United States District Court, D. Massachusetts
MEMORANDUM & ORDER
Nathaniel M. Gorton United States District Judge.
suit arises out of a contractual dispute. Plaintiff, a
healthcare company that collects sensitive, patient-level
data, licenses that data to the defendant, a healthcare
consulting company that compiles and/or repackages that data
and sells it to third parties. In addition to claiming breach
of contract, plaintiff alleges trade secret misappropriation
(under federal and state law), unfair and deceptive practices
under Massachusetts law and fraud in the inducement.
Defendant has filed a counterclaim for declaratory judgment,
unfair competition, misleading statements under the Lanham
Act and breach of contract. The parties have filed cross
motions for injunctive relief.
Healthcare, LLC (“Allscripts” or
“plaintiff”) is a health information technology
company that collects, aggregates and de-identifies
sensitive, patient-level data from a network of medical
practices. It collects such data in compliance with
applicable privacy and security laws and regulations,
including the Health Information Portability and Privacy Act
Privacy Rule (“HIPAA Privacy Rule” or the
of its business model, Allscripts licenses its data to third
party recipients, provided that they can assure Allscripts of
their ability to protect the data and an independent
statistician certifies that the data has been de-identified
in compliance with HIPAA.
June, 2014, Allscripts entered into a Master Data License
Services Agreement (“the Agreement”) with
DR/Decision Resources, LLC d/b/a Decision Resources Group
(“DRG” or “defendant”), a healthcare
data and consulting company that creates and sells reports
containing healthcare data.
Terms of the Agreement
to the terms of the Agreement, which is governed by Delaware
law (§ 9.2), either party can terminate the contract if
the other party commits a material breach and fails to cure
within 30 days of receiving written notice (§ 8.2).
relevant provisions in the Agreement that delineate use and
disclosure of Allscripts' data are excerpted as follows:
Section 3.1 defines “data” as the
aggregated, de-identified patient data set derived from
Allscripts' network of participating medical practices
which use Allscripts electronic health records software
. . . If Data is de-identified in accordance with a
statistician certificate, both parties shall comply with the
terms of such statistician certificate.
3.2 further states the terms of the license agreement, in
Subject to Client's compliance with the terms of this
Agreement, Allscripts hereby grants to Client a limited,
revocable non-exclusive license to use the Data to create
analyses, reports and products (“Client
Products”) using the Data and to commercially
distribute such Client Products to its customers. If the Data
is de-identified using a statistician certification, such
license is subject to the terms and restrictions set forth in
the statistician certificate.
Section 3.3 provides that the client shall have no right to
sell, license, transfer or distribute the Data to any third
party other than as permitted under this Agreement.
Section 5.2 states that DRG has a duty of confidentiality
that extends for five years after either expiration or
termination of the contract but that Allscripts data, trade
secrets and software systems and related information must be
kept confidential in perpetuity.
Terms of the Certification
2014, Allscripts commissioned Dr. Patrick Baier (“Dr.
Baier”) to issue a statistician certification with
respect to the data DRG receives from Allscripts, entitled
HIPAA Certification for Allscripts Descriptions Resources
Group Site Certification (“the Certification”).
Dr. Baier issued another certification in 2018, which
contains the same language with respect to the disputed
provisions. For ease of reference, the Court will use the
paragraph citations from the 2018 Certification. The
Certification provides, in relevant part, that
Decision Resources Group will either keep the Allscripts data
internally for its own use, or may create analyses, reports
and products using data and other data and distribute such
products to its customers under the condition that Decision
Resources Group will not disclose the Allscripts data to any
Decision Resources Group and any third party clients of
Decision Resources Group receiving Allscripts data as above
may however as part of their business activities produce
summary works and aggregated derivative works as part of its
product offerings. Such works must be sufficiently ...