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Steady State Imaging, LLC v. General Electric Co.

United States District Court, D. Minnesota

April 4, 2019






         This case arises out of a contract dispute between Plaintiff Steady State Imaging, LLC (“SSI”) and Defendant General Electric Company (“GE”). SSI is a Minnesota corporation that focuses on the development of a magnetic resonance imaging (“MRI”) technique known as Sweep Imaging with Fourier Transform, or “SWIFT.” In 2011, SSI and GE entered into a contract to explore the commercial development of SWIFT technology. SSI brought this action in May 2017, alleging two counts of breach of contract, breach of the implied covenant of good faith and fair dealing, and promissory estoppel. This Court dismissed SSI's breach of good faith and fair dealing claim in January 2018.

         Presently before the Court are four motions: GE's motion for summary judgment on all remaining claims; two motions by GE to exclude expert testimony; and SSI's motion to exclude expert testimony. Because SSI has not shown that it suffered damages as a result of GE's breach of the 2011 contract, the Court will grant summary judgment for GE on Count I. Because genuine disputes of material fact exist as to whether GE entered into and breached subsequent contracts to commercialize SWIFT, the Court will deny summary judgment as to Counts III and IV. Finally, because the expert testimony in issue is sufficiently supported, relevant, and reliable, the Court will deny SSI's and GE's motions to exclude expert testimony.


         I. SWIFT and SSI

          SWIFT is an MRI technique notable for its abilities to operate quietly and create images of tissues that conventional MRI technologies are unable to produce. (Am. Compl. (“Compl.”) ¶¶ 9-10, May 19, 2017, Docket No. 22.) It was developed in the early 2000s by Dr. Michael Garwood at the University of Minnesota. (Id. ¶ 11; (Decl. of Marla Butler (“Butler Decl.”) ¶ 66, Sept. 10, 2018, Docket No. 205, Ex. 65 (“Garwood Dep.”) at 28, Docket No. 288.) The University of Minnesota maintains ownership over the various patents created in the development of SWIFT. (Compl. ¶ 12.)

         In 2005, Garwood founded SSI to develop and commercialize SWIFT technology. (Compl. ¶ 15; Garwood Dep. at 30-31.) In December 2006, the University of Minnesota licensed the SWIFT patents to SSI pursuant to an exclusive patent license agreement (“PLA”). (Butler Decl. ¶ 3, Ex. 2 (“PLA”), Sept. 10, 2018, Docket No. 220.) The PLA required SSI to use reasonable efforts to commercialize SWIFT technology. (PLA ¶ 5.1.) It also permitted SSI to sublicense its rights or assign all of its rights and duties subject to certain conditions. (PLA ¶¶ 3.1.2, 3.1.3.)

         II. The Asset Purchase Agreement

         Hoping to eventually transfer SWIFT technology to a major manufacturer of MRI scanners, SSI engaged in conversations about SWIFT with several companies, including Siemens and GE. (Garwood Dep. at 44-47.) In 2009, Siemens and SSI drafted a contract that would require Siemens to “explore and evaluate the market potential of SWIFT technologies.” (Decl. of Troy Kopishcke (“Kopishcke Decl.”) ¶ 21, Oct. 15, 2018, Docket No. 347, Ex. K7 at 3, Docket No. 354.) However, SSI ultimately decided to enter an agreement with GE instead of Siemens, and on April 5, 2011, SSI and GE executed an asset purchase agreement (“APA”). (Butler Decl. ¶ 2, Ex. 1 (“APA”), Sept. 10, 2018, Docket No. 218.) The APA contains the following provision:

[GE] shall have no obligation to pursue the commercialization of any Additional Payment Product or use any specific level of efforts if [GE] chooses to commercialize any Additional Payment Product. Notwithstanding the preceding sentence, (1) following the Closing, [GE] shall create, in accordance with its standard policies and procedures, an ATD Program with respect to the SWIFT Technology and (2) if, following the completion of the ATD Program, [GE] determines in its sole discretion that an NPI Program is appropriate for any product using the SWIFT Technology, [GE] shall create, in accordance with its standard policies and procedures, an NPI Program with respect to such product.

