Tuesday, March 15, 2011

Smith & Nephew Sues Fired Engineers for Breach of Contract, Other Alleged Offenses

Posted By on Tue, Mar 15, 2011 at 2:43 PM

By Lindsay Jones

Orthopedics giant Smith & Nephew is suing nine former employees for $56 million or more over breach of contract, misappropriation of trade secrets, civil conspiracy, and other allegations related to a knee replacement instrument. The company also has filed a temporary restraining order against them.

In its 29-page complaint, S&N accuses David T. Mehl, Luke Gibson, Megan Rumery, Andrew J. Wald, Ashley M. Deken, Carey L. Bryant, Kaleigh Ross, Patrick Conway, and Bonnie Walker of trying to use their insider knowledge to form their own entity. All nine were fired last week.

“The recently uncovered conspiracy involves several engineers, their managers, the department supervisor, and a director who committed overt acts with the collective intent to use S&N’s trade secrets and confidential information to start a competing business and intentionally and maliciously interfere with and disrupt S&N’s ongoing business,” according to the court documents.

Most of the defendants are Memphians and two have Mississippi addresses. Attempts to reach them were unsuccessful, and an attorney for Smith & Nephew referred all inquiries to the company, which issued a statement.

“Smith & Nephew takes intellectual property rights seriously and always seeks to protect it for the benefit of our patients and customers,” the statement reads.

At issue in the case is Smith & Nephew’s patient matched instrumentation program for knee replacement surgeries. Marketed under the name Visionaire, it allows surgeons to fit knee replacements more accurately using a customized molded guide, or template, that shows them how much bone to remove.

This increases surgical efficiency and shortens the amount of time patients are under anesthesia. Smith & Nephew engineers customize the guides based on preoperative images of patients’ bones.

Smith & Nephew contends that Mehl and his colleagues, who were in charge of working on patient cases at the company’s Brooks Road facility, felt it was trying to gain their knowledge and eliminate their jobs.

“Mehl stated that S&N wanted to keep the Visionaire group as a case processing group, learn what the group knew, and then outsource all of the Visionaire processing, essentially leaving the group without a purpose,” court documents say.

To circumvent this, Mehl and the others planned a “mass resignation” to start their own business using the technology they helped develop and improve since around 2008. Their idea was to act as consultants for Smith & Nephew at first and later sell the bootleg technology to the London-based company's competitors.

“We can now communicate in ways other than whispering or texting,” says an e-mail from Walker dated March 8.

The e-mail goes on to request that recipients update their resumes and create resignation letters so they could follow through on their plans to leave the company.

Andrew Burns, S&N's media relations manager in Memphis, said he could not disclose how much revenue Visionaire generated since it began being marketed in 2009. But the court documents say harm from the proprietary information getting out would be “immediate and irreparable.”

It’s also not clear how quickly patient cases are being fulfilled with nine team members off the job. The average product development engineer is expected to work about five cases a day, according to the court documents.

“Despite [the former employees’] attempts, there has been no disruption in service to our physician customers or the patients they serve,” the company statement says.

Smith & Nephew recently made news when rumors spread of its possible acquisition by an American equity consortium, and when it made known its intention to create 100 new jobs in Memphis during the first quarter.

Smith & Nephew already employs more than 2,000 people in Memphis.

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