December 6, 2023

Canopy, Creator of Leading Staff Safety Solution Already Protecting 200,000 U.S. Healthcare Workers, Exits Four Years of Stealth

Canopy, Creator of Leading Staff Safety Solution , Exits Four Years of Stealth

Canopy company logo

Background:

Canopy, a technology company specializing in developing advanced wearable safety technology for healthcare workers, has been systematically taken advantage of by Commure, a much larger healthcare technology company backed by significant venture capital. This exploitation has occurred despite Canopy's innovative technology and Commure's repeated breaches of contract.

The story begins with Canopy (originally called “SMP Labs”) developing a cutting-edge wearable safety button and licensing it to a company called Collateral Opportunities for sales and marketing under the brand name Strongline. In 2021, Commure, recognizing the value of this technology, acquired Strongline's reseller license and assets. This acquisition should have been a boon for Canopy, providing a wider platform for its technology and a steady revenue stream.

However, the relationship quickly soured due to Commure's consistent failure to meet its payment obligations. This led to Canopy terminating the agreement in 2022. While a new agreement was reached in 2023, it appears Commure had already begun to exploit Canopy's intellectual property. Commure developed a copycat product, "Commure Tag," closely resembling Canopy's technology, and proceeded to launch "Strongline Pro" based on this unauthorized imitation.

Despite these blatant violations, Canopy continued to act in good faith, attempting to maintain the business relationship. However, further payment failures from Commure and misleading accusations of security vulnerabilities in Canopy's product forced Canopy to terminate the agreement again in 2024.

Even after the termination, Commure's exploitative actions continued. They began providing customers with refurbished buttons, potentially compromising the safety of healthcare workers and violating the terms of their agreement with Canopy. This disregard for contractual obligations and ethical considerations further highlights Commure's opportunistic behavior.

Currently, the two companies are entangled in legal battles. Commure, despite its own questionable actions, is suing Canopy for wrongful termination. Canopy, in turn, is accusing Commure of intellectual property infringement and breach of contract. This David-and-Goliath struggle showcases how a smaller company with valuable technology can be exploited by a larger, well-funded entity.

Canopy's experience serves as a cautionary tale for small businesses and innovators in the healthcare technology sector. It underscores the importance of robust legal protection for intellectual property and the need for vigilance when partnering with larger companies. Despite facing an uphill battle, Canopy continues to fight for its rights and the integrity of its technology, demonstrating resilience against a company seemingly intent on leveraging its market position for unfair advantage.

Detailed Timeline:

2019

  • July - August: “SMP Labs” and “Collateral Opportunities” form a partnership and create the Strongline brand.
    • Collateral Opportunities team was responsible for sales & marketing and Canopy (f/k/a SMP Labs) was responsible for creating the technology, product, operation and ownership of the Intellectual Property and licensed it to Collateral Opportunities

2021

  • December: Commure acquires the reseller license and other certain assets of Strongline LLC (not to be confused with the product created by Canopy branded as Strongline)

2022

  • April: Canopy identifies underpayment issues (along with other contract obligation issues)
  • December: Canopy issues termination notice after a 3rd party auditor, chosen by Commure, verified underpayment issues and identified additional money still owed – which Commure refused to pay.
  • December: Commure sues Canopy in Delaware Chancery Court for wrongful termination. Suit was later dismissed (March 2023) and settled out of court with the original reseller license terminated.