(APA ¶ 2.2(a)(iv)(D).) The APA defines an “ATD Program” as:

[GE's] investigative research and development program whose purpose is to evaluate the clinical and technical feasibility of a new technology and to reduce the clinical and technical risks of commercializing the technology . . . and whose output is used to determine the appropriateness of the technology for inclusion in an NPI program.[1]

(Id. ¶ 9.1.)

         GE's internal guidance documents provide additional information on how GE runs its ATD programs. According to the MR Advanced Technology Development Guidance Document (“MR Guidance Document”), an ATD program should follow five steps, or “technology milestones.” (Butler Decl. ¶ 4, Ex. 3 (“MR Guidance Doc.”) at 4-12, Sept. 10, 2018, Docket No. 222.) There are specific tasks required to complete each milestone. (See, e.g., MR Guidance Doc. ¶ 6.1.2.) Two milestones mention “down selection, ” which is not defined but appears to refer to the process of comparing technological alternatives. (See Id. ¶¶ 6.1.2, 6.1.3.) At the end of each milestone, a technical review is held to determine whether the program should move forward into the next phase. (Id. ¶ 6.2.)

         If GE decided to commercialize SWIFT following completion of an ATD program, the APA required it to make royalty payments to SSI for each sale. (APA ¶ 2.2(a).) Finally, the APA required amendments, modifications, and supplements to be in a signed writing. (APA ¶ 8.7.)

         III. Post-APA Events

         After execution of the APA in April 2011, GE employees began internal discussions about plans for the SWIFT ATD Program (the “ATD Program”). (See Butler Decl. ¶¶ 7-8, Exs. 6-7, Sept. 10, 2018, Docket Nos. 228, 230.) By the end of May 2011, GE had determined which employees would be assigned to the ATD Program, outlined goals for the following 3-6 months, held a meeting to introduce employees to SWIFT, and established a rough timeline for the various phases of the ATD Program.[2] On May 20, 2011, the ATD Program team met to discuss its plans. (See Butler Decl. ¶ 16, Ex. 15, Sept. 10, 2018, Docket No. 242.) The ATD Program team held bi-weekly meetings through July 11, 2011. (See Butler Decl. ¶¶17-19, Exs. 16-18, Sept. 10, 2018, Docket Nos. 243-45.)

         By June 2011, GE had begun comparing SWIFT with another MRI technology known as RUFIS. (See Butler Decl., ¶¶ 22-26, Exs. 21-25, Sept. 10, 2018, Docket Nos. 248-52.) The following month, the ATD Program team began to express concern with the results of the comparison, with one team member indicating that SWIFT's results as compared to RUFIS were “very very concerning.” (Butler Decl. ¶ 27, Ex. 26 at 2, Sept. 10, 2018, Docket No. 253.) As such, Jason Polzin, GE's Chief Engineer for Global MR, predicted “slow[ing] down the effort on SWIFT.” (Id.)

         SSI's President, Troy Kopischke, first learned that GE was working on RUFIS in November 2011 at the Radiological Society of North America (“RSNA”) conference. (2d Decl. of Troy Kopischke (“2d Kopischke Decl.”) ¶ 8, Oct. 15, 2018, Docket No. 346.) When Kopischke approached a “Quiet MRI” display in GE's technology pavilion, GE's Chief Technology Officer, Mike Harsh, told him that the technology displayed was RUFIS technology and that GE would be introducing a RUFIS product before it introduced a SWIFT product. (Id.; Butler Decl. ¶ 38, Ex. 37 (“Kopishcke Dep.” at 145-46, Sept. 10, 2018, Docket No. 264.) Kopischke described feeling “sick to [his] stomach” after that conversation. (Id. at 146.) While he remembered discussing RUFIS before execution of the APA, he had no idea that GE was in fact pursuing RUFIS and had expected a SWIFT product to be launched at the same conference. (Id. at 145-46.)

