San Diego Bankruptcy Court Rules Sotera Employees Misappropriated Masimo Trade Secrets
October 16 2017 - 4:15PM
Business Wire
Masimo (NASDAQ: MASI) announced today that the bankruptcy court
in San Diego has issued final judgment, holding that Sotera
Wireless Employees misappropriated Masimo trade secrets. The
misappropriation stems from two former Masimo employees, James
Welch and David Hunt, copying thousands of confidential Masimo
documents, and using Masimo’s trade secrets to benefit Sotera. The
Court found clear and convincing evidence that willful and
malicious misappropriation exists. The court also found that the
actions of Welch and Hunt were “despicable conduct,” and that they
“consciously disregarded Masimo’s rights.”
The Court has permanently enjoined Sotera from retaining,
disclosing, disseminating or using confidential Masimo documents,
originating from either James Welch’s or David Hunt’s Masimo
computers. The Court also enjoined Sotera, until September 16,
2021, from including Mr. Welch in Sotera’s Design Control process,
including preparing the Customer Needs Document, the Design Input
Requirements documentation, the Software Requirements Specification
or User Story, implementing software design and the Software Design
Specification, the Design Review, the Verification process, the
Validation process, developing schematics and other production
specifications, and preparing the design history file. David Hunt
had not been working at Sotera since 2015. Masimo understands that
Mr. Welch is also no longer employed by Sotera.
This case was originally the subject of an action in the
Superior Court of Orange County filed in May 2013 against Welch,
Hunt and Sotera. This portion of that case was tried in the
bankruptcy court in San Diego after Sotera filed for Chapter 11
bankruptcy in 2016. Thus, the San Diego ruling concerned the
misappropriation of Masimo’s trade secrets by Sotera. The remaining
portion of the Superior Court action against Welch and Hunt remains
pending.
Joe Kiani, Founder and CEO of Masimo, said, “I am sad that we
even had to pursue this case. These were trusted employees. I hope
all members of Masimo’s team will adhere to Masimo’s guiding
principles of ‘remaining faithful to your promises and
responsibilities, being driven by fascination and accomplishment,
not power and greed, making every day as fun as possible, making
themselves better each year, and, doing what is best for patient
care.’ We believe these guiding principles are critical not only to
our success, but to our integrity and humanity.”
@MasimoInnovates | #Masimo
About Masimo
Masimo (NASDAQ: MASI) is a global leader in innovative
noninvasive monitoring technologies. Our mission is to improve
patient outcomes and reduce the cost of care by taking noninvasive
monitoring to new sites and applications. In 1995, the company
debuted Masimo SET® Measure-through Motion and Low Perfusion™ pulse
oximetry, which has been shown in multiple studies to significantly
reduce false alarms and accurately monitor for true alarms. Masimo
SET® has also been shown to help clinicians reduce severe
retinopathy of prematurity in neonates,1 improve CCHD screening in
newborns,2 and, when used for continuous monitoring with Masimo
Patient SafetyNet™* in post-surgical wards, reduce rapid response
activations and costs.3,4,5 Masimo SET® is estimated to be used on
more than 100 million patients in leading hospitals and other
healthcare settings around the world,6 and is the primary pulse
oximetry at 17 of the top 20 hospitals listed in the 2017-18 U.S.
News and World Report Best Hospitals Honor Roll.7 In 2005, Masimo
introduced rainbow® Pulse CO-Oximetry technology, allowing
noninvasive and continuous monitoring of blood constituents that
previously could only be measured invasively, including total
hemoglobin (SpHb®), oxygen content (SpOC™), carboxyhemoglobin
(SpCO®), methemoglobin (SpMet®), and more recently, Pleth
Variability Index (PVi®) and Oxygen Reserve Index (ORi™), in
addition to SpO2, pulse rate, and perfusion index (PI). In studies
with SpHb, reductions in blood transfusion** were observed8,9 and
when used with PVi, a reduction in 30-day mortality was observed.10
In 2014, Masimo introduced Root®, an intuitive patient monitoring
and connectivity platform with the Masimo Open Connect™ (MOC-9™)
interface, enabling other companies to augment Root with new
features and measurement capabilities. Masimo is also taking an
active leadership role in mHealth with products such as the
Radius-7™ wearable patient monitor, iSpO2® pulse oximeter for
smartphones, and the MightySat™ fingertip pulse oximeter.
