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San Diego Bankruptcy Court Rules Sotera Employees Misappropriated Masimo Trade Secrets

10/16/17

SAN DIEGO--(BUSINESS WIRE)--Oct. 16, 2017-- Masimo (NASDAQ: MASI) announced today that the bankruptcy court in San Diego has issued final judgment, holding that Sotera Wireless Employees misappropriated Masimo trade secrets. The misappropriation stems from two former Masimo employees, James Welch and David Hunt, copying thousands of confidential Masimo documents, and using Masimo’s trade secrets to benefit Sotera. The Court found clear and convincing evidence that willful and malicious misappropriation exists. The court also found that the actions of Welch and Hunt were “despicable conduct,” and that they “consciously disregarded Masimo’s rights.”

The Court has permanently enjoined Sotera from retaining, disclosing, disseminating or using confidential Masimo documents, originating from either James Welch’s or David Hunt’s Masimo computers. The Court also enjoined Sotera, until September 16, 2021, from including Mr. Welch in Sotera’s Design Control process, including preparing the Customer Needs Document, the Design Input Requirements documentation, the Software Requirements Specification or User Story, implementing software design and the Software Design Specification, the Design Review, the Verification process, the Validation process, developing schematics and other production specifications, and preparing the design history file. David Hunt had not been working at Sotera since 2015. Masimo understands that Mr. Welch is also no longer employed by Sotera.

This case was originally the subject of an action in the Superior Court of Orange County filed in May 2013 against Welch, Hunt and Sotera. This portion of that case was tried in the bankruptcy court in San Diego after Sotera filed for Chapter 11 bankruptcy in 2016. Thus, the San Diego ruling concerned the misappropriation of Masimo’s trade secrets by Sotera. The remaining portion of the Superior Court action against Welch and Hunt remains pending.

Joe Kiani, Founder and CEO of Masimo, said, “I am sad that we even had to pursue this case. These were trusted employees. I hope all members of Masimo’s team will adhere to Masimo’s guiding principles of ‘remaining faithful to your promises and responsibilities, being driven by fascination and accomplishment, not power and greed, making every day as fun as possible, making themselves better each year, and, doing what is best for patient care.’ We believe these guiding principles are critical not only to our success, but to our integrity and humanity.”

@MasimoInnovates | #Masimo

About Masimo

Masimo (NASDAQ: MASI) is a global leader in innovative noninvasive monitoring technologies. Our mission is to improve patient outcomes and reduce the cost of care by taking noninvasive monitoring to new sites and applications. In 1995, the company debuted Masimo SET® Measure-through Motion and Low Perfusion™ pulse oximetry, which has been shown in multiple studies to significantly reduce false alarms and accurately monitor for true alarms. Masimo SET® has also been shown to help clinicians reduce severe retinopathy of prematurity in neonates,1 improve CCHD screening in newborns,2 and, when used for continuous monitoring with Masimo Patient SafetyNet™* in post-surgical wards, reduce rapid response activations and costs.3,4,5 Masimo SET® is estimated to be used on more than 100 million patients in leading hospitals and other healthcare settings around the world,6 and is the primary pulse oximetry at 17 of the top 20 hospitals listed in the 2017-18 U.S. News and World Report Best Hospitals Honor Roll.7 In 2005, Masimo introduced rainbow® Pulse CO-Oximetry technology, allowing noninvasive and continuous monitoring of blood constituents that previously could only be measured invasively, including total hemoglobin (SpHb®), oxygen content (SpOC™), carboxyhemoglobin (SpCO®), methemoglobin (SpMet®), and more recently, Pleth Variability Index (PVi®) and Oxygen Reserve Index (ORi™), in addition to SpO2, pulse rate, and perfusion index (PI). In studies with SpHb, reductions in blood transfusion** were observed8,9 and when used with PVi, a reduction in 30-day mortality was observed.10 In 2014, Masimo introduced Root®, an intuitive patient monitoring and connectivity platform with the Masimo Open Connect™ (MOC-9™) interface, enabling other companies to augment Root with new features and measurement capabilities. Masimo is also taking an active leadership role in mHealth with products such as the Radius-7™ wearable patient monitor, iSpO2® pulse oximeter for smartphones, and the MightySat™ fingertip pulse oximeter. Additional information about Masimo and its products may be found at www.masimo.com. Published clinical studies on Masimo products can be found at http://www.masimo.com/cpub/clinical-evidence.htm.

*The use of the trademark Patient SafetyNet is under license from University HealthSystem Consortium.

**Clinical decisions regarding red blood cell transfusions should be based on the clinician’s judgment considering, among other factors: patient condition, continuous SpHb monitoring, and laboratory diagnostic tests using blood samples.

References

  1. Castillo A et al. Prevention of Retinopathy of Prematurity in Preterm Infants through Changes in Clinical Practice and SpO2 Technology. Acta Paediatr. 2011 Feb; 100(2):188-92.
  2. de-Wahl Granelli A et al. Impact of pulse oximetry screening on the detection of duct dependent congenital heart disease: a Swedish prospective screening study in 39,821 newborns. BMJ. 2009;338.
  3. Taenzer AH et al. Impact of Pulse Oximetry Surveillance on Rescue Events and Intensive Care Unit Transfers: A Before-And-After Concurrence Study. Anesthesiology. 2010; 112(2):282-287.
  4. Taenzer AH et al. Postoperative Monitoring – The Dartmouth Experience. Anesthesia Patient Safety Foundation Newsletter. Spring-Summer 2012.
  5. McGrath SP et al. Surveillance Monitoring Management for General Care Units: Strategy, Design, and Implementation. The Joint Commission Journal on Quality and Patient Safety. 2016 Jul; 42(7):293-302.
  6. Estimate: Masimo data on file.
  7. http://health.usnews.com/health-care/best-hospitals/articles/best-hospitals-honor-roll-and-overview.
  8. Ehrenfeld JM et al. Continuous Non-invasive Hemoglobin Monitoring during Orthopedic Surgery: A Randomized Trial. J Blood Disorders Transf. 2014. 5:9. 2.
  9. Awada WN et al. Continuous and noninvasive hemoglobin monitoring reduces red blood cell transfusion during neurosurgery: a prospective cohort study. J Clin Monit Comput. 2015 Feb 4.
  10. Nathan N et al. Impact of Continuous Perioperative SpHb Monitoring. Proceedings from the 2016 ASA Annual Meeting, Chicago. Abstract #A1103.

Forward-Looking Statements

This press release includes forward-looking statements as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, in connection with the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations about future events affecting us and are subject to risks and uncertainties, all of which are difficult to predict and many of which are beyond our control and could cause our actual results to differ materially and adversely from those expressed in our forward-looking statements as a result of various risk factors, including, but not limited to: risks related to our assumptions regarding the repeatability of clinical results; risks related to our belief that Masimo's unique noninvasive measurement technologies contribute to positive clinical outcomes and patient safety; as well as other factors discussed in the "Risk Factors" section of our most recent reports filed with the Securities and Exchange Commission ("SEC"), which may be obtained for free at the SEC's website at www.sec.gov. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. All forward-looking statements included in this press release are expressly qualified in their entirety by the foregoing cautionary statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today's date. We do not undertake any obligation to update, amend or clarify these statements or the "Risk Factors" contained in our most recent reports filed with the SEC, whether as a result of new information, future events or otherwise, except as may be required under the applicable securities laws.

Source: Masimo

Masimo
Evan Lamb
949-396-3376
elamb@masimo.com