Item 1. Legal Proceedings
Item 1. Legal Proceedings.
We are regularly subject to claims, lawsuits, arbitration proceedings, administrative actions and other legal and regulatory proceedings involving commercial disputes, competition, intellectual property disputes and other matters, and we may become subject to additional types of claims, lawsuits, arbitration proceedings, administrative actions, government investigations and legal and regulatory proceedings in the future and as our business grows, including proceedings related to product liability or our acquisitions, securities issuances or our business practices, including public disclosures about our business. Our success depends in part on our non-infringement of the patents or proprietary rights of third parties. In the past, third parties have asserted and may in the future assert that we are employing their proprietary technology without authorization. We have been involved in multiple patent litigation matters and other proceedings in the past and we expect that given the litigious history of our industry and the high profile of operating as a public company, third parties may claim that our products infringe their intellectual property rights. We have also initiated litigation to defend our technology including technology developed through our significant investments in research and development. It is our general policy not to license our patents but to protect our sole right to own and practice them. There are inherent uncertainties in these legal matters, some of which are beyond management’s control, making the ultimate outcomes difficult to predict. Amongst other matters, we are currently or recently have been involved in the following litigation matters and other proceedings:
The 2021 Bio-Rad Settlement And Patent Cross License Agreement
We and Bio-Rad Laboratories, Inc. (“Bio-Rad”) were previously engaged in litigation and other proceedings relating to substantially all of our Chromium products, including our legacy GEM products and Next GEM products and multiple Bio-Rad products, in multiple jurisdictions and forums around the world (the "Bio-Rad Actions"). On July 26, 2021, we entered into a Settlement and Patent Cross License Agreement (the “Agreement”) with Bio-Rad resolving all outstanding litigation and other proceedings between the two companies across all jurisdictions around the world and dismissing all infringement claims with prejudice.
Pursuant to the terms of the Agreement, we and Bio-Rad granted each other a non-exclusive, worldwide, royalty-bearing license to develop products and services related to single cell analysis. The cross license excludes spatial and In Situ products. It also excludes digital PCR products in our case. The term of the Agreement is for the life of the licensed patents. We and Bio-Rad have agreed not to sue each other on licensed products and licensed services on other patents owned or exclusively licensed by each company. The companies have agreed that each company’s patents are owned by each respective company.
Each company shall pay to the other royalties from licensed products and licensed services through 2030. We previously accrued $44.8 million in royalties and interest between November 14, 2018 and March 31, 2021 related to sales of our GEM products as a result of the litigation with Bio-Rad. Pursuant to the Agreement, we shall pay Bio-Rad $29.4 million in royalties and interest related to the sales of such GEM products between November 14, 2018 and March 31, 2021. As a result, in connection with the Agreement we reversed $15.4 million in accrued royalties and interest to our financial statements in the second quarter of 2021.
The Nanostring Action
On May 6, 2021, we filed suit against Nanostring Technologies, Inc. ("Nanostring") in the U.S. District Court for the District of Delaware alleging that Nanostring's GeoMx Digital Spatial Profiler and associated instruments and reagents infringe U.S. Patent Nos. 10,472,669, 10,662,467, 10,961,566, 10,983,113, and 10,996,219. On May 19, 2021, we filed an amended complaint additionally alleging that the GeoMx products infringe U.S. Patent Nos. 11,001,878 and 11,008,607.
On July 1, 2021, Nanostring filed a motion to dismiss. Briefing is in progress and no hearing has been scheduled. Discovery has not yet commenced and no case schedule has been set.
For further discussion of the risks relating to intellectual property and our pending litigation, see the section titled “ Risk Factors—Risks related to litigation and our intellectual property ” under Item 1A below.
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