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Item 3. Legal Proceedings

2023-03-30 compared with 2022-03-29 · 201 added, 132 removed, 8 unchanged (98% of the section changed)

Legal Proceedings

On October 13, 2021, the United States District

Court for the District of New Jersey consolidated into In re CorMedix Inc.

Securities Litigation , Case No.

2:21-cv014020-JXN-CLW,

two putative class action lawsuits filed on or about July 22, 2021 and September 13, 2021, respectively, and appointed lead counsel and

lead plaintiff, a purported stockholder.

The lead plaintiff filed a consolidated amended class action complaint on December 14, 2021,

alleging violations of Sections 10(b) and 20(a) of the Exchange Act, along with Rule 10b-5 promulgated thereunder, and Sections 11 and

15 of the Securities Act of 1933.

The complaint names as defendants the Company, Khoso Baluch, Matthew David, Phoebe Mounts, John L.

Robert Cook, Janet Dillione, Alan W.

Dunton, Myron Kaplan, Steven Lefkowitz, Paulo F.

Costa, and Greg Duncan, as well as two underwriters

of the Company’s secondary stock offering, B.

Riley Securities, Inc.

and Needham & Company, LLC.

The purported bases for these

claims are alleged misstatements and omissions in connection with the NDA submitted to the FDA for DefenCath, and the subsequent notification

by the FDA that the NDA could not be approved in its present form.

The lead plaintiff purports to assert the Exchange Act claims on behalf

of persons that purchased or otherwise acquired shares of our securities between October 16, 2019, and September 6, 2021, and purports

to assert the Securities Act claims on behalf of persons that purchased shares of our securities pursuant or traceable to a secondary

offering of stock that commenced on November 27, 2020.

We intend to vigorously contest such claims and filed a motion to dismiss the current

complaint in full, with prejudice, on February 21, 2022.

As of this filing, the current schedule set by the Court requires us and the

other defendants to refile their motion to dismiss on March 28, 2022, requires the lead plaintiff to file an opposition to our motion

to dismiss on or before April 27, 2022 and requires that we file a reply on or before May 27, 2022.

On or about October 13, 2021, a purported shareholder,

derivatively and on our behalf, filed a shareholder derivative complaint in the United States District Court for the District of New

Jersey, in a case entitled Voter v.

October 13, 2021, the United States District Court for the District of New Jersey consolidated into In re CorMedix Inc.

Litigation , Case No.

2:21-cv014020-JXN-CLW, two putative class action lawsuits filed on or about July 22, 2021 and September 13,

2021, respectively, and appointed lead counsel and lead plaintiff, a purported stockholder of the Company.

The lead plaintiff filed a

consolidated amended class action complaint on December 14, 2021, alleging violations of Sections 10(b) and 20(a) of the Exchange Act,

along with Rule 10b-5 promulgated thereunder, and Sections 11 and 15 of the Securities Act of 1933.

On October 10, 2022, the lead plaintiff

filed a second amended consolidated complaint that superseded the original complaints in In re CorMedix Securities Litigation.

the second amended complaint, the lead plaintiff seeks to represent two classes of shareholders:

(i) shareholders who purchased or otherwise

acquired CorMedix securities between October 16, 2019 and August 8, 2022, inclusive;

and (ii) shareholders who purchased CorMedix securities

pursuant or traceable to the Company’s November 27, 2020 offering pursuant to CorMedix’s Form S-3 Registration Statement,

its Prospectus Supplement, dated November 27, 2020, and its Prospectus Supplement, dated August 12, 2021.

The second amended complaint

names as defendants the Company and twelve (12) current and former directors and officers of CorMedix, namely Khoso Baluch, Robert Cook,

Matthew David, Phoebe Mounts, John L.

Armstrong, and Joseph Todisco (the “Officer Defendants” and collectively with CorMedix,

the “CorMedix Defendants”) as well as Janet Dillione, Myron Kaplan, Alan W.

Dunton, Steven Lefkowitz, Paulo F.

Duncan (the “Director Defendants”).

The second amended complaint alleges that the CorMedix Defendants violated Section 10(b)

of the Exchange Act (and Rule 10b-5), the Officer Defendants violated Section 20(a), the Director Defendants, CorMedix, Baluch, and David

violated Section 11 of the Securities Act, and that the Director Defendants, Baluch, and David violated Section 15.

In general, the purported

bases for these claims are allegedly false and misleading statements and omissions related to the NDA submissions to the FDA for DefenCath,

subsequent complete response letters, as well as communications from the FDA related and directed to the Company’s contract manufacturing

organization and heparin supplier.

