Firm returns from the grave a profit.

• Author: Richter, Chris
• Position: TAR HEEL TATTLER

Imagine Perry Mason confronting a wife who has bumped off her husband for the insurance money. "He was worth more to you dead than alive, wasn't he?" Durham's Volumetrics Medical Imaging Inc. is like that. It was buried in February 2001, but thanks to a lawsuit, it's worth more than ever.

Volumetrics was spun out of Duke University in 1992 to find commercial uses for ultrasound technology. "It was 3-D ultrasound, which was unheard of at the time," says Jim Newton, an administrator at Chapel Hill-based Tri-State Investment Group, which began pumping money into the venture in 1995.

By 1999, Volumetrics was looking for a partner or buyer. ATL Ultrasound--part of Dutch conglomerate Royal Philips Electronics--seemed the most promising. Volumetrics officials later would claim that ATL offered in February 2000 to buy it for about $120 million. ATL also suggested that the two companies work on a joint product.

Volumetrics says ATL, which had signed an agreement not to disclose Volumetrics' secrets, began negotiating with one of its competitors, Palo Alto, Calif.-based Agilent Technologies. Even though ATL assured Volumetrics that it was still interested in being its partner, Philips bought Agilent's ultrasound division for $1.7 billion in November 2000.

In January 2001, ATL told Volumetrics that their relationship was over...