December was a good news, bad news month for MedicaLogic, the Hillsboro, Ore.-based electronic medical records company. On Dec. 10, MedicaLogic raised more than $100 million in its initial public offering, and stock was hovering around $22 per share at Modern Physician's press time. Just a few days before the IPO, however, MedicaLogic learned it was the target of a patent infringement lawsuit brought by Madison, Wis.-based Epic Systems. MedicaLogic is a 15-year-old EMR company that recently launched several new Internet-based products designed to facilitate patient-physician and physician-hospital communications. Currently, about 3,000 physicians use MedicaLogic's Logician technology. Epic is a software development company.
Epic, which filed the suit in U.S. District Court for the Western District of Wisconsin, alleges that MedicaLogic has directly infringed on Epic's patented text expansion system. The Epic system automatically completes abbreviated medical notes if the provider types in an identifiera periodbefore the abbreviated phrase. For example, if a provider types ".next," the Epic system will recognize the period as the identifier and automatically change ".next" into "negative examination of thyroid." In 1998, Epic patented this "dot-phrase technology," according to Epic attorney Steve Dickmann. The suit is seeking damages and an injunction against MedicaLogic.
MedicaLogic believes the suit is without merit and hopes to have it dismissed, says Sue Reber, vice president of strategic marketing. The Epic patent was filed in 1996, she says, well after many similar software systems, including MedicaLogic's, were widely available with similar functionality.
Reber says in the current free-for-all atmosphere of the e-healthcare business, companies likely will find themselves stepping on each other's toes, leaving the courts to decide whether the software and technology are proprietary.