The Company intends to vigorously contest such claims.

The Company and the other Defendants filed

their motion to dismiss the second amended complaint on November 23, 2022;

the lead plaintiff filed his opposition to the Defendants’

motions to dismiss on January 7, 2023;

and Defendants filed their reply brief on February 6, 2023.

or about October 13, 2021, a purported shareholder, derivatively and on behalf of the Company, filed a shareholder derivative complaint

in the United States District Court for the District of New Jersey, in a case entitled Voter v.

Baluch, et al.

2:21-cv-18493-JXN-LDW

The complaint names as defendants Khoso Baluch,

Janet Dillione, Alan W.

(the “Derivative Litigation”).

The complaint names as defendants Khoso Baluch, Janet Dillione, Alan W.

Dunton, Myron Kaplan,

Steven Lefkowitz, Paulo F.

Costa, Greg Duncan, Matthew David, and Phoebe Mounts along with the Company as Nominal Defendant.

complaint alleges breaches of fiduciary duties, abuse of control, and waste of corporate assets against the defendants and a claim for

contribution for purported violations of Sections 10(b) and 21D of the Exchange Act against certain defendants.

The individual defendants

intend to vigorously contest such claims.

On January 21, 2022, pursuant to a stipulation between the parties, the Court entered an order

staying the case while the motion to dismiss the class action lawsuit described in the foregoing paragraph is pending.

The stay may be

terminated before the motion to dismiss is resolved according to certain circumstances described in the stipulation available on the

Court’s public docket.

The case was administratively terminated on March 16, 2022 while the stay is pending.

or about January 13, 2023, another purported shareholder, derivatively and on behalf of the Company, filed a shareholder derivative complaint

in the United States District Court for the District of New Jersey, in a case entitled DeSalvo v.

Costa, et al.

2:23-cv-00150-JXN-CLW.

Defendants Paulo F.

Costa, Janet D.

Dillione, Greg Duncan, Alan Dunton, Myron Kaplan, Steven Lefkowitz, Joseph Todisco, Khoso Baluch,

Robert Cook, Matthew David, Phoebe Mounts, and John L.

Armstrong along with the Company as Nominal Defendant.

The complaint alleges breaches

of fiduciary duty and unjust enrichment against the individual defendants.

The individual defendants intend to vigorously contest such

The case is in the early stages.

or about January 25, 2023, another purported shareholder, derivatively and on behalf of the Company, filed a shareholder derivative complaint

in the United States District Court for the District of New Jersey, in a case entitled Scullion v.

Baluch, et al.

2:23-cv-00406-ES-ESK.

Defendants Khoso Baluch, Janet Dillione, Alan W.

Dunton, Myron Kaplan, Steven Lefkowitz, Paulo F.

Costa, Greg Duncan, Matthew David, and Phoebe Mounts, along

with us as Nominal Defendant.

The complaint alleges breaches of fiduciary duties, abuse of control, and waste of corporate assets

against the defendants and a claim for contribution for purported violations of Sections 10(b) and 21D of the Exchange Act against certain

We intend to vigorously contest such claims.

On January 21, 2022, pursuant to a stipulation between the parties, the Court

entered an order staying the case while the motion to dismiss the class action lawsuit described in the foregoing paragraph is pending.

The stay may be terminated before the motion to dismiss is resolved according to certain circumstances described in the stipulation available

on the Court’s public docket.

On September 9, 2014, we filed in the District

Court of Mannheim, Germany a patent infringement action against TauroPharm GmbH and Tauro-Implant GmbH as well as their respective CEOs,

referred to as the Defendants claiming infringement of our European Patent EP 1 814 562 B1, which was granted by the EPO on January 8,

2014, or the Prosl European Patent.

The Prosl European Patent covers a low dose heparin catheter lock solution for maintaining patency

and preventing infection in a hemodialysis catheter.

In this action, we claim that the Defendants infringe on the Prosl European Patent

by manufacturing and distributing catheter locking solutions to the extent they are covered by the claims of the Prosl European Patent.

We believe that our patent is sound and are seeking injunctive relief and raising claims for information, rendering of accounts, calling

back, destruction and damages.

Separately, TauroPharm has filed an opposition with the EPO against the Prosl European Patent alleging

that it lacks novelty and inventive step.

We cannot predict the ultimate outcome of either of these related matters.

At present, the

EPO has revoked the Prosl European Patent as invalid, and we have filed an appeal, which is currently pending.

In the same complaint against the same Defendants,

we also alleged an infringement (requesting the same remedies) of NDP’s utility model DE 20 2005 022 124 U1, referred to as the

Utility Model, which we believe is fundamentally identical to the Prosl European Patent in its main aspects and claims.

