XML 26 R16.htm IDEA: XBRL DOCUMENT v3.23.3
Commitments and Contingencies
9 Months Ended
Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 6. Commitments and Contingencies

For information on our commitments and contingencies, see Part II, Item 8 (Financial Statements and Supplementary Data, Note 11. Commitments and Contingencies) of our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to our commitments and contingencies as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, except for “Obligations with Third-Parties” and “Litigation” as discussed below.

Obligations with Third Parties

We manufacture products with third-party manufacturers. We are committed to purchase $30.9 million of inventory as of September 30, 2023.

Litigation

From time to time, we are subject to various legal proceedings or claims that arise in the ordinary course of business. We accrue a liability when management believes that it is both probable that we have incurred a liability and we can reasonably estimate the amount of loss. As of September 30, 2023 and December 31, 2022, we did not have accrued contingency liabilities. The following is a description of our significant legal proceedings. Although we believe that resolving these claims, individually or in aggregate, will not have a material adverse impact on our financial statements, these matters are subject to inherent uncertainties.

Patent Infringement Claims and Counterclaims

Impinj Patent Infringement Claims Against NXP in California

On June 6, 2019, we filed a patent infringement lawsuit against NXP USA, Inc., a Delaware corporation and subsidiary of NXP Semiconductors N.V., or NXP, in the U.S. District Court for the Northern District of California, or the Court. Our original complaint alleged that certain NXP endpoint ICs infringe 26 of our U.S. patents. At the order of the Court, we filed an amended complaint limited to eight of the original 26 patents. We subsequently elected to go forward with asserting infringement of six of those eight patents. We sought, among other things, past damages, including lost profits; no less than a reasonable royalty; enhanced damages for willful infringement; and reasonable attorneys’ fees and costs. We also sought an injunction against NXP making, selling, using, offering for sale or importing UCODE 8 and UCODE 9 ICs. NXP responded to our complaint on September 30, 2019 citing numerous defenses including denying infringement and claiming our asserted patents are invalid.

After various pre-trial motions, the Court narrowed the case to two patents—U.S. patent nos. 9,633,302 (the “’302 patent”) and 8,115,597 (the “’597 patent”). Before trial, the Court granted summary judgment of infringement on the ‘302 patent. The Court conducted a trial on those two patents beginning on July 5, 2023, and concluding on July 13, 2023. The issues on the ‘302 patent were validity, damages and willful infringement. The issues on the ‘597 patent were infringement, validity, damages and willful infringement.

On July 14, 2023, the jury returned a verdict in our favor finding that: (1) the asserted independent claims of the '302 patent had not been proven invalid, but two of the asserted dependent claims had been proven invalid; (2) NXP’s infringement of the asserted claims of the ‘302 patent was willful; (3) none of the asserted claims of the ‘597 patent were proven to be invalid; and (4) NXP infringed the asserted claims of the ‘597 patent. The jury awarded approximately $18.2 million and $18.4 million in damages for infringement of the ‘302 patent and the ’597 patent, respectively. The majority of these damages were for lost profits and are therefore overlapping.

On September 28, 2023, the Court granted NXP's post-trial motion for a new trial on the validity of the '302 patent based on the jury's inconsistent verdicts on the validity of independent and dependent claims for that patent. The Court also ruled that the damages awarded by the jury for both patents should be reduced by certain sales made to a distributor outside the United States. The Court directed the parties to meet and confer on the appropriate reduction of damages, and on October 20, 2023, the parties stipulated that the damages award for the infringement of the '597 patent should be $13.1 million. We recognize contingent gains in our financial statements upon resolution of all contingencies related to the award.

On October 3, 2023, the Court denied our motion for a permanent injunction. Having granted a new trial on the validity of the '302 patent, the denial was based only on the '597 patent. We have appealed the denial of the injunction to the Federal Circuit. We also anticipate moving for the imposition of a royalty given the denial of our injunction request.

NXP Patent Infringement Claims Against Impinj in Washington

On October 4, 2019, NXP USA, Inc. and NXP filed a patent infringement lawsuit against us in the U.S. District Court for the District of Delaware. The complaint alleged that certain of our products infringe eight U.S. patents owned by NXP or NXP USA, Inc. The plaintiffs sought, among other things, past damages adequate to compensate them for our alleged infringement of each of the patents-in-suit and reasonable attorneys’ fees and costs. They also sought an injunction against us. We denied we are infringing any of the patents and we have asserted both that our wafer supplier is licensed under four of them and that all eight are invalid. On

September 23, 2020, the District of Delaware granted Impinj’s motion to transfer the case to the U.S. District Court for the Western District of Washington in Seattle.

