Wismer Martin Accuses Eds Of Stealing Secrets Lawsuit Alleges Giant Corporation Violated Confidentiality Agreement

Wismer Martin Corp. has filed a lawsuit charging one of the biggest companies in the electronic information industry with the theft of trade secrets.

Spokane-based Wismer Martin won a temporary restraining order Thursday in U.S. District Court that forbids Texas-based Electronic Data Systems Corp. (EDS) from going ahead with a deal that could squeeze Wismer Martin out of a relationship with one of its biggest customers, Blue Cross of Washington and Alaska.

The lawsuit seeks damages in excess of $3 million, and charges that EDS violated confidentiality agreements with Wismer Martin in order to strike its deal with Blue Cross.

“We’re the little guy here,” Wismer Martin attorney Larry Small, said late Thursday. “But we’re not going to get stomped on by this giant corporation.”

Wismer Martin is a manufacturer of software for the medical industry. During the past three years, it has developed and packaged software products to create systems that can link physicians, hospitals, insurance companies and other health care providers into a single computer network, allowing them all to share information electronically.

The potential for cost savings in such networks is enormous, and at a time both business and government are clamoring for cuts in health care costs, the profit potential for health information network packages is also enormous.

Three years ago, Wismer Martin teamed with Medical Services Corp. of Eastern Washington to create the Eastern Washington Health Information Network linking hospitals, physicians and MSC. Later, it worked with Blue Cross of Washington and Alaska to form the Washington Health Information Network and the Alaska Health Information Network.

In order to market its product more widely, Wismer Martin has been searching for a major corporation with which to ally itself. And in 1994, EDS began exploring the possibility of buying Wismer Martin, according to the lawsuit.

As is standard in such cases, the two parties entered into a confidentiality agreement so the trade secrets either party would reveal to the other during the negotiations could be protected should the deal fall through.

The deal did fall through in March, and Wismer Martin says EDS took the trade secrets and a key Wismer Martin employee, and began using them to steal customers away from the Spokane company.

On March 15, according to the suit, Mike Magliaro, Wismer Martin’s vice president of health care information networks, resigned and subsequently went to work for EDS.

“From and after March 15, with the direct and indirect assistance of Mr. Magliaro,” the suit states, EDS used Wismer Martin’s trade secrets to solicit Blue Cross of Washington and Alaska and other Wismer Martin customers to buy health information network-related services from EDS rather than Wismer Martin.

Now, the suit states, Wismer Martin officials have learned that EDS is negotiating a long-term contract with Blue Cross and Medical Services Corp. to purchase the three networks in Washington and Alaska.

That’s the deal that Thursday’s temporary restraining order blocks.

“Wismer Martin, in good faith, provided its business secrets and practices to EDS,” Small said, “and EDS, the giant corporation, is now coming right into our own back yard with all this information and knowledge, and trying to take advantage of it within our customer base.”

During the time the negotiations between EDS and Wismer Martin were being conducted, Wismer Martin’s fortunes took a dramatic plunge. The company’s financial losses have left it on the brink of failure during the past several months.

A stock offering, which company officials say has been successful, has apparently resolved the crisis for the time being.

And Wismer Martin has entered into negotiations with communications giant GTE, similar to the earlier EDS talks, in order to try and strike some strategic alliance that would strengthen Wismer Martin’s ability to market its health information network products.

A hearing on whether to drop or extend the temporary restraining order will be held at 10 a.m. Thursday before U.S. District Judge Fred Van Sickle.

, DataTimes