage,per1(b).Mr.BrownsignedthisAgreementonJuly31,2009.Mr.BrownhadbeenintheUnitedStatesforfiveyearsatthatpoint,andhadbeenworkingatSiemens.HewasamemberoftheAustralianArmyReserve.Noth-ingsuggeststhathisSignaturewasprocuredundereconomicoranyotherformofduress.ThereisnodisputethattheAgreementwasmadeforconsider-ation.MergeHealthcareislargerandmoreestablishedthanLifeImage;itsrangeofproductsandservicesisbroader.Historically,Mergehasofferedmedicalimagestoringandsharingonatraditionalplatform,calledavendorneutralarchive.Notjustradiology-focused,Mergeofferssolutionsforcardiological,orthopedic,pediatric,orophthalmologicalsettings,butallthesystemsincludemedicalimaging.
It
hasonegroupinclinicaltrialandlaboratorysolutionsnothavingtodowithimage-sharing.InJuly2011,Merge'sSeniorVicePresidentofSolutionManagement-ProductStrategyandManage-mentPaulMerrildinstructedanothervicepresidenttoprepareamarketanalysisofLifeImage,Inc.'sproductsandsolutions.Thisresultedina58-pageslidepresentationdatedJuly27,2011.AchartwithincomparesLifeImage,Inc.'sproductswiththoseofMerge.Thestudynotesthat"[tlheLINC(multipurposesharingnetwork)productseemstobethestrategiclongtermdirectiontoeliminateduplicateexams."AgraphwithinshowsthatLifeImage,Inc.provides"manualcloudbasedresultsdelivery,""automaticcloudbasedresultsdelivery,""multipurposesharingnetwork"and"mobileviewingandsharing."MergehadnoneofthesecapabilitiestoofferhospitalsinJuly2011.Afairinferencetodrawfromthepresentationpre-paredbythevicepresidentisthatMergewaskeenlyawareofLifeImage'sappealtothemarketinanenvironmentofrisinghealthcarecosts.TherearechartsinthestudythatdiscussLifeImage'scustomers,scale,prestige,andactivity.ThereportestablishesconclusivelythattherewasknowledgeandbeliefatthehighestlevelsofMergethatLifeImagewasdevelopingandmarketingapowerfulinternettoolthatwasgroundbreaking.
It
wouldreducepatientexposuretoradiation,save10-15billiondollarsinmedicalcarecosts,provideforquickconsultsbyexpertphysiciansoutsidethegeographicareaandthegraphdemon-stratedthatMergehadnoequivalentproduct.Toitscustomers,MergehistoricallyoffereditsiC-onnectproductwhichprovidesradiologicalimage
 
'l11e
MassachusettsLaw~porter
Cite
as
29
MASS.
L.
RPrR.
No.21,429(Aprtll6,2012)
429
sharingthatisVNAandnotcloud-based.Inrecentmonths,Mergehasbeendevelopingitsowncloud-basedmedicalimagesharingdeviceandcallingit"Honeycomb."InOctober
2011,
MergeannouncedHoneycombtothepublic,butasofthiswriting,itisnotavailabletothemarket.HoneycombhasbeendevelopedbyMergeinordertoenterthecloud-basedmedicalimagingmarketplace.OnJuly
22,2011,
Merge'schairman,MichaelFerro,instructedhisSeniorSalesVice-PresidentSte-phenMartintocontactMr.Browninregardtopossibleemployment,ostensiblybecauseMr.Brownwasmov-ingtoChicago.Mr.Martinimmediatelydidsoandonthatveryday,Mr.BrownlunchedwithMr.MartinanddescribedhimselfasintriguedbythepossibilityofjoiningMerge.TheinferencethatMergetargetedMr.BrownforrecruitmentbecauseofhispositionwithLifeImageisinescapable.Withindaysofthiscontact,Mr.BrownsentanemailthroughoutLifeImagethatquotedMichaelFerro,thechairmanofMerge,assayingthatMergehadanapplicationthatwas"theLifeImagekiller."Mr.Brownwrotethat"Mergeisshaping
11.P
tobeoneofour
biggestcompetitors."
(Emphasisin
ortgtnal.)
HethenadvisedCEOMr.
Tabatabaie
thathewouldneedto"stepintothefraywithFerro."Mr.BrownaversthathesentthisoutofloyaltytoLifeImagebutItake
it
toshowthatheknewandunderstoodthatMerge'sbusi-nessinterestsweredirectlycompetitivewiththoseofhisemployer,LifeImage.NegotiationsmovedapacebetweenMergeandMr.BrownandtherewasafurthermeetingonAugust
22,2011.
