PITTSBURGH — When a pharmaceutical giant unexpectedly ended its partnership with a Pittsburgh biotech startup, forcing the company to close in 2023, the biotech hit back — and recently notched an early legal win in New York.

In April, ChemImage Corp., a Point Breeze advanced medical imaging company, filed a five-count lawsuit against Johnson & Johnson and subsidiary Ethicon Inc. for breach of contract, tortious interference with contracts and other claims in the U.S. District Court for the Southern District of New York, seeking over $1.5 billion in damages. In a ruling Monday, U.S. District Court Judge Jesse M. Furman reduced the amount ChemImage could claim without capping any potential award, while also allowing the lawsuit to continue.

“The court concludes that ChemImage pleads plausible claims against J & J, but that ChemImage’s damages are indeed limited, though not necessarily to $40 million,” the judge wrote.

The matchup has David and Goliath proportions.

J&J, a global research, development and manufacturer of health care products based in New Brunswick, New Jersey, had sought partial dismissal of the complaint and a cap on any award at $40 million. Founded in 2002, ChemImage pioneered software designed to help surgeons in the operating room and employed about 75 people before closing last year.

ChemImage and Ethicon inked a contract in 2019 to pair ChemImage’s evolving software with Ethicon’s robotic surgery hardware, which included meeting certain milestones in developing ChemImage’s AI-based light imaging technology.

ChemImage’s technology promised to identify tumors, giving surgeons night vision-type capabilities and the ability to distinguish between healthy and diseased tissue in real time, vastly improving surgical outcomes by eliminating the wait for biopsy or pathology reports.

In its lawsuit, ChemImage alleged that J & J reached out to ChemImage for a competitive advantage in the market for surgical robots, which Ethicon was developing. But then J & J’s corporate priorities shifted and its efforts to catch up in the market for surgical robotics fizzled with the layoff of 350 employees from its robotics program, according to ChemImage’s complaint.

In March 2023, ChemImage received a contract termination notice from Ethicon “falsely claiming that ChemImage had failed to meet a developmental milestone.” The end of the contract meant ChemImage losing a $40 million contract termination fee, $140 million in milestone payments and $1.5 billion or more in royalty payments, according to the lawsuit.

Alex Spiro, a partner at the New York law firm of Quinn Emmanuel Urquhart & Sullivan LLP, is representing ChemImage while Rachel B. Sherman, a partner at Patterson Belknap Webb & Tyler LLP in New York, is representing J & J.