Update: MMRGlobal announces new patent, says HITECH Act qualifications may not be met without vendor relationship

In October, CivSource noted a troubling trend developing within the Health IT world – the rise of broad based, innovation limiting patents. In the story, we noted some contrasts between health care information providers Allscripts and MMRGlobal. Allscripts has a diverse portfolio of health care software and recently called on developers to submit code in their own open sourcing challenge. MMRGlobal, has opted to go the other way staking out sweeping patents on many of health IT’s core functions. Now, they’ve announced more, and record breaking quarterly profits.

On October 30, MMRGlobal was provided with a new patent – U.S. Patent No. 8,301,466 entitled “Method and System for Providing Online Records” according to the information on this patent, it is directed toward methods for providing users with the ability to access and collect health records online. Essentially, this sets forth a patent for online portals that provide electronic health records. Virtually every provider of electronic health information offers an online portal for accessing this information. Now, there may be new challenges for these providers as well as the physicians and hospitals that use them.

The company is staking out patent based claims to almost all types of communication health care professionals have with their patents concerning their medical records including telephone conversations, fax, email and web. More patent applications are pending, and will likely make the scope of MMRGlobal’s enforcement rights much larger.

In a letter to shareholders, Robert H. Lorsch, Chairman and CEO writes, “the Company believes that the claims in its patent portfolio provide solutions necessary for healthcare providers to meet those requirements. Because the MMR HIT Patents were filed in advance of the relevant Meaningful Use requirements, the Company believes that the its patent portfolio makes it difficult for eligible healthcare professionals to fully qualify for incentives under the HITECH Act without licensing from MMR. Also, because of the government incentives, there will continue to be increasing interest and need by hospitals and physician groups to deploy web-based patient portals that access to medical records — with expenditures in this area continuing to be in the hundreds of millions of dollars at least.” The company has been applying for patents since 2005 in the US and several international jurisdictions with the obvious intent of capturing global marketshare.

The Health Information Technology for Economic and Clinical Health (HITECH) Act, was included as part of the 2009 stimulus package and is a federal mandate aimed at promoting the adoption and meaningful use of health information technology. The phrase meaningful use, included in the law has been the source of much controversy within the health care field, given its general vagueness. Since then, the Department of Health and Human Services (HHS) along with other health care stakeholders have been working to provide guidance around that phrase and its interpretation. That guidance is due out soon, likely some time in 2013. Some guidance is already available on HealthIT.gov.

Essentially, the meaningful use requirements stipulate that patients in the US be provided with a personal health record accessible online. Think of personal health records as a digitized version of the patient file that follows you from doctors office to doctors office, in hard copy. The idea behind these health records are easier transfer of this information, and easy access during critical care situations regardless of where those situations transpire. They are also a means for patients to see the information compiled about them.

MMRGlobal apparently seeks to limit the creation of these portals to their sole licensing authority. With each new patent announcement the company also notes the following, “Ted Ward of Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor LLP, who represents the company on patent licensing and infringement matters, is in the process of contacting numerous hospitals and other healthcare professionals regarding the enforcement of the company’s intellectual property rights and the opportunity to license the technology.” The translation on this is – vendor relationships by force, and indeed one case is already in legal arbitration.

MMRGlobal is in its second year of a $30 million license agreement with Surgery Center Management, LLC (SCM) which was licensing the MMRGlobal software to the tune of $5 million per year. MMRGlobal is now going into arbitration against SCM claiming that the company owes $10 million on this agreement and has not yet paid up. Mr. Ward, the attorney tasked with patent enforcement for MMRGlobal is also heading up this case. In addition to fees owed, the company is making patent infringement claims against SCM saying that the company’s failure to pay puts them in breach of trademark and patent rights.

So far, these tactics seem to be working, however counter they may run to the spirit of free market competition, and non-coersive business practices. The company announced a record breaking quarter, with sales, deferred revenue and signed customer purchase agreements amounting to more than one million dollars driven by MMRPro – their EMR solution. The company may also be getting help from the inside the government knowledge of its board members, one of which, is Former Under Secretary of Homeland Security Asa Hutchinson. According to the company, they have 180 patent applications still outstanding, and are sending some 250 letters a week to health care providers about the scope of their enforcement ability.