The Court separated

the two proceedings and the Prosl European Patent and the Utility Model claims were tried separately.

TauroPharm has filed a cancellation

action against the Utility Model before the German Patent and Trademark Office, or German PTO based on the similar arguments as those

in the opposition against the Prosl European Patent.

The Court issued its decisions on May 8, 2015,

staying both proceedings.

In its decisions, the Court found that the commercialization by TauroPharm in Germany of its TauroLock catheter

lock solutions Hep100 and Hep500 infringes both the Prosl European Patent and the Utility Model and further that there is no prior use

right that would allow TauroPharm to continue to make, use or sell its product in Germany.

However, the Court declined to issue an injunction

in favor of us that would preclude the continued commercialization by TauroPharm based upon its finding that there is a sufficient likelihood

that the EPO, in the case of the Prosl European Patent, or the German PTO, in the case of the Utility Model, may find that such patent

or utility model is invalid.

Specifically, the Court noted the possible publication of certain instructions for product use that may

be deemed to constitute prior art.

As such, the District Court determined that it will defer any consideration of the request by us for

injunctive and other relief until such time as the EPO or the German PTO made a final decision on the underlying validity of the Prosl

European Patent and the Utility Model.

The opposition proceeding against the Prosl European

Patent before the EPO is ongoing.

Oral proceedings before the Opposition Division at the EPO were held on November 25, 2015, at which

the three-judge patent examiner panel considered arguments related to the validity of the Prosl European Patent.

The hearing was adjourned

due to the fact that the panel was of the view that Claus Herdeis, one of the managing directors of TauroPharm, had to be heard as a

witness in a further hearing in order to close some gaps in the documentation presented by TauroPharm as regards the publication of prior

The German PTO held a hearing in the validity

proceedings relating to the Utility Model on June 29, 2016, at which the panel affirmed its preliminary finding that the Utility Model

was invalid based upon prior publication of a reference to the benefits that may be associated with adding heparin to a taurolidine based

Costa, Gregory Duncan, Matthew David,

and Phoebe Mounts, along with the Company as Nominal Defendant.

The complaint alleges breaches of fiduciary duties.

The individual defendants

intend to vigorously contest such claims.

The case is also in the early stages.

or about June 23, 2022, the Company’s Board received a letter demanding it investigate and pursue causes of action, purportedly

on behalf of Company, against certain current and former directors, officers, and/or other employees of the Company (the “Letter”),

which the Board believes are duplicative of the claims already asserted in the Derivative Litigation.

As set forth in the Board’s

response to the Letter, the Board will consider the Letter at an appropriate time, as circumstances warrant, as it continues to monitor

the progress of the Derivative Litigation.

September 9, 2014, we filed in the District Court of Mannheim, Germany a patent infringement action against TauroPharm GmbH and Tauro-Implant

GmbH as well as their respective CEOs, referred to as the Defendants claiming infringement of ND Partners, LLC’s European Patent

EP 1 814 562 B1, for which we have an exclusive license, and which was granted by the EPO on January 8, 2014 (the "Prosl European

The Prosl European Patent covers a low dose heparin catheter lock solution for maintaining patency and preventing infection

in a hemodialysis catheter.

In this action, we claim that the Defendants infringe on the Prosl European Patent by offering, putting on

the market, using, importing and possessing for the aforementioned purposes, as well as by offering to supply and supplying catheter

locking solutions to the extent they are covered by the claims of the Prosl European Patent.

We are seeking injunctive relief and raising

claims for information, rendering of accounts, calling back, destruction and determination of damages.

Separately, TauroPharm has filed

an opposition with the EPO against the Prosl European Patent alleging that it lacks novelty and inventive step and that it is not patentable

but relates to methods for treatment of the human body.

the same complaint against the same Defendants, we also alleged an infringement (requesting the same remedies, plus damages for costs

of a warning letter) of ND Partners, LLC’s utility model DE 20 2005 022 124 U1, for which we have an exclusive license, and which

is referred to as the "Utility Model", which we believe is fundamentally identical to the Prosl European Patent in its main

aspects and claims.

The Court separated the two proceedings and the Prosl European Patent (docket number 7 O 118/14) and the Utility

Model (docket number 7 O 2/15) claims were tried separately.

TauroPharm GmbH has filed a cancellation action against the Utility Model

before the German Patent and Trademark Office (the "German PTO") based on essentially the similar arguments as those in the

opposition against the Prosl European Patent.

District Court of Mannheim issued its decisions on May 8, 2015, staying both proceedings.

