District Court Awarded Ultrasound Device Maker Verasonics $5.6 Million And World-Wide Injunction In Trade Secret Case

The United States District Court of Western District of Washington entered a judgment in a trade secret case, Verasonics, Inc. v. Alpinion Medical Systems Co., Ltd. (Case No. 2:14-cv-01820-JCC). The district court confirmed the final arbitration award, giving Plaintiff Verasonics, Inc. $5.6 million in damages, including fees and costs, and enjoining Defendant Alpinion Medical Systems Co., Ltd. from using Verasonics’ trade secret, including marketing or selling any devices using the trade secret for five years.

Verasonics, Inc. describes itself as a Kirkland, Washington-based company that specializes in ultrasound devices and technology.  In the complaint filed on November 26, 2014, Verasonics alleged that Alpinion, headquartered in Seoul, South Korea, showed interest in “licensing, co-development or investment” opportunities with Verasonics starting from 2010.  Alpinion allegedly “induced” Verasonics into revealing its trade secrets and confidential information to Alpinion as the two parties entered into a series of Non-Disclosure Agreements (“NDAs”), and lease agreements for Alpinion to lease two research ultrasound systems from Verasonics.  The complaint also alleged that Alpinion made a below-market offer to Verasonics, which was rejected, and that Alpinion represented that its interest was in commercial ultrasound products, not in research ultrasound devices.

However, Alpinion later announced its own eCube-12R ultrasound platform specifically designed for the research market.  Verasonics sued Alpinion for trade secret misappropriation under the Washington State Uniform Trade Secret Act in addition to breach of contract claims in the Western District of Washington.

In 2015, the case at the district court was stayed pending a binding arbitration at the American Arbitration Association (case name ICDR No. 01-15-0002-9484).  The arbitrator found that Alpinion breached the parties’ NDAs and lease agreement, and violoated the Washington Uniform Trade Secret Act.  The arbitrator issued a partial final arbitration award of $2.9 million in compensatory damages and a five-year injunction against Alpinion on March 2, 2017.  The partial arbitration award was filed under seal and not publicly available.  According to Davis Wright Tremaine LLP, the law firm representing Verasonics in this matter, the injunction against marketing and sales of the accused product is worldwide.  The arbitrator subsequently issued a final award on June 26, 2017, ordering Alpinion to pay Verasonics another $2.7 million in attorneys’ and arbitration fees and other expenses.

According to a press release made after the partial final award, Lauren Pflugrath, president and CEO of Verasonics, said:

"We are grateful for the arbitrator’s decision to issue the Final Award so clearly in our favor.  We continue to expand and build positive collaborative partnerships, but must insist on protecting our intellectual property."

Written by: Sabrina Wang