business

Last summer, Dr. Peter Elkin bid farewell to his longtime employer, the Mayo Clinic, and headed off to the prestigious Mount Sinai Medical Center in New York, where a new job awaited.

He seemed to part on friendly terms. During his 12-year stint at Mayo, the nationally known physician developed software that could revolutionize medical record-keeping and billing, while helping spot disease outbreaks possibly related to terrorist acts or emerging infectious illnesses.

The technology could prove to be a commercial blockbuster, especially since computerized medical records are a key part of the Obama administration's health care reform plan.

But since last summer, the relationship between Mayo and Elkin has soured into a contentious legal battle in U.S. District Court in St. Paul, with the Mayo Foundation for Medical Research & Education and Elkin suing each other.

The dispute shows how prickly it can be for an institution like Mayo to commercialize the inventions of its staff, when potentially lucrative research partnerships between inventors and business partners break down into acrimonious disputes.

Dueling lawsuits

Mayo fired the first salvo in January, with a lawsuit claiming Elkin tried to undermine commercialization of the software from the very beginning.

Mayo's complaint hints at betrayal, calling Elkin a "once-trusted, high-level researcher and clinician" whose behavior is "recalcitrant."

Mayo alleges breach of contract and fiduciary duty and trade secret misappropriation, among other claims.

Three weeks later, Elkin filed a countersuit, claiming Mayo reaped millions from his technology but never paid him royalties. He further charges that Mayo attempted to quash his research once he left for MountSinai by threatening civil and criminal sanctions if he discussed the software publicly.

Both have demanded a jury trial, monetary relief and attorney's fees. Both have declined to comment on the case.

Software breakthrough

Elkin, 52, began developing the core elements of his software while a research fellow at Harvard's Medical School and School of Public Health.

The results of his research were published in medical journals and presented at conferences, establishing Elkin's name in bioinformatics -- an emerging field that applies information technology to molecular biology.

Elkin's core software, called a "natural language processor,'' can read and understand text dictated or typed into a computer by doctors and nurses, recognizing their words and phrases.

The result is a standardized medical record that can link patient records to diagnostic and treatment information.

Mayo has long emphasized research on ways to improve medical record-keeping. In the early 20th century, Dr. Henry Plummer invented a system for maintaining medical records that is still the model today.

In 1996, Elkin was hired by the Mayo Medical School, where he had a hand in attracting more than $7 million in grants to develop his software, including funds from the Veterans Administration and the U.S. Centers for Disease Control (CDC).

In legal documents, he says he worked with the CDC on software to improve the reporting of outbreaks of disease related to terrorist attacks or infectious diseases, such as avian flu, so public health authorities can spot patterns quickly and deploy resources.

In 1999, Elkin says, Mayo became interested in turning his software into a for-profit business. With the help of private individuals, a company called Conceptual Health Solutions (CHS) was born.

From there, documents suggest, the relationship grew strained.

Mayo, which maintains it owns all inventions and discoveries resulting from its research projects, says it granted an exclusive license to CHS to market the Elkin software in return for a "substantial equity interest" in the company and a continuing royalty stream.

Elkin, however, maintains he developed the natural language software before coming to Mayo and that the intellectual property belongs to him. In court documents, he says he assigned a "small part" of his system to Mayo, but not the portion that used the natural language software. In return, his complaint states, Elkin would receive 51 percent of the inventor's share, with the rest going to his colleagues at Mayo.

The agreement also states that Elkin would receive 40 percent of the royalties. Yet he claims he never received "a penny" for his work.

After the formation of CHS, however, Mayo alleges Elkin "actively worked to undermine" the commercialization of the software by registering an Internet domain name "corresponding" to the Conceptual Health Solutions name. When CHS tried to buy the name, Elkin said it was registered to his wife. When CHS contacted Margaret Elkin, she allegedly demanded a "substantial equity interest" in exchange for the domain name.

In an attempt to "avoid needless conflict" with Elkin, Mayo said it simply changed the company's name to LingoLogix.

That company was subsequently sold to Missouri-based Cerner Corp. in 2008 for $5.7 million. (Cerner, which has filed a counterclaim, declined to comment for this story.)

Meanwhile, court documents suggest the relationship continued to be marred by conflict. In 2004, Elkin alleges, a programmer in his lab secretly gave the source code for the software to LingoLogix. Elkin claims he was told that if he complained, he would be fired.

For its part, Mayo says, Elkin exhibited "strange and counterproductive behavior," including an attempt to secretly sell a "purportedly" different version of the software to drug giant Merck & Co. in early 2008. When Mayo learned of that, talks with Merck broke down.

'Shocked'

A real tipping point in the relationship seemed to have come after Elkin left Mayo, when he gave a speech at the American Medical Informatics Association meeting in Washington, D.C., in November.

Officials from Cerner were in the audience. They were "shocked" at his presentation -- the software he discussed was suspiciously similar, "if not identical," to the product licensed to Cerner, according to Mayo's complaint. Elkin allegedly tried to sell the software to audience members.

The Cerner reps complained to Mayo. When confronted, Elkin claimed he was demonstrating software different from the product licensed to Cerner. At that point Mayo said it began depositing Elkins' royalty payments, the amount of which hasn't been quantified in court documents, into a "separate account."

Today, the case is pending in federal court before Judge David Doty.

Last month, Mount Sinai issued a news release announcing that Elkin, the director of its new Center for Biomedical Informatics, had been elected to Mastership in the American College of Physicians -- one of the highest honors in medicine.

In the release, Elkin said the election was a "tremendous privilege. ... Medicine is a team effort, so this award also pays tribute to my current colleagues at Mount Sinai and former colleagues at the Mayo Clinic, with whom I have had the pleasure of collaborating."

Janet Moore • 612-673-7752