Kipu Health awarded $19.5M after competitor copycat charge

The cloud-based EHR developer had alleged that a former customer, ZenCharts, which plans to appeal, had violated a user agreement, cloning its software to develop a system of its own.
By Nathan Eddy
12:38 PM

Kipu Health, the maker of a data management platform for behavioral healthcare and addiction treatment specialists, was awarded nearly $20 million by a federal jury in Florida after it ruled one of the company’s former customers, ZenCharts, cloned its software in order to become a competitor.

The jury ruled the action taken by ZenCharts violated the terms of the user agreement, and ruled the defendants had worked to duplicate a product initially offered by Kipu by conspiring to gain access to the company’s electronic health record platform.

The news service Reuters reported the jury verdict. Calls and emails from Healthcare IT News to Kipu requesting statements went unreturned.

ZenCharts CEO Richard Glaser responded to Healthcare IT News via email with a written statement, saying that while the company respects the ruling of the jury, it does not agree with it and intends to appeal.

"We would like to thank all of our customers for standing with us during this arduous journey," the statement continued. "While this is not our first setback, we will continue moving forward as we always have."

Kipu’s cloud-based system EHR System automates addiction treatment centers and enables them to deliver improved care when treating those suffering from drug and alcohol addiction.

The software automated the entire episode of care in addiction treatment including detoxification, residential treatment, intensive outpatient treatment, as well as aftercare.

The technology eliminates paper medical forms, helping clinicians treat patients by automating assessments, diagnosis, history and physicals as well as creating treatment plans.

The litigation was initiated at the end of 2017 when Kipu Systems sued ZenCharts and addiction treatment organization Solutions Recovery, alleging the defendants had reverse engineered Kipu’s platform and seeking damages of $30 million.

Kipu Systems alleged individuals associated with the treatment provider and individuals associated with a software development company approached Kipu under false pretenses.

The lawsuit filed by Kipu alleged the defendants approached Kipu under the false pretense that Solutions Recovery was interested in purchasing a license to use the Kipu system in order to gain access to the system and then create a copycat EHR product.

The case became further complicated in May after Coral Gables, Florida-based Kipu submitted a request to withdraw some of the claims it had filed, which a judge denied, ruling a month later that it would be a "disservice" to the defendants in the case.

The Boca Raton-based ZenCharts, for its part, took the fight to its own blog, publishing a factual product release timeline along with sources. The company used Kipu Systems’ release notes to create the timeline, which it claims proves ZenCharts debuted certain product features before Kipu.

"The very information they published, announcing features, proves we actually had these features first," the blog post noted.

The post is accompanied by charts that compare the dates of release for certain platform features such as addiction treatment CRM, pre-defined group topics and a signature wizard.

In April 2019, ZenCharts took the step of publishing a press release claiming the company had the only CRM that is fully integrated with EHR software created specifically for addiction treatment by addiction treatment professionals.

Nathan Eddy is a healthcare and technology freelancer based in Berlin.
Email the writer: nathaneddy@gmail.com
Twitter: @dropdeaded209

Healthcare IT News is a HIMSS Media publication.