         Kopischke states that when he and SSI's CEO, Danny Cunagin, first visited GE's booth that day, Mr. Harsh assured them not to worry because GE would “release SWIFT second, ” after it introduced RUFIS. (Id. at 146.) He also states that during a second visit to the booth, GE's General Manager for Premium MR, Jacques Coumans, told them that GE was “committed to . . . doing a neuro application with SWIFT.” (Id. at 219; 2d Kopischke Decl. ¶ 9.) In a letter to SSI shareholders that December, Cunagin relayed that his interactions with GE senior management at the RSNA conference had given him confidence that GE would “release quiet MRI into the marketplace sometime in 2012” and would “play a key role in quiet MRI.” (2d Kopischke Decl. ¶ 9, Ex. K2 at 3, Oct. 15, 2018, Docket No. 349.) However, he also told shareholders that GE had been “careful not to make any firm commitments on timing.” (Id.)

         In April 2012, Kopischke, Cunagin, and Garwood went to the annual meeting of the International Society for Magnetic Resonance in Medicine (“ISMRM”). (2d Kopischke Decl. ¶ 10.) There, they had informal conversations with GE representatives, including Jason Polzin. (Id.) Kopischke recalls that GE representatives told them that GE had a working SWIFT prototype and that they were in the process of optimizing it on GE scanners. (Id.) During a meeting with an SSI shareholder in May 2012, Kopischke communicated that they had spoken with GE and believed that GE's work on revamping SWIFT for its scanners was progressing and would be done in 2013. (2d Kopischke Decl. ¶ 11, Ex. K4 at 2, Oct. 15, 2018, Docket No. 351.) In reality, however, there was no SWIFT-capable scanner or prototype-a fact which SSI would not become aware of until much later. (1st Decl. of Paul Robbennolt (“Robbennolt Decl.”) ¶ 3, Oct. 15, 2018, Docket No. 359, Ex. R2 (“Peters Dep.”) at 94, Docket No. 361; Kopischke Dep. at 264.)

         Kopischke, Cunagin, and Garwood attended the ISMRM conference again in April 2013. (2d Kopischke Decl. ¶ 13.) They met with GE representatives, including Jacques Coumans, Jason Polzin, and Baldev Ahluwalia, GE's then-General Manager of Premium MR. (Id.) Frustrated with GE's lack of progress on SWIFT, the SSI employees expressed their concerns to GE. (Id.) In response, Coumans purportedly “put his arm around Mike Garwood and promised him that GE would commercialize SWIFT.” (Butler Decl. ¶ 37, Ex. 36 (“Pl.'s Answer to Interrog.”) at 7, Docket No. 205-3.) Coumans also told Kopischke and Cunagin that they would make money from SWIFT commercialization. (Id. at 9.) Polzin and Ahluwalia likewise told the SSI employees not to worry “because GE would commercialize SWIFT as soon as practicable.” (Id. at 9.)

         In May 2013, Polzin and Ahluwalia contacted Kopischke and Cunagin and represented that while they were interested in moving forward with SWIFT commercialization, GE needed SSI's assistance. (Id. at 8.) Specifically, GE needed assistance with “applications that leverage the SWIFT technology” and “making SWIFT run on conventional MRI hardware.” (Id. at 9.) In response, in June 2013, Kopischke “provided information to GE about SWIFT, as well as a list of possible solutions for identified issues with SWIFT.” (Id.)

         That summer, SSI representatives held several phone conferences with GE to discuss technical matters. (Kopischke Dep. at 264-65.) Based on the rudimentary nature of the questions GE was asking, it became clear to Garwood and Kopischke that, despite indicating there was already a SWIFT prototype, GE actually had very little understanding of SWIFT technology and had misrepresented its progress. (Id. at 140-41.) Kopischke reported that he and others at SSI felt “shocked” and “lied to” at this time. (Id. at 140.)

