By John Wallace
GE Healthcare recently mailed a letter to diagnostic imaging device and service providers around the globe that explains a restriction on the use of “software that is not part of the equipment’s base system standard operating software.”
The letter has garnered several responses from companies, professional organizations and individuals. It was also a very hot topic on the TechNation Listserv in August – shortly after the first letters starting arriving in mailboxes.
The letter reads:
“It is our understanding that as a broker/dealer of used healthcare equipment you might have occasion to purchase used GE Healthcare equipment from original equipment purchasers. In such cases, the equipment you purchase may contain software that was sublicensed to the original equipment purchaser and subject to various terms and conditions, including restrictions on the resale or the transfer of certain software licenses. Please be aware, unless otherwise explicitly stated by GE Healthcare in writing, software that is not part of the equipment’s base system standard operating software is non-transferable and only the original equipment purchaser has a non-exclusive, limited license to use such software.”
The letter goes on to inform anybody with questions to contact one of three individuals at GE Healthcare.
Mark Emery, General Manager of Equipment of Lifecycle Solutions and Accessories for GE Healthcare, explained the letter in his own words for MD Publishing.
“It has become evident to us that non-transferrable licensed software is being resold in a way that is inconsistent with our software license terms,” Emery wrote in an email response. “The true re-sale value of GE equipment is based on the hardware and operating software – which can be sold and resold – and not on any non-transferable licensed software that may have been available to an original licensed user. With this letter, GE aims to draw attention to the product terms and conditions surrounding licensed software that is not part of the operating system.”
Block Imaging President Josh Block described GE’s letter as a “head turner.”
“There’s no question that software has proprietary elements and that the investment and creativity involved with imaging applications are to be applauded and compensated. That being said, in this time and marketplace, this move is certainly a head turner, especially given the significant price already paid for the intellectual property by the initial purchaser,” Block writes.
On the TechNation Listserv, individuals posted a wide range of comments.
“There is concern in this community regarding the recent GE letter on software,” MRA President Tom Quinn wrote. “Some assume GE has contractual rights, some assume GE is exercising its power right or wrong, others have sent out a brave letter regarding that company and others and the GE letter for commercial purposes I believe. The absolute truth of this issue is this is an FDA matter. Period. End. Finish.”
“I read this GE letter. They assert a litany of rights. Has anyone verified that they have these rights? Are they spelled out in the sales documents of new systems?” Pat Lynch asked on the TechNation Listserv.
“Certainly not defending GE or any other Big Box vendor, but if we just bought a new scanner we would have to pay for all enhancements we added on the system – Cardiac scoring, 3-D workstation, enhanced dynamic range, dose reduction, etc., … We see licensed software options all over the medical field, especially in patient monitoring, the same rules apply. They must be purchased as a separate option and do not go with the system if turned in for sale or trade,” Patrick Frazier wrote. “When a system is approved from the FDA, I believe that the system in its basic form is approved and then each option had to be approved. So, if a hospital sells a piece of equipment to a third party, the system will operate as designed as a basic system approved by our FDA. Seems to me a few folks are trying to make a profit off of selling equipment with bootlegged software. I’m sure there are other facets of the arguments I’m not aware of.”
Emery explains that the letter is not about a policy shift. It is a reminder about existing policy.
“This is not a matter of software that was once transferable now becoming non-transferable. The license of the software at issue was never a transferable license, and such restrictions were and continue to be identified in our Standard Product Terms and Conditions,” he explained. “We are actively drawing attention to these terms since it has become evident to us that non-transferrable licensed software is being resold in a way that is inconsistent with the software license terms. It is important that both re-sellers and potential buyers are aware of these terms to ensure expectations related to their transaction are clear. We are actively communicating on these topics with equipment resellers and customers.”
In a follow up question, Emery provided additional clarification.
“To be clear, operating software is licensed with the system and enables functionality of the system, including image generation and review,” Emery said. “This is different and separate from optional clinical applications software, which only a licensed customer can use on the purchased system to acquire advanced features. Our terms allow for the transfer of the operating software, but not the transfer of optional licensed clinical applications software.”