On December 11, 2020, we moved to stay the case with respect to six of the eight patents in suit pending final resolution of IPR petitions we filed with the PTAB. On February 12, 2021, the Court granted our motion to stay the case as to these six patents. The PTAB instituted IPRs on two of the six challenged patents but denied them on the other four. The Court subsequently removed the stay on the four against which IPRs were not instituted. The Court ultimately narrowed the case to seven patents.

Following the close of fact discovery, the parties each moved for summary judgment on various issues. The Court ultimately granted summary judgment of noninfringement to us on six of the seven patents, and the final patent went to a jury trial beginning on June 5, 2023. The jury found that we did not infringe the patent and a final judgment was entered in our favor. We moved for attorneys’ fees on July 12, 2023 but that motion was denied on August 31, 2023. NXP has appealed the judgment.

Impinj Patent Infringement Claims Against NXP in Texas

On May 25, 2021, we filed a new patent infringement lawsuit against NXP USA in the United States District Court for the Western District of Texas (Waco), asserting that NXP has infringed nine of our patents, including seven that we originally asserted in the Northern California case. We also later added NXP Semiconductor Netherlands B.V. as a defendant.

We are seeking among other things, past damages, including lost profits; no less than a reasonable royalty; enhanced damages for willful infringement; and reasonable attorney’s fees and costs. We are also seeking an injunction against NXP making, selling, using, offering for sale or importing its UCODE 7, 8 and 9 endpoint ICs.

On July 26, 2021, NXP filed an answer to our complaint and counterclaimed that we infringe nine patents, one of which NXP owns and eight of which NXP recently licensed from a third party. NXP has denied infringement, asserted our patents are invalid and asserted that some are unenforceable and/or subject to a license under our commitments to license “necessary” patents to certain standards.

A claim construction hearing was held on February 10, 2022 and fact discovery has closed. The Patent Office has instituted reexamination proceedings on five of the nine patents asserted by NXP and has issued a final office action rejecting all asserted claims on three of those patents.

The parties originally selected three patents each for the first trial scheduled to begin on October 30,2023. A Magistrate Judge decided various summary judgment and other pre-trial motions on October 12, 2023. The decisions did not impact the specific patents at issue in the first trial. NXP subsequently dropped one of their patents for the first trial, leaving two NXP patents for the trial.

NXP Patent Infringement Claims Against Impinj in China

On December 7, 2020, Impinj Radio Frequency Technology (Shanghai) Co., Ltd., or Impinj Shanghai, was served with patent infringement lawsuits filed in the Intellectual Property Court in Shanghai, China, or Shanghai Intellectual Property Court, in which NXP B.V. asserted that certain of our products infringe three Chinese patents owned by NXP B.V. These patents corresponded to three of the eight U.S. patents NXP asserted in the U.S. District Court in Washington. The plaintiffs sought, among other things, past damages and reasonable attorneys’ fees and costs. They also sought an injunction against us, enjoining continuing acts of infringement of the patents-in-suit. Impinj, Inc. was added to the suit in July 2021. In November 2022, Impinj filed with the Shanghai court motions to dismiss two patent cases on the basis that the patents were licensed to our supplier.

Two NXP patents ruled invalid: Impinj Shanghai filed invalidity requests against all three Chinese patents before the China National Intellectual Property Administration, or CNIPA, on December 22, 2020. CNIPA originally issued decisions upholding the validity of all three Chinese patents in July 2021. However, in October 2021, Impinj Shanghai filed with the Beijing Intellectual Property Court for judicial review of all of CNIPA’s validity decisions. The Beijing Intellectual Property Court upheld the validity for one of NXP’s Chinese patents in December 2022, but overturned the validity decisions for the other two patents in August 2023. Impinj appealed the Court’s validity finding in January 2023, and NXP appealed the invalidity findings in September 2023.

All lawsuits withdrawn by NXP: On September 13, 2023, NXP filed petitions with the Shanghai court to withdraw all the three cases without prejudice. The Shanghai court granted NXP’s petitions on September 27, 2023. With the withdrawal of all three lawsuits by NXP, all civil actions initiated by NXP against Impinj in China were concluded.