Mr.BrownsenthisLifeImageAgreementtoMerge,likelyforalegalreview.IconcludefromthisthatMergeHealthcarewasawareofMr.Brown'scov-enantwithLifeImage.OnSeptember
6,
20II,
Mr.BrowngavehisnoticethathewouldleaveLifeImagewithoutindicatinghisdiscussionswithMerge.OnSeptember
14,
Mr.BrownmetwithMergeper-sonnel.ThemeetingwithMergewasinordertoac-quaintMr.BrownwithHoneycomb,thesoontobeavailableproductofMergethatwasadirecthead-to-headcompetitorwiththeLifeImageproduct.Mr.BrownadvisedMergethatHoneycombneededamethodofimportingpatient's(radiological)compactdiscs,whichHoneycombwasnotequippedtodo.Onthatdate,hewasstillintheemployofLifeImage.ThissuggestionwasnotmadeinthebestinterestsofMr.Brown'semployer,LifeImage.NotwithstandingthedenialsofMergestaff,IfindtheCircumstantialevidencecompellingthatMr.Brownwasrecruitedinordertosellamatchingcom-petitiveapplicationfromMerge,and/orthatMergesoughttolearninformationfromMr.BrownthatwouldpromotesalesofiConnector
Honeycomb.f
OnOctober
2,20II,
Mr.BrownnotifiedMr.TabatabaiethathewasmovingtoMergeasVice-Pres-identofNationalAccounts.Mr.BrownbeganhisemploymentwithMergeonOctober
11,2011-
AsVicePresidentforBusinessDevelopmentandasanearlyandseniormemberofthebusinessdevelop-mentteam,Mr.BrownhadonhiscompanylaptopthecompleteproductfortwoofLifeImage'scloud-basedapplications,LILAandLISAforuseatcustomerdem-onstrations.ThereisforensicevidencewhichIcreditthatonSeptember
15,2011,
Mr.BrowncopiedthecontentsofhisLifeImagelaptopcomputerontoabrandnewMacBookandreturnedtheLifeImagecomputeronhisfinaldayofemployment.Thus,hecarriedthecompleteLifeImageproductwithhimonhiscomputerwhenheleftLifeImageandwenttoMerge.HealsodeletedemailstoMergefromhis"sent"folder,asthoughtocoverthosetracks.AlargevolumeofinformationwasexportedfromMr.Brown'sLifeImagelaptopontoaexternalharddrivebetweenSeptember
8
andSeptember
14,
afterhehadgivennotice.ThosefilenamesincludeImple-mentations,CustomerContracts,PromotionalMate-rialsandfourothers.TherewouldbenoneedforMr.Browntocollectthisdataonaharddrive
as
anemployeeofLifeImagebecause
it
wouldbeavailable(initsowncloud,apparently)atanytimethathechosetoaccessit,
so
longas
hewasintheemployofLifeImage.Thissuggeststhat
Mr.
Brownsoughttopre-servethisinternalLifeImagedatainafashionthatwouldbeavailabletohiminhisnewjob.Thiscasewasfiled
in
thiscourtonOctober
17,20II,
andthetemporaryrestrainingorderallowed
in
part.OnOctober
18,20II,
Mr.Brownwasservedwiththetemporaryrestrainingorder,whichrequiredhimtoreturn
all
materialstakenfromLifeImage.OnreceiptoftheTROofthiscourtorderinghimtopre-servealldata,Mr.Brown,apparentlyinapanic,deletedcertainLifeImagematerialfromhislaptop;thislastisanapparentviolationofthiscourt'sorder.Allcomputer-storedmaterialstakenfromLifeImage'sdataarenowsecureinhislawyer'soffice.ThereisnodirectevidenceofMr.Brown'sdisclo-sureofconfidentialinformationtoMergebutwhatisreferencedabove;however,therehasbeennodiscov-erytodate.DISCUSSIONInjunctiverelief"isanextraordinaryremedyneverawardedasamatterofright."
Winterv.NaturalRe-sourcesDefenseCouncil,Inc.,
555
U.S.7,24
(2008).
Thecourtmustconsiderseveralfactorstodeterminewhethersuchreliefiswarranted:(1)theplaintiffs'likelihoodofsuccessonthemerits;(2)theirreparableharmtotheplaintiffsintheabsenceofrelief,and(3)thebalancebetweentheharmandtheharmthereliefwouldcausethedefendants.
Tri-Nei
Mgmt.,Inc.v.BoardofHealthofBarnstable,
433Mass.
217,219(2001).
Thecourtalsoconsiderswhetherthereliefsoughtwilladverselyaffectthepublic.Id.

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