Manufacturing & Technology and Technology

Patent dispute threatens Suros Surgical Systems: Consultant claims key role in biopsy innovation

October 8, 2007

An intellectual property tussle dating back to the origins of Suros Surgical Systems Inc. is threatening to become more than a headache for the local medicaldevice maker.

Founded in 2000, Suros was one of the fastest-growing high-tech startups in Indianapolis history. Its machine for minimally invasive breast biopsies now rings up more than $43 million in annual sales. Such success attracted deep-pocketed suitors, and Suros was acquired in July 2006 for a whopping $240 million by Bedford, Mass.-based Hologic Inc. Suros' operations remain here.

But a consultant who assisted Suros when it was just a brash upstart claims he was one of the key innovators behind its "Automated Tissue Excision and Collection," or ATEC, system.

Jeffrey Schwindt, president of Indianapolis-based Tissue Extraction Devices LLC, claims that in 2000 he conceived and developed key elements of Suros' biopsy device prototype, including its pneumatic circuitry and motor.

Schwindt now is attempting to sell a portfolio of allowed or pending U.S. patents for pneumatically controlled medical-device technology. He also is pursuing a patent-interference lawsuit against Suros, claiming his contributions to the ATEC system should have been included in its original patent.

If successful, Tissue Extraction Devices could gain co-ownership of crucial Suros intellectual property-and sell it to a competitor.

"We of course believe strongly, and have a banker's box full of documents that prove, Jeff should be named as an inventor," said Schwindt's attorney and business partner Chris Haigh. "Which would mean that Jeff has an equal right to the entire patent."

Both Suros and its attorney declined IBJ's requests for an interview, referring IBJ instead to a Suros brief filed with the U.S. Patent and Trademark Office.

The brief claims that two of Suros' cofounders, Joseph L. Mark and Michael E. Miller, are entirely responsible for the innovations that led to the ATEC.

According to Suros' brief, Schwindt simply followed their instructions to fabricate a circuit board and console for the ATEC prototype using off-the-shelf components and had no involvement in the biopsy device's development.

"The only thing that Mr. Schwindt did was to implement the functional requirements that were provided to him by Mr. Mark and Mr. Miller," the brief reads in a typically pointed passage.

Schwindt was one of Suros' original 50 investors. He said he put $50,000 into the company and eventually received a sevenfold return. Schwindt also owns a local manufacturing business called Air Systems Engineering. In Suros' early years, Schwindt said, Air Systems Engineering built 400 ATEC consoles.

But relations between Schwindt and Suros soured when meetings meant to clarify his role in the ATEC's development turned confrontational. By 2004, Schwindt started attempting to develop his own patents for the technology. He's offering them for sale now, he said, because the patent office finally is starting to move on his applications.

Tissue Extraction Systems, which Schwindt founded only last year, is willing to sell its patent portfolio to Suros, Schwindt said. But only if its offer is the highest.

"They're on the bid list. If they want to bid for it, fine," he said. "But we're going to go talk to other people."

Mark Long, president of the Indiana University Research and Technology Corp., said intellectual property disputes are one of the biggest threats high-tech startups face. Because consultants often are used to advance an innovation, it's important to clarify and document everyone's contribution from the start.

"If you don't, you're putting your entire future at risk," Long said. But Tissue Extraction Systems' attempt to retroactively lay claim to Suros' innovation is a long shot. Jay Taylor, a partner in Ice Miller LLP's Intellectual Property Group who's unaffiliated with either company, said in 90 percent of patent interference disputes, the claim goes to the "first filer." The heavy burden of proof will be on Tissue Extraction Systems.

Even so, Taylor said, it's safe to assume Suros would prefer to have settled the matter long ago.

"This is probably a fairly complicated situation that's perhaps not easily resolvable," he said. "[But] it's always wise to iron out these issues ahead of time, rather than be faced with them later on."
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