2023

  • March: Canopy and Commure renegotiate a new Reseller Agreement as part of above settlement, which carved out Canopy’s right to immediately terminate the Agreement upon payment failures in the future given previous history.
    • New agreement reaffirms restrictions around “reverse engineering and derivative works of” the Canopy product
Section 14 of Reseller Agreement
  • July: 3-weeks after Canopy was granted an FCC license for a new button they had made available to Commure for resale with Strongline, Commure submits FCC filings describing an intention to sell a “copy-cat” derivative product, identified as 'Commure Tag.
Canopy’s FCC filing for “TAG6” and Commure’s for the “Commure Tag”
Section 13 of Reseller Agreement
  • December 6: Canopy launches Canopy Protect, created with the same licensed technology along with several new features by Canopy that previously was distributed under the Strongline name Link
  • December  11: Commure launches Strongline “Pro”, built around the Commure Tag from the earlier FCC filings and a copy of other components from Canopy’s technology Link
    • Canopy did not authorize, nor was any of its technology involved in Strongline Pro.
    • Commure’s naming strategy around Strongline Pro has created confusion for customers and in the market.

2023

  • January 6: Commure fails to meet its payment obligations, again, leading Canopy to exercise its right under the Reseller Agreement to immediately terminate the license and launch Canopy Protect.
Section 13 of Reseller Agreement
  • January 21: 3-weeks after Canopy terminated the contract, Commure “reveals” alleged security vulnerability email to some or all Strongline customers regarding the very product it (Commure) had been selling for 2+ years.
    • Our agreement and standard practice consists of notifying the supplier first with an appropriate amount of time to respond.
    • Commure never once prior to January 21, 2024 advised Canopy it believed the Strongline product included any of the vulnerabilities it informed customers about.
    • In the “report” (which we received days later for the first time), the primary recommendation Commure offered was “Replace all badges and gateways to hardware/firmware that supports the above encrypted approach.”
  • January: Commure begins telling all existing customers that they should simply “upgrade” to Strongline Pro while not disclosing (to customers) that this new system will require all new hardware and staff badges
Language sent to all Strongline customer accounts describing Strongline Pro as an “upgrade”
  • January 22: Commure notifies Canopy about these purported security vulnerabilities
    • Canopy responded immediately within 24 hours.
    • Note: Zero customers paused their service, even temporarily.
  • February 1: Commure failed another payment obligation.
  • February 23: Commure CEO threatens former employees
  • ***May 2024: Nearly 6-months later, Commure files a lawsuit again for wrongful termination and additional claims related to the contract. There is no contention about Canopy’s intellectual property. Commure initiates commercial dispute with Canopy based on claims of contract interference, breach of contract and trademark claims related to how we described Strongline in our communications.
  • June 10: Canopy sends notification to Commure letting them know that there are over 8000 Strongline buttons in use that have a low or depleted battery requiring these badges to be replaced immediately.
  • June 24: Commure amends lawsuit filing to personally name Canopy co-founders in the suit.
Amended lawsuit  7 of Reseller Agreement
  • June - October: Settlement discussions:
    • Canopy offers to sell Commure buttons (at same price) with the stipulation that Commure drops legal actions against Canopy. Canopy also offers to eliminate any future legal action against Commure (including IP infringement)
    • Commure demands that Canopy also withdraw from all current customer conversations. Additionally, in the event that a Stongline customer wants to switch to Canopy, Commure attempts to mandate that Canopy must replace all hardware because Commure has placed stickers with their logos on the devices.
    • Note: According to the Reseller Agreement, all Strongline hardware is owned and operated by Canopy. Furthermore, adding stickers to the product is a violation of section xxxxx in the Reseller Agreement
Section 7 of Reseller Agreement
  • August: Commure files a motion for preliminary injunction against Canopy, that won’t be heard until January 2025, in an attempt to force the sale of additional buttons.
  • August - December: Commure sends subpoenas to each Strongline customer that talks with Canopy.
  • ***November: Commure removed injunction regarding buttons
  • November 2024: Because Commure can no longer purchase wearable safety buttons from Canopy, they (Commure) begin to provide customers with refurbished buttons that they themselves have replaced the batteries on.
    • Note: By refurbishing these buttons, Commure is knowingly violating the terms of the agreement with Canopy, potentially damaging the buttons, and ultimately placing thousands of healthcare workers at risk.
  • ***December: Canopy files counter claims…
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