Additional information about Masimo and its products may be found
at www.masimo.com. Published clinical studies on Masimo products
can be found at
http://www.masimo.com/cpub/clinical-evidence.htm.
*The use of the trademark Patient SafetyNet is under license
from University HealthSystem Consortium.
**Clinical decisions regarding red blood cell transfusions
should be based on the clinician’s judgment considering, among
other factors: patient condition, continuous SpHb monitoring, and
laboratory diagnostic tests using blood samples.
References
- Castillo A et al. Prevention of
Retinopathy of Prematurity in Preterm Infants through Changes in
Clinical Practice and SpO2 Technology. Acta Paediatr. 2011 Feb;
100(2):188-92.
- de-Wahl Granelli A et al. Impact of
pulse oximetry screening on the detection of duct dependent
congenital heart disease: a Swedish prospective screening study in
39,821 newborns. BMJ. 2009;338.
- Taenzer AH et al. Impact of Pulse
Oximetry Surveillance on Rescue Events and Intensive Care Unit
Transfers: A Before-And-After Concurrence Study. Anesthesiology.
2010; 112(2):282-287.
- Taenzer AH et al. Postoperative
Monitoring – The Dartmouth Experience. Anesthesia Patient Safety
Foundation Newsletter. Spring-Summer 2012.
- McGrath SP et al. Surveillance
Monitoring Management for General Care Units: Strategy, Design, and
Implementation. The Joint Commission Journal on Quality and Patient
Safety. 2016 Jul; 42(7):293-302.
- Estimate: Masimo data on file.
-
http://health.usnews.com/health-care/best-hospitals/articles/best-hospitals-honor-roll-and-overview.
- Ehrenfeld JM et al. Continuous
Non-invasive Hemoglobin Monitoring during Orthopedic Surgery: A
Randomized Trial. J Blood Disorders Transf. 2014. 5:9. 2.
- Awada WN et al. Continuous and
noninvasive hemoglobin monitoring reduces red blood cell
transfusion during neurosurgery: a prospective cohort study. J Clin
Monit Comput. 2015 Feb 4.
- Nathan N et al. Impact of Continuous
Perioperative SpHb Monitoring. Proceedings from the 2016 ASA Annual
Meeting, Chicago. Abstract #A1103.
Forward-Looking Statements
This press release includes forward-looking statements as
defined in Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, in connection with the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on current expectations about
future events affecting us and are subject to risks and
uncertainties, all of which are difficult to predict and many of
which are beyond our control and could cause our actual results to
differ materially and adversely from those expressed in our
forward-looking statements as a result of various risk factors,
including, but not limited to: risks related to our assumptions
regarding the repeatability of clinical results; risks related to
our belief that Masimo's unique noninvasive measurement
technologies contribute to positive clinical outcomes and patient
safety; as well as other factors discussed in the "Risk Factors"
section of our most recent reports filed with the Securities and
Exchange Commission ("SEC"), which may be obtained for free at the
SEC's website at www.sec.gov. Although we believe that the
expectations reflected in our forward-looking statements are
reasonable, we do not know whether our expectations will prove
correct. All forward-looking statements included in this press
release are expressly qualified in their entirety by the foregoing
cautionary statements. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of today's date. We do not undertake any obligation to update,
amend or clarify these statements or the "Risk Factors" contained
in our most recent reports filed with the SEC, whether as a result
of new information, future events or otherwise, except as may be
required under the applicable securities laws.
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MasimoEvan Lamb949-396-3376elamb@masimo.com
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