Hardball and Lowball in the Lab Industry

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CLIENTS OF THE DARK REPORT and attendees at our annual Executive War College know that we are advocates for tough competition, excellence in management, and integrity in service.

After all, isn’t it true that the companies many Americans annually recognize as the most respected are known for these three qualities? Certainly the recent examples of Nordstrom’s Department Stores, General Electric Corporation and Home Depot illustrate that employees and customers alike innately prefer forthright companies which offer quality products and stand behind what they sell. On the other hand, Microsoft Corporation wouldn’t make that list. Nor would most of the nation’s largest HMOs. These are companies which the public doesn’t trust, for a host of reasons. I offer these contrasting examples to make a point.

Within the laboratory industry, we have our own spectrum of companies with differing reputations for quality and integrity. Despite the protestations of many former employees of National Health Laboratories, this was a company that never earned the respect of its industry peers. On the other hand, there were, and still are, many private laboratory operations that have intensely loyal doctors and patients—because of that lab’s quality of service and integrity of management.

So, I for one, look with disappointment upon Cytyc Corporation’s recent decision to sue AutoCyte, Inc. for patent infringement. Timing of the lawsuit is interesting, coming within 12 weeks of AutoCyte’s recent FDA approval for its own monolayer Pap smear prep system.

Call me old-fashioned, but I like to compete in the traditional way. I want to beat my competitors with better products and better service. So I tend to view patent infringement suits as a backdoor way to handcuff competing companies. I call that the difference between hardball and lowball.

Hardball is in that time-honored American tradition of play tough and pursue every advantage, but always keep within the bounds of the game. Lowball has that connotation of riverboat gamblers and carny booths on the midway, where all is never as it appears to be.

Certainly, if AutoCyte has egregiously infringed Cytyc’s 1993 patent, then Cytyc is entitled to compensation. But, assuming that’s not the case, I think the lab industry would be much better served if these two firms compete on product and service in the marketplace, rather than duking it out in federal court.


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