         SSI then began to “escalate [its] efforts to push GE” to “fulfill its promises.” (2d Kopischke Decl. ¶ 16.) Its efforts culminated in a meeting on August 29, 2014, in Waukesha, Wisconsin. (Id. ¶ 17; Butler Decl. ¶ 48, Ex. 47 (“Meeting Report”), Sept. 10., 2018, Docket No. 271.) At that meeting, Cunagin and Garwood told GE that SSI and its shareholders were disappointed that “expectations had been set and not fulfilled by GE.” (Meeting Report at 3.) They explained that the slow-moving pace at which GE had been running was no longer acceptable, and that SSI would be “exploring what rights SSI or the U of M had available to pressure GE into commercialization.” (Id. at 3.) Polzin and Ahluwalia acknowledged that things had not gone as originally expected, apologized, and cited market competition as GE's reason for prioritizing other projects. (Id. at 3-4.) Cunagin demanded a decision on how GE planned to move forward, and Polzin and Ahluwalia told him that they would discuss SWIFT at the next senior management meeting. (Id. at 4; Kopischke Dep. at 222.)

         On September 12, 2014, Polzin and Ahluwalia called SSI to report that they had brought SSI's concerns to senior management, including Dr. Richard Hausmann, GE Healthcare's CEO and President of Global MR business. (Kopischke Dep. at 226.) They told SSI that GE had decided to commercialize SWIFT and said it would begin implementation of a neuro application as soon as practicable. (Pl.'s Answer to Interrog. at 11.)

         GE also asked SSI for help with putting together a SWIFT prototype on the September 12 call. (2d Kopischke Decl. ¶ 19.) SSI agreed to assist GE and subsequently found a company that had the experience to help the parties called HeartVista, Inc. (Pl.'s Answer to Interrog. at 6.) Kopischke also secured commitments to collaborate from several doctors, Stanford University, and other entities. (Id. at 7-8.) Securing these commitments took significant time and effort. (See Butler Decl. ¶¶ 52-65, Exs. 51-64, Sept. 10, 2018, Docket Nos. 274-87.) Kopischke then put together a “detailed proposal for a program to implement SWIFT on GE's MRI hardware.” (Pl.'s Answer to Interrog. at 8; Butler Decl. ¶ 62, Ex. 61, Sept. 10, 2018, Docket No. 284.) Kopischke sent the proposal to GE on January 5, 2015. (Pl.'s Answer to Interrog. at 8.)

         While Kopischke was working on the proposal, GE replaced Dr. Hausmann with Eric Stahre. (2d Kopischke Decl. ¶ 20.) In January 2015, Stahre reaffirmed GE's commitment to commercialize SWIFT. (Id.)

         Kopischke continued to reach out to GE to ask about financing SWIFT commercialization through February 2015. (See Butler Decl. ¶ 65, Ex. 64, Sept. 10, 208, Docket No. 287.) GE did not take additional steps to move forward.

         IV. Procedural History

         SSI filed an Amended Complaint on May 19, 2017. SSI brought four claims: (I) breach of contract (APA); (II) breach of the implied covenant of good faith and fair dealing; (III) breach of contract (post-APA agreements to commercialize SWIFT); and (IV) promissory estoppel. (Compl. at 8-10.) GE moved to dismiss Counts II-IV. (Mot. to Dismiss, June 2, 2017, Docket No. 24.) On January 17, 2018, the Court granted the motion to dismiss with respect to SSI's good faith and fair dealing claim. (Order at 11, Jan. 17, 2018, Docket No. 121.) The Court also found that the APA imposed no obligation to commercialize SWIFT. (Id. at 7-8.)

         Presently before the Court is GE's motion for summary judgment on the remaining claims. (Mot. for Summary J., Sept. 10, 2018, Docket No. 199.) GE also presents two motions to exclude expert testimony. (Mot. to Exclude, Sept. 10, 2018, Docket No. 291; Mot. to Exclude, Sept. 20, 2018, Docket No. 303.) SSI presents one motion to exclude expert testimony. (Mot. to Exclude, Sept. 10, 2018, Docket No. 203.)


         I. Motion for ...

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