A small company that makes software for regional information networks last week stopped giant Electronic Data Systems Corp. from negotiating for three big network-management contracts in a legal dispute over trade secrets.
Wismer Martin, a privately held firm based in Spokane, Wash., had disclosed the workings and marketing plan of its software product during exploratory merger talks last year with EDS, according to a lawsuit filed in U.S. District Court in Spokane.
The software company was looking for wider distribution for its product, which had been developed for three electronic data-transfer networks developed by Seattle-based Blue Cross of Washington and Alaska, and for a Blues affiliate in eastern Washington, Medical Service Corp.
The talks collapsed last spring over the price of the acquisition, said Ron Holden, Wismer Martin's chief executive officer.
But EDS subsequently began discussions with the Blues to take over and expand the three regional networks, said Tim Frazier, senior vice president and general manager of Shared Market Services, an operating division of Blue Cross of Washington and Alaska.
In the process, EDS made use of information disclosed under the protection of a confidentiality agreement during the merger talks, Holden said. In effect, EDSInformation systems
was trying to get the fruits of the Wismer Martin acquisition without paying the acquisition price, he said.
U.S. District Judge Fred Van Sickle awarded Wismer Martin an injunction preventing EDS from using its software until Van Sickle can hear the software maker's claim for damages, which it says are in excess of $3 million.
Holden was diplomatic last week in discussing the legal victory, emphasizing that the company's aim is to get a role in the EDS-Blues deal.
"EDS is a great company. And we think the opportunity is huge (for network business). We just have a business dispute with them, and we intend to get it solved and go forward from there," Holden said.
The market opportunity could reach $100 million, a mother lode for a company with revenues of about $10 million, he added.
The injunction delays plans by the Blues to accelerate the reach and acceptance of the fledgling information networks, which now serve about 1,200 physicians at 250 sites.
"Wismer's role in this is primarily building software," Frazier said, adding that EDS' large-scale network-building capacity is what's needed now to hook up and provide support for new customers.
Expansion of the networks would benefit a range of players, including Wismer Martin, Frazier said.