How I Did It: Raymond Damadian
Raymond Damadian changed the face of medicine in 1977 with the world's first MRI device. His technology has since helped millions, even as Damadian developed a reputation in the medical and business worlds as a battler. He founded his company, Fonar, to manufacture his own MRI machines, then spent the next 20 years engaging much larger rivals in a series of patent infringement suits. In 1997, Fonar won a $128 million judgment against General Electric. His $30 million company has managed to introduce new products over the years, though it remains a David in a multibillion-dollar industry full of Goliaths.
I was born in New York City and spent my childhood in Forest Hills, Queens. My father was a photoengraver for the New York World-Telegram. I went to public school, but on weekends I studied violin at Juilliard. When I was 15, I won a full scholarship to the University of Wisconsin from the Ford Foundation and had to give up Juilliard. It was OK. I was no Itzhak Perlman.
I got my medical degree at Albert Einstein College of Medicine in the Bronx and took a faculty position at SUNY Downstate Medical Center in Brooklyn. I was studying how potassium and sodium generate electric voltages in the human body. I got a call from a doctor who wanted to measure potassium in bacteria. He asked me to join him. This was in 1969. I had grown some bacteria, and we put it in a nuclear magnetic resonance machine, a tool chemists had been using for years. In an instant, we got a signal and measured the rate of decay of the potassium. I was stunned. That measurement would have taken me days in the laboratory.
I thought, If we could do on a human what we just did on that test tube, maybe we could build a scanner that would go over the body to hunt down cancer. It was kind of preposterous. But I had hope.
The breakthrough was in 1970, when my research on lab rats proved scanning for cancer tissue was feasible. The journal Science published our findings, and that led to a grant from the National Cancer Institute. We started construction on the first MRI, which we called Indomitable. I had two postdoctoral fellows, Larry Minkoff and Michael Goldsmith, who helped me build it.
The original antenna was 14 inches in diameter; I could just barely get into it. I had a cardiologist and emergency shock paddles on hand, in case something went wrong. I got in the scanner, and we didn't get any signal. It was a profound disappointment. We hypothesized that the scan failed because, frankly, I was just too fat for the coil.
It took some convincing, but Larry Minkoff, who was very skinny, finally agreed to get in. To our great excitement, we got a signal right away. We had achieved the world's first human scan. We were ecstatic. That was July 3, 1977.
Right away, I started getting phone calls from big companies. I don't think I was being naive. They all came to see the machine, and I was glad to have them. The question was whether or not they would make an offer of some kind that would work. I wanted to be in a leadership position. We had started this from scratch, and I didn't want to just sell.
I decided to start my own company. My brother-in-law had a number of well-established friends, and I reached out to a friend I grew up with in Forest Hills whose brother had a successful business. We raised about $2 million.
Fonar was incorporated in 1978, and I became the CEO. In 1980, we engineered and built the world's first commercial scanner, which we called the QED 80. We had our patents, and we were relying on them, but people said to me, "You're nuts. You're going up against the biggest corporations in the world; they're going to eat you alive." And they did. Johnson & Johnson began work on its scanner in 1979, and the rest followed soon after. It was very painful.
We didn't have any choice; we had to go to the courts. We were getting snuffed out. In 1985, we brought an action against J&J. After a two-month trial, the jury had given us a favorable verdict, but the judge reversed it. It then went up to the appellate court, which upheld the judge's ruling. It's really strange when you're an inventor and your whole destiny hangs on a judge's decision.
We continued to sell to hospitals and clinics, but when you're competing against GE and Siemens, it gets very tough. Our customers probably weren't excited to spend $1.5 million to buy a machine from us when they weren't sure if we were going to be here in a year.
We were suffering until around 1990, when my son, who had just joined the business after college, read a news story about a major patent fight that Honeywell had won against Minolta for its invention of the autofocus lens. He contacted Honeywell, which put him in touch with its lawyers. We didn't have 10 cents for legal representation, so the only way this would get done was if they took the case on full contingency. At the end of four months, after looking through every single document we had, they agreed to take our case. They wanted to go after GE.
There were two patents involved in the GE case. The first was my original patent, and the second was a new technique we developed for imaging the spine. While we were awaiting the outcome of the trial, another executive and I had been invited to Washington, D.C., to make a presentation to the Air Force, which was considering buying one of our machines. Right in the middle of our presentation, we got a message from our lawyers. The verdict was in—we won on all patents on all counts. We started screaming and dancing like a couple of lunatics. The generals didn't know what was going on.
That was 1995. I got a phone call from Jack Welch asking for a meeting. We went to 30 Rockefeller Plaza, and he offered us a check for $80 million, right then and there, for the second patent. He didn't agree with the ruling on the first patent. If we didn't accept, GE would petition the court of appeals to overrule the entire decision. I said, "With all due respect, Mr. Welch, the first patent is the one that is closest and dearest to my soul. I can't walk away from it." My attorneys were dying. Remember, they were working on contingency.
GE petitioned the court of appeals. We waited several months, and the decision came back unanimously in our favor. The judgment was for $128 million. The court made it clear—pay Fonar, and pay now. Even before the GE ruling, Hitachi and Siemens settled with us out of court.
In 2001, we came out with the only upright MRI machine, for more accurate scanning of the neck and spine. Thankfully, we are the only ones in the industry who make it. We've got over 140 machines out there now in worldwide distribution. I think our outlook is fantastic.