SensorMedics Is Sued by Competitor : Litigation: Maker of medical diagnostic systems denies stealing product designs, selling devices without U.S. approval.

A Minnesota medical-device maker said Tuesday it has filed a lawsuit against SensorMedics Corp., alleging that the Yorba Linda maker of medical diagnostic systems stole product designs and sold devices without proper federal approval.

In the suit filed in U.S. District Court in Minnesota, Medical Graphics Corp. of St. Paul said privately held SensorMedics is in violation of a patent that Medical Graphics holds on a device that analyzes oxygen in the breath of patients suffering from heart and lung problems.

The lawsuit also alleges that SensorMedics marketed and sold the device from November, 1990, to June, 1992, even though it knew that it had not received permission from the U.S. Food and Drug Administration to do so.

SensorMedics strongly denied the allegations, saying that the lawsuit came as a shock to company officials.

“We think the complaint is totally without merit and intend to vigorously defend ourselves,” said Chief Executive George D. Homes, adding that he knew of no incident that might have triggered the legal action.

SensorMedics and Medical Graphics have been strong competitors for the past 10 years, selling nearly identical products to the medical industry both in the United States and overseas.

Homes said he has met with executives of the rival firm at trade shows and never suspected that a disagreement might arise.

“I must say, I am totally surprised,” he said.

The lawsuit centers on a device that measures so-called “breath-by-breath” evaluations of patients. Such analyses measure how strong a patient’s breathing is, how much oxygen is being absorbed into the bloodstream and how much carbon dioxide is being exhaled. Such systems cost about $30,000 apiece.

Both companies make such a measuring device. In its lawsuit, however, Medical Graphics argues that it invented the process first and carries the patent on it.

Medical Graphics also alleges that its business was unfairly hampered because SensorMedics, which is larger and sells more of the machines, was selling without proper federal authority.

It also alleges that SensorMedics interfered with contracts between Medical Graphics and customers, distributed a letter to potential customers that dissuaded them from doing business with the smaller firm, and unfairly slashed prices “to prevent Medical Graphics from obtaining a sale,” according to the suit.

Medical Graphics spokeswoman Tana DeBoer said her firm stands by its allegations.

“It is our position that Medical Graphics has a strong case,” she said.