521 F.Supp.3d 112
D. Mass.2021Background
- Allscripts (plaintiff) licensed patient‑level healthcare data to Decision Resources Group (DRG) under a 2014 Master Data License Services Agreement governed by Delaware law.
- Agreement granted DRG a limited, revocable license to "use the Data to create analyses, reports and products" (Section 3.2) but prohibited selling or distributing the Data except as permitted (Section 3.3); either party could terminate for a material breach (Section 8.2).
- Allscripts obtained a HIPAA statistician certification (Dr. Baier) incorporated into the Agreement; Paragraph 22 stated DRG "will not provide patient level Allscripts data to a client" and may only disclose derivative works not linked to individuals.
- DRG developed the Raven Product linking Allscripts data with other sources and sold it to customers; Allscripts audited DRG, alleged DRG was supplying patient‑level Allscripts data to customers, and sued in 2019 asserting DTSA, state trade secret, breach of contract, Chapter 93A and fraud (fraud later dismissed).
- Parties filed cross motions for summary judgment: DRG sought judgment on Allscripts’ claims and a declaratory judgment; Allscripts sought judgment on DRG’s affirmative defenses and counterclaims II–IV. The court denied DRG’s SJ motion in large part and allowed Allscripts’ SJ motion on affirmative defenses and several counterclaims.
Issues
| Issue | Allscripts' Argument | DRG's Argument | Held |
|---|---|---|---|
| Whether the statistician Certification (Paragraph 22) was incorporated so as to bar DRG from providing patient‑level data to customers | Certification was incorporated into the Agreement in full, so Paragraph 22 limits DRG’s rights and prohibits providing patient‑level data | Certification was incorporated only to ensure HIPAA compliance and not to alter commercial license rights | Genuine factual dispute about scope of incorporation; summary judgment denied to DRG on this issue |
| Whether Section 3.2 authorizes DRG to create and commercially distribute the Raven Product containing transformed/linked Allscripts data | Raven Product merely distributes Allscripts’ patient‑level data (resale), contrary to Sections 3.2/3.3 | DRG’s cleaning, normalizing and linking transforms data into a new product permitted by Section 3.2 | Contract language ambiguous; extrinsic evidence conflicted; genuine dispute precludes SJ for DRG |
| Whether Allscripts can prove damages from alleged unauthorized distribution | Allscripts presents lost‑profit evidence tied to customers buying from DRG instead of Allscripts | DRG contends Allscripts cannot show damages or that alleged harm is cognizable absent a HIPAA violation | Existence of damages depends on resolution of breach scope; factual dispute — SJ denied for DRG |
| Whether Allscripts’ DTSA, Massachusetts trade‑secret and Chapter 93A claims fail as a matter of law | Allscripts contends DRG exceeded its license, supporting DTSA, trade secret and 93A claims | DRG sought SJ arguing lawful use under the Agreement | Court found genuine disputes about license scope and denied SJ on Counts I, II, IV (Allscripts’ claims) |
| DRG Counterclaim II (Chapter 93A): whether Allscripts engaged in unfair competition by intending to terminate data access or by false statements to clients | DRG alleges Allscripts intended to terminate access and told customers DRG would lose Allscripts’ data, causing injury | Allscripts notes it never terminated access and that the alleged false statements did not occur primarily and substantially in Massachusetts | Summary judgment for Allscripts on Counterclaim II: DRG cannot show prima facie Chapter 93A claim (conduct not primarily in MA; no loss from termination intent) |
| DRG Counterclaim III (Lanham Act): whether Allscripts’ statements to Point72 constituted "advertising or promotion" | DRG contends Allscripts made false statements to customers (e.g., Point72) amounting to commercial advertising or promotion | Allscripts argues a single statement to one customer is not "advertising or promotion" under the Lanham Act | Summary judgment for Allscripts on Counterclaim III: evidence shows only one customer contact (Point72), insufficient dissemination to constitute Lanham Act advertising |
| DRG Counterclaim IV (breach of contract re: misuse of DRG confidential info) | DRG alleges Allscripts used DRG confidential customer identities to contact Point72 and cause loss | Allscripts argues DRG failed to timely disclose its damages computation and thus cannot rely on the undisclosed evidence | Summary judgment for Allscripts on Counterclaim IV: DRG precluded from using undisclosed damages evidence under Rule 37(c)(1) and cannot prove essential element of damages |
| Allscripts’ motion for SJ on DRG’s affirmative defenses (failure to disclose bases) | Allscripts asserts DRG failed to provide factual/legal bases for its 17 affirmative defenses per Rule 26(e) | DRG contends discovery provided facts and no motion to compel was filed | Summary judgment for Allscripts: DRG failed to supplement responses and is precluded from using undisclosed material; affirmative defenses dismissed |
Key Cases Cited
- Mesnick v. Gen. Elec. Co., 950 F.2d 816 (1st Cir. 1991) (describing the role of summary judgment to assess need for trial)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (standards for materiality and genuine issues at summary judgment)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (burden‑shifting principles on summary judgment)
- Town of Cheswold v. Cent. Delaware Bus. Park, 188 A.3d 810 (Del. 2018) (rules for incorporation of external documents into a contract)
- NAMA Holdings, LLC v. World Mkt. Ctr. Venture, LLC, 948 A.2d 411 (Del. Ch. 2007) (give effect to clear literal contract meaning)
- Eagle Indus. v. DeVilbiss Health Care, 702 A.2d 1228 (Del. 1997) (use extrinsic evidence when contract language is ambiguous)
- Podiatrist Ass’n v. La Cruz Azul de P.R., Inc., 332 F.3d 6 (1st Cir. 2003) (Lanham Act requires "advertising or promotion" targeted to purchasers)
- Seven‑Up Co. v. Coca‑Cola Co., 86 F.3d 1379 (5th Cir. 1996) (single promotional presentation may suffice in very small markets)
- Coastal Abstract Serv. v. First Am. Title Ins. Co., 173 F.3d 725 (9th Cir. 1999) (single statement may satisfy Lanham Act only where potential purchaser pool is extremely small)
- AVX Corp. v. Cabot Corp., 251 F.R.D. 70 (D. Mass. 2008) (preclusion for failure to timely disclose damages computation under Rule 26)