Tar Heel Tattler - January 2005
Imagine Perry Mason confronting a wife who has bumped off her husband for the insurance money. “He was worth more to you dead than alive, wasn’t he?” Durham’s Volumetrics Medical Imaging Inc. is like that. It was buried in February 2001, but thanks to a lawsuit, it’s worth more than ever.
Volumetrics was spun out of Duke University in 1992 to find commercial uses for ultrasound technology. “It was 3-D ultrasound, which was unheard of at the time,” says Jim Newton, an administrator at Chapel Hill-based Tri-State Investment Group, which began pumping money into the venture in 1995.
By 1999, Volumetrics was looking for a partner or buyer. ATL Ultrasound — part of Dutch conglomerate Royal Philips Electronics — seemed the most promising. Volumetrics officials later would claim that ATL offered in February 2000 to buy it for about $120 million. ATL also suggested that the two companies work on a joint product.
Volumetrics says ATL, which had signed an agreement not to disclose Volumetrics’ secrets, began negotiating with one of its competitors, Palo Alto, Calif.-based Agilent Technologies. Even though ATL assured Volumetrics that it was still interested in being its partner, Philips bought Agilent’s ultrasound division for $1.7 billion in November 2000.
In January 2001, ATL told Volumetrics that their relationship was over. Volumetrics shut down a month later and sued ATL, alleging that it used — or could use — the technology it observed during the collaboration to create its own imaging machine. A federal jury in the Middle District of North Carolina ruled in favor of Volumetrics in early 2003 and awarded the company $106 million. The judge tripled the damages. Philips appealed, and the case was to have been heard in fall 2004. But Philips settled at the last minute for $180 million.
Now, after legal fees, former employees who owned shares will get their cut, and investors will see a return on their money. Among them are the nonprofit North Carolina Technology Development Authority, a Research Triangle Park-based economic-development organization that invested about $200,000 in Volumetrics between 1995 and 1999. President and CEO John Draper says he expects $500,000 to $600,000 — perhaps more.
Newton won’t say how much Tri-State put in or how much he expects the 80 investors to receive. But he’s satisfied that they’ll get at least something back. Even if it is from the grave.