Reading like the plot of a legal thriller, an MRI firm admitted to creating phony documents in support of its successful claim for theft of trade secrets.
LBDS Holding Co.(LBDS) was awarded $24.4 million by a federal jury in Texas in March. The jury found that ISOL Technology Inc. (ISOL) misappropriated LBDS’s trade secrets relating to magnetic resonance imaging of the heart.
The jury found that ISOL had breached its technology services and product supply agreement with LBDS and that it had engaged in unfair competition.
LBDS sued ISOL in 2011, alleging that ISOL was selling a cardiac MRI system using LBDS technology. LBDS initially sought more than $60 million in damages in connection with a missed opportunity to sell its systems in Korea.
However, in May LBDS’s attorneys asked a judge for permission to withdraw from the case after learning that their client had admitted to manufacturing evidence used at trial. They were allowed to do so in June.
ISOL served the firm with a notice that it intended to seek sanctions against LBDS for perjury and falsifying evidence.
Lead counsel for ISOL said he had received an anonymous voicemail urging him to alert the FBI to the verdict against his client.
ISOL’s attorney then learned that LBDS made changes to an agreement with a customer in order to show that it lost more sales than it actually had, according to the motion.
LBDS employees also allegedly created a fake website with a name similar to the client’s and sent fake emails purportedly from the client “confirming” the client’s intention to order a number of LBDS MRI units.
LBDS employees similarly created “evidence” that a venture capitalist was interested in investing in the company.
When LBDS’s attorneys confronted their client’s principal about the charges, he admitted that they were “essentially correct.”
The law firm initially asked its client to admit its wrongdoing to the court. When ISOL failed to do so, the firm brought its motion to withdraw.
When admitting to the court that it had faked evidence, and asking for the court’s forgiveness, LBDS contended that the jury verdict should be upheld.
The company also claimed that it planned to tell the court about the phony documents — but that its lawyers did so first.
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Photo Attribution: “MRI-Philips” by Jan Ainali is used through license by CC BY 3.0.