Suit says Kirschner tried to ruin orthopedic firm

August 12, 1993|By Lorraine Mirabella | Lorraine Mirabella,Staff Writer

A Timonium-based orthopedic company has filed suit against Kirschner Medical Corp., alleging it stole international clients and conspired to drive it out of business by forcing it into involuntary bankruptcy proceedings.

Osteo Implant Technology Inc. and its subsidiary, Osteo-Technology International Inc., are seeking $17 million in compensatory and punitive damages from Kirschner, also based in Timonium.

Representatives of Kirschner Medical were unavailable for comment yesterday.

The dispute between the two companies came two years after Osteo-Technology, which makes and sells implants such as knees, hips, shoulders and trauma devices for medical and veterinary use, bought Kirschner's veterinary orthopedic NTC business. It also purchased the company's plant in Timonium.

At the time, debt-strapped Kirschner was trying to rebound from financial troubles that resulted in losses totaling more than $20 million over 1989 and 1990. Kirschner earned $3.5 million on revenues of $37.7 million in the first six months of this year.

The portion of the business sold to Osteo-Technology included finished inventory, patents, supplies, tooling, furniture, machinery and equipment. As part of the sale, Kirschner agreed not to compete in the international market for 10 years, the lawsuit said.

But since the signing of the agreement, Industrias Quirurgicas de Levente (IQL), a Spanish subsidiary of Kirschner, has sold more than $250,000 worth of veterinary implant prostheses in the United States, Europe, South America and Japan, the suit alleged.

Because of IQL's sales in other countries, Osteo-Technology unfairly lost potential income, the suit charged.

The lawsuit, filed Monday in Baltimore County Circuit Court, also alleged that Kirschner conspired with two vendors, the Komtek division of Kervick Enterprises Inc. and Brimfield Precision Inc., to put Osteo Implant out of business. The vendors had manufactured parts needed to make an artificial hip replacement system that Osteo Implant planned to sell to Tulane University.

When the vendors learned that Osteo Implant would drop their services and make the products itself,they refused to return the company's tooling, the suit said. Instead, they helped Kirschner pursue the Tulane contract, according to the suit.

In April, Kirschner won an exclusive worldwide license for the hip replacement device from Tulane, which holds the patent.

The vendors could not be reached for comment.

The suit also charged that Kirschner and the two vendors schemed to have Osteo Implant and, later, Osteo-Technology, placed in involuntary bankruptcy proceedings as a way to buy the company's tooling and secure the Tulane contract.

In April, the vendors petitioned to place Osteo Implant into involuntary Chapter 7 bankruptcy. Kirschner made a similar filing in July.

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