A federal judge dismissed Scott Schorer, the former CEO of now-defunct Innovative Spinal Technologies, from a lawsuit accusing him and the company of fraud and breach of contract.
Judge David Hurd of the U.S. District Court for Northern New York threw out all four causes of action against Schorer made by Creative NeuroScience Applications and its two founders, and ruled that he be removed as a defendant from the case.
Creative Neuroscience and its co-founders, Frank Boehm Jr. and Benedetta Melnick, accused IST and Schorer in August of failing to develop, market and pay royalties on technology IST licensed from CNA.
Schorer told MassDevice he’s looking forward to putting the episode behind him.
“I didn’t feel that this suit had merit and we were looking forward to seeing it resolved in court,” Schorer said. “I didn’t feel I did anything wrong and it was nice to see the court agree. I’m looking forward to moving on.”
Boehm did not return a call seeking comment, but when we asked Melnick if she’s discouraged at the prospect of winning damages from a company that’s already declared bankruptcy and had its assets sold, she told us an appeal isn’t out of the question.
“It’s just not as simple as what you just described,” Melnick said. “Anything in the legal system can be appealed. Nothing is settled until all the appeals are finished.”
The case is based on a patent the duo holds for percutaneous placement of spinal screws and connecting rods. According to the suit, IST agreed to payments totaling $610,000 and a schedule of milestone payments totaling $2.4 million, pegged to achieving certain revenue goals, in return for incorporating the technology into its spinal stabilization device.
But IST and Schorer “diverted the funds and squandered its money to projects other than those for commercializing” the patent, according to the complaint, despite assuring Boehm and Melnick that “funding received by outside investors and entities would be devoted in significant portion, if not entirely, toward development, promotion, and marketing of the technology.”
“The funds” refers to the reported $75 million IST raised in venture capital funding.
IST filed for bankruptcy in May after seven years of operation.