In its decisions, the Court found that the

TauroLock catheter lock solutions TauroLockHep100 and TauroLockHep500 infringe both certain claims of the Prosl European Patent and the

Utility Model and further that there is no prior use right that would allow the Defendants to continue to make, offer, use or sell its

product in Germany.

However, the Court declined to issue an injunction in favor of us that would preclude the continued commercialization

by TauroPharm and the other Defendants, based upon its finding that there is a sufficient likelihood that the EPO, in the case of the

Prosl European Patent, or the German PTO, in the case of the Utility Model, may find that such patent or utility model is invalid.

Specifically,

the Court noted the possible publication of certain instructions for product use that may be deemed to constitute prior art.

the District Court determined that it will defer any consideration of the request by us for injunctive and other relief until such time

as the EPO or the German PTO made a final decision on the underlying validity of the Prosl European Patent and the Utility Model.

proceedings before the Opposition Division at the EPO were held on November 25, 2015, at which the three-judge patent examiner panel

considered arguments related to the validity of the Prosl European Patent.

The hearing was adjourned due to the fact that the panel was

of the view that Claus Herdeis, one of the managing directors of TauroPharm, had to be heard as a witness in a further hearing in order

to close some gaps in the documentation presented by TauroPharm as regards the publication of prior art.

German PTO held a hearing in the validity proceedings relating to the Utility Model on June 29, 2016, at which the panel affirmed its

preliminary finding that the Utility Model was invalid based upon prior publication of a reference to the benefits that may be associated

with adding heparin to a taurolidine based solution.

We filed an appeal against the ruling on September 7, 2016.

An oral hearing was held on September 17, 2019 in which the German

Federal Patent Court affirmed the first instance decision that the Utility Model was invalid.

The decision has only a declaratory effect,

as the Utility Model had expired in November 2015.

On April 28, 2020, we filed a withdrawal of the complaint on the German utility model,

thereby waiving our claims on these proceedings.

On November 22, 2017, the EPO in Munich, Germany

held a further oral hearing in this matter.

At the hearing, the panel held that the Prosl European Patent would be invalidated because

it did not meet the requirements of novelty based on a technical aspect of the European intellectual property law.

We disagree with this

decision and have appealed the decision.

We continue to believe that the Prosl European Patent is indeed novel and that its validity

should be maintained.

There can be no assurance that we will prevail in this matter.

On January 16, 2015, we filed a complaint against

TauroPharm GmbH and its managing directors in the District Court of Cologne, Germany.

In the complaint, we allege violation of the German

Unfair Competition Act by TauroPharm and that TauroPharm is improperly and unfairly using our proprietary information relating to the

composition and manufacture of Neutrolin, in the manufacture and sale of TauroPharm’s products TauroLockTM, TauroLock-HEP100 and

TauroLock-HEP500.

We sought a cease and desist order against TauroPharm from continuing to manufacture and sell any product containing

An oral hearing was

held on September 17, 2019 in which the German Federal Patent Court affirmed the first instance decision that the Utility Model was invalid.

The decision has only a declaratory effect, as the Utility Model had expired in November 2015.

On April 28, 2020, we filed a withdrawal

of the complaint on the German utility model, thereby waiving our claims on these proceedings.

The proceedings were closed and during

the year ended December 31, 2020, final reimbursement of approximately $30,000 for the costs in connection with the utility model infringement

were paid to TauroPharm .

November 22, 2017, the EPO in Munich, Germany held a further oral hearing in this matter.

At the hearing, the panel held that the Prosl

European Patent would be invalidated because it did not meet the requirements of novelty based on a technical aspect of the European

intellectual property law.

We disagree with this decision and have appealed the decision.

In a hearing on October 27, 2022 before the

EPO Board of Appeals, the Board held that the patent claims of the Prosl European Patent on file were not inventive over prior art presented

by TauroPharm.

We thus withdrew our appeal against the first instance decision.

This means that the invalidation of the patent has become

final and that, as a consequence, the infringement proceedings, which are formally still ongoing, will also be closed because there is

no underlying patent anymore.

In view of the invalidation of the Prosl European Patent, on November 9, 2022, the Defendants requested

the infringement proceedings (docket number 7 O 118/14) to be resumed and to dismiss our infringement action.

to avoid a dismissal, on January 12, 2023, we withdrew the infringement action with prejudice.

The Defendants consented to the withdrawal

on February 2, 2023 and requested that we, as plaintiff, bear the costs of the proceedings.

Given that pursuant to statutory law, a plaintiff

that withdraws an action, has to bear the costs of the proceedings, we put the decision on who has to bear the costs in the District

Court of Mannheim’s discretion.

