CLEARONE INC 10-Q

Item 1. LEGAL PROCEEDINGS The Company is involved in litigation against Shure Incorporated (“Shure”) as further described in Part I, Item 3 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual Report”), which information is incorporated herein by reference. The following recent developments amend and supplement the disclosure of the ongoing litigation proceedings against Shure as at November 12, 2021 as follows: Shure, Incorporated v. ClearOne, Inc., 17-cv-3078 (N.D. of Illinois) Shure and ClearOne completed supplemental briefing before the district court relating to the Court’s ruling holding Shure in contempt. The Court has not yet issued a ruling on the supplemental briefing. On July 21, 2021, the Federal Circuit dismissed Shure’s appeal of the Court’s ruling holding Shure in contempt. ClearOne, Inc. v. Shure, Incorporated, 19-cv-02421 (N.D. of Illinois) On July 21, 2020, ClearOne informed the Court that it would proceed with its advertising-related claims in Delaware rather than Illinois. ClearOne thus filed a Second Amended Complaint removing the prospective economic advantage and trade libel claims. In July 2021, the parties completed briefing on Shure’s early motion to obtain summary judgment and dismissal of ClearOne’s trade secret misappropriation claims. The parties’ claim construction briefing is still pending. Shure, Incorporated v. ClearOne, Inc., 19-cv-1343 (D. of Delaware) On November 1, 2021, a jury trial commenced in the U.S. District Court for the District of Delaware on Shure’s claim of infringement the sole claim of U.S. Patent No. D865,723 (the “’723 patent”). On the third day of trial, November 3, 2021, a jury returned a verdict in favor of ClearOne on all issues. The jury found that ClearOne had not infringed the ’723 patent and that the ’723 patent was invalid. Shortly before trial, Shure dropped its business tort claims against ClearOne, and ClearOne has asked the Court to dismiss Shure’s now withdrawn business tort claims with prejudice. That request is still pending. The Court also severed ClearOne’s business tort claims from the trial of Shure’s ’723 patent infringement claims, and the parties are waiting for the Court to schedule a trial on ClearOne’s business tort claims. Shure’s claim of infringement of U.S Patent No. 9,565,493 is stayed pending ClearOne’s appeal to the U.S. Court of Appeals for the Federal Circuit of the U.S. Patent and Trademark Office’s decision regarding the patentability of several amended claims of that patent in an inter partes review proceeding. That appeal is fully briefed. Item 1A. RISK FACTORS None. Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS (a) None. (b) Not applicable. (c) None. Item 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. Item 4. MINE SAFETY DISCLOSURES Not applicable.