Dive Brief:

• An eight-person jury Friday rejected the hospital Cedars-Sinai's trade secrets claim and found Quest hadn't violated a nondisclosure agreement with Cedars-Sinai by using confidential information. The trial was held in the U.S. District for the Central District of California.
• Cedars-Sinai Medical Center sued Quest Diagnostics in 2017 alleging the company stole the hospital's trade secrets and developed a blood test to diagnose irritable bowel syndrome that competed with a test developed by a doctor at Cedars-Sinai.
• Cedars-Sinai said it was disappointed by the verdict and was evaluating all of its legal options.

Dive Insight:

Hospitals frequently license the research and development from their physicians to generate what can be substantial revenue.

Indeed, intellectual property is the bread and butter investment for many academic and nonprofit health systems, helping to bring in some return while allowing physicians, who often develop those innovations themselves, to retain some benefit. Earlier this year, Mayo Clinic said it has generated $600 million in revenue from licensing its IP since 1986.

The dispute between Cedars-Sinai and Quest Diagnostics involves a noninvasive blood test to detect IBS developed by Cedars-Sinai doctor Mark Pimentel.

After signing a a confidentiality agreement, Cedars-Sinai and Quest entered into discussions about Quest commercializing Cedars-Sinai's test. Quest ultimately declined to license the test after the parties couldn't agree on terms. Quest subsequently developed its own test.

In late 2017, Cedars-Sinai sued Quest, alleging it misappropriated trade secrets related to the IBS test and Pimentel's research.

As to the trade secrets claims, Quest said Cedars-Sinai not only failed to prove it had any ownership interest in the claimed trade secrets but also had failed to prove any of the trade secrets were actually secret. Quest said the information was never actually secret because the hospital had been actively shopping its test to multiple companies at the same time it was in discussions with Quest.

The jury ultimately rejected Cedars-Sinai's trade secret claims.

Quest Diagnostics' senior director of external engagement Dennis Moynihan told MedTech Dive the company was pleased with the verdict.

Meanwhile, Cedars-Sinai is still committed to protecting Pimentel's innovations, Laura Coverson, senior communications specialist at the hospital, told MedTech Dive.