Due to the withdrawal, there will be no decision on the merits, however, the District Court of

Mannheim will issue a decision that we have to bear the cost of the proceedings.

Given that the court fees have already been paid by

us, the cost of the proceedings are the costs that will have to be reimbursed to the Defendants, i.e., mainly statutory attorney's fees

and expenses.

January 16, 2015, we filed a complaint against TauroPharm GmbH and its managing directors in the District Court of Cologne, Germany.

In the complaint, we allege violation of the German Unfair Competition Act by TauroPharm for the unauthorized use of our proprietary

information obtained in confidence by TauroPharm.

We allege that TauroPharm is improperly and unfairly using our proprietary information

relating to the composition and manufacture of Neutrolin, in the manufacture and sale of TauroPharm’s products TauroLockTM, TauroLock-HEP100

and TauroLock-HEP500.

We seek a cease and desist order against TauroPharm from continuing to manufacture and sell any product containing

taurolidine (the API of Neutrolin) and citric acid in addition to possible other components, damages for any sales in the past and the

removal of all such products from the market.

Hearings in this matter were held in the District Court of Cologne, Germany on November

19, 2015, on November 15, 2016 and on November 20, 2018.

A decision was rendered by the Court on December 11, 2018, dismissing the complaint

in its entirety.

We appealed in January 2019.

An oral hearing was held on September 6, 2019.

In view of new arguments brought forward

in this hearing, the Court issued an evidentiary order on September 27, 2019 ordering an expert opinion.

The expert opinion was not in

In a supplementary expert opinion submitted after we had brought forward arguments against the first expert opinion, the expert

confirmed his view.

In an oral hearing held on June 18, 2021, the Court only heard from the expert, and the Court as well as both parties

asked further questions to the expert around his expert opinion.

At the end of the hearing and internal deliberation among the panel of

judges, the Court indicated that it would dismiss our complaint if we did not withdraw the appeal.

As there were no advantages to further

pursuing the matter in view of the Court’s statements, we withdrew the appeal and the proceedings are therefore now closed.

requested an increase of the value in dispute determined by the Court in order to receive a higher reimbursement of costs (as this is

based on the value in dispute under German law) but the request was rejected in view of arguments brought forward against it by our legal

We will have to reimburse costs in the amount of approximately $41,000 plus interest to TauroPharm.

An initial hearing in the District Court of Cologne, Germany was held on November 19, 2015

to consider our claims.

On January 14, 2016, the Court issued an interim decision in the form of a court order outlining several issues

of concern that relate primarily to the court's interest in clarifying the facts and reviewing any and all available documentation, in

particular with regard to the question which specific know-how was provided to TauroPharm by whom and when.

A further oral hearing in

this matter was held on November 15, 2016.

In this hearing, the Court heard arguments from CorMedix and TauroPharm concerning the allegations

of unfair competition.

On March 7, 2017, the Court issued another interim decision in the form of a court order outlining again several

issues relating to the argumentation of both sides in the proceedings.

Both parties have submitted further writs in this matter and the

Court had scheduled a further hearing for May 8, 2018.

After having been rescheduled several times, the hearing took place on November

A decision was rendered by the Court on December 11, 2018, dismissing the complaint in its entirety.

We have appealed this

decision in January 2019 and filed our grounds of appeal in March 2019.

An oral hearing was held on September 6, 2019 in which our legal

counsel brought forward further arguments for the fact that the manufacturing process of the respective catheter locking solution is

indeed protectable as a trade secret.

In view of these new arguments, the Court issued an evidentiary order on September 27, 2019 ordering

an expert opinion.

The expert opinion was not in our favor, but we have filed a response to the expert opinion in reaction to which the

Court asked the expert to supplement his opinion to address the issues brought forward in our submission.

In the supplementary expert

opinion, the expert confirmed his view.

In an oral hearing held on June 18, 2021, the Court only heard from the expert, and the Court,

as well as both parties, asked further questions to the expert around his expert opinion.

At the end of the hearing and internal deliberation

among the panel of judges, the Court indicated that it would dismiss our complaint, if we did not withdraw the appeal.

As there were

no advantages to further pursuing the matter in view of the Court’s statements, we withdrew the appeal and the proceedings are

therefore now closed.

TauroPharm requested an increase of the value in dispute determined by the Court in order to receive a higher reimbursement

of costs (as this is based on the value in dispute under German law) but the request was rejected in view of arguments brought forward

against it by our legal counsel.

We reimbursed costs in the amount of approximately $41,000 plus interest to TauroPharm.

Mine Safety Disclosures

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings