Athelas
$6 billion healthcare startup Commure has been ordered to stop making one of its most historically successful products in a legal face-off with the tech’s creators.
Commure, the startup cofounded by General Catalyst CEO Hemant Taneja and incubated by the VC firm, has been embroiled in legal turmoil for over a year with the makers of its former workplace safety tech, Strongline.
Canopy Works created the technology behind Strongline, a wearable panic button for hospital staff that was once Commure’s best-selling product. Canopy severed its ties with Commure in 2023, after which Commure released an “upgrade” to Strongline called Strongline Pro.
Canopy alleged in a lawsuit against Commure in the Northern District of California that Commure’s Strongline Pro was a derivative of Canopy’s Strongline, which violated the companies’ contract. Now, a federal district court has sided with Canopy and ordered Commure to stop selling Strongline Pro.
The court’s preliminary injunction, filed on April 25 in the Northern District of California and made public Friday afternoon, prohibits Commure from distributing or marketing Strongline Pro to new customers, at least while the underlying breach of contract case proceeds.
It’s a big win for Canopy, which says it’s lost business as hospital customers “upgrade” from Canopy’s Strongline to Commure’s Strongline Pro. Strongline’s business was Commure’s sole growing revenue source at the time of its $6 billion merger with fellow General Catalyst portfolio company Athelas, as Business Insider reported in September. It’s unclear how much revenue Strongline Pro now contributes to Commure or how much that revenue could be affected by the court order.
“This injunction validates the years of dedicated R&D and significant investment Canopy has poured into its unique healthcare safety platform,” A Canopy spokesperson said in a statement to BI. “This ruling provides certainty for our customers, confirming they are partnered with the creator of this technology and can trust the integrity and performance of the Canopy system safeguarding their employees.”
Commure has asked the court to delay the injunction’s enforcement. In a statement to BI, Commure SVP and General Manager Dan Warner said he expects the Ninth Circuit Court of Appeals to overturn the injunction, adding that “the law and facts are firmly on Commure’s side,” and that Commure developed Strongline Pro entirely in-house.
For its part, Commure has expanded well beyond its workplace safety product in the past year. The startup has signaled its intentions to dig deeper into healthcare AI following its acquisition of revenue cycle management company Athelas, buying ambient scribing company Augmedix in July 2024 for $139 million in cash, and scooping up another General Catalyst portfolio company, AI-powered care coordination platform Memora Health, in December.
General Catalyst is also closing a deal to buy Akron, Ohio-based health system Summa Health. The firm has said it plans to integrate healthcare technology into the hospitals’ operations, an endeavor that would likely include Commure’s tech.
Commure’s battle with Canopy
Commure and Canopy created their first agreement to make Commure a reseller of Canopy’s technology in 2019.
In 2022, Commure bought the rights to white-label and sell Strongline’s wearable panic buttons for hospital staff. Canopy Works, then known as SMP Labs, remained a separate company and retained ownership of the intellectual property.
Tensions quickly escalated after the acquisition. In late 2022, Commure sued Canopy when the company tried to terminate its partnership with Commure. Canopy had cited delayed payments as a reason for breaking away from the startup.
That lawsuit was dismissed and later settled, but the damage was done. By December 2023, Canopy spun out for good as a new company to sell its safety technology directly to health systems.
Commure moved quickly to rebuild its workplace safety business, launching Strongline Pro just days after Canopy’s debut. Commure positioned Strongline Pro as a successor to the original Strongline product, although filings with federal regulators showed substantial similarities between the two devices, per BI’s September reporting.
Commure holds that “Strongline Pro was developed independently by Commure without using any information from Canopy,” per the Friday injunction.
After Canopy’s exodus, Commure filed a lawsuit against Canopy in April 2024, alleging that Commure had contributed to the development of Strongline’s original concept and that Canopy had violated its contractual obligations to provide its tech to Commure through the end of the year. Commure also raised concerns about alleged security vulnerabilities in Canopy’s technology.
As ordered in the injunction, existing Strongline Pro customers can continue to use Strongline Pro, but Commure cannot upgrade those systems or contract with new Strongline Pro customers.
In his statement to BI, Commure’s Warner also referenced a prior civil decision in which he said a judge ruled that a Canopy employee, who previously worked at Commure, had misappropriated Commure’s confidential information for Canopy’s benefit. Warner said the ruling “confirms that Commure, not Canopy, is the party harmed in this dispute.” BI could not independently review the filing as it has not been made public.
A Canopy spokesperson said in response that the arbitration was a separate issue with one of Commure’s former employees that is “completely unrelated to the ongoing litigation with Canopy.”
The post $6 billion Commure was just ordered to stop selling a hot healthtech product in its latest legal challenge appeared first on Business Insider.
