IDX Systems Corporation v. Epic Systems Corporation et al.

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IDX, a provider of healthcare information technology systems, sued several defendants alleging theft of trade secrets, breach of contractual obligations, unfair competition, and tortious interference.

Retained by Kirkland & Ellis

Cornerstone Research assisted IDX Systems Corporation (IDX) in this case, which began in early 2001. IDX, a provider of healthcare information technology systems, sued several defendants, including Epic Systems Corporation (Epic) and the University of Wisconsin Medical Foundation (UWMF), alleging theft of trade secrets, breach of contractual obligations, unfair competition, and tortious interference. IDX had originally had a license with UWMF covering information systems, and later competed with Epic to install a new healthcare information system at UWMF. According to IDX, during this competition UWMF disclosed information about IDX software to Epic, thus breaching the confidentiality provisions of the existing license. In August 2001, the U.S. District Court for the Western District of Wisconsin dismissed IDX’s claim for theft of trade secrets.

The District Court ruled on summary judgment that UWMF had violated its contract by disclosing IDX technical information to Epic.

After appeal, the Seventh Circuit affirmed the District Court ruling, but remanded the matter for further proceedings on the remaining breach of contract and other claims. IDX’s counsel, retained Mary Woodford, a vice president of Cornerstone Research, to assist in the new proceedings. Ms. Woodford analyzed IDX’s economic losses and provided deposition testimony on her analysis and conclusions. In her analysis, she modeled the expected financial performance of the proposed contract to determine both lost profits and unjust enrichment. The analysis covered one-time software license fees, price erosion, and ongoing maintenance and support fees. Ms. Woodford also reviewed the analysis and findings of the defendants’ damages expert, and identified flaws in his methodology and in the bases of his analysis. In August 2002, the District Court ruled on summary judgment that UWMF had violated its contract by disclosing IDX technical information to Epic. The court also denied Epic’s summary judgment motion, which asked the court to dismiss the tortious interference claims. Subsequently, on the eve of trial, the case settled.

Case Expert

Mary A. Woodford

Senior Advisor, Cornerstone Research