Nuance Sued for $30 Million in Fees by Vianix

In court papers made public this week, Vianix, has filed suit against Nuance Communications, seeking up to $30 million in unpaid licensing fees related to the use of its Managed Audio Sound Compression (MASC) technology in Nuance’s Dictaphone product line.

According to court papers originally filed in Wilmington, Del., June 2, Virginia Beach, Va.-based Vianix began licensing the MASC audio compression software to Dictaphone in January 2003. Nuance acquired Dictaphone in March 2006 and continues its operations as the Dictaphone Healthcare Solutions division.

Vianix’s MASC technology is reportedly being used by Nuance's Dictaphone division in many of its dictation and transcription products, namely its Enterprise Express, Enterprise Workstation, EXSpeech, iChart, iChart Managed Services, Powerscribe, and Powerscribe Workstation SDK.

The lawsuit alleges that in January 2007 Vianix began to see "repeated instances of late license fee reports and payments by Nuance" and "apparent discrepancies between the number of MASC technology sublicenses and license fees being reported to it by Nuance." Soon thereafter, Vianix audited Nuances records and "discovered defaults and breaches of Nuance's obligations under the technology license agreement on a massive and pervasive scale,'' Vianix said in the court papers.

Lawyers for Vianix allege that the records Nuance provided regarding its licenses of the MASC technology, particularly to its resellers and original equipment manufacturer partners, contained large gaps and inaccurate information.

Vianix estimates the unpaid fees and interest owed to it by Nuance to be valued at between $20 million and $30 million. The suit also seeks a court injunction mandating Nuance to live up to its obligations outlined in the contract, which is valid through January 2009. The lawsuit is not seeking a termination of the business relationship or existing contracts between Vianix and Nuance, lawyers for Vianix confirmed.

Nuance has until July 26 to respond to the allegations in court. In an official statement, though, Richard Mack, a Nuance spokesman, said that while his company does not comment on pending litigation, "we believe the suit is fully without merit and we intend to defend ourselves thoroughly."

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