Note 3 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Text Block]

Note 3 — Commitments and Contingencies

Leases

The Company has entered into a lease for office, warehouse and laboratory facilities in The Woodlands, Texas under a third party non-cancelable operating lease through April 30, 2016. Future minimum lease commitments as of March 31, 2013 are as follows:

Year Ending December 31
Nine months ending 2013	$	166,757
2014	206,267
2015	208,992
2016	76,294
2017	--
2018	--
Thereafter	--
Total	$	658,310

This lease provides the Company with a right to extend the lease term for two additional five year terms or one term of ten years, at the Company’s option.  

Litigation

On or around December 12, 2012, we were served with notice of two lawsuits filed by Conductive Inkjet Technology Limited (“CIT”) in the Patent Courts in the United Kingdom.  The two cases are respectively claim nos. HC12E02467 and HC12F02468 (the “UK Actions”).  The first action, which is case number HC12F02468, seeks relief for (1) breach of contract, (2) causing loss by unlawful means, and (3) breach of confidence.  The second action, which is case number HC12E02467, asserts that we included CIT’s confidential information in two PCT patent applications that we filed.  The UK Actions seek a finding that we violated a duty of confidence to CIT, an order that confidential materials be returned to CIT, an order that we change the inventorship on the two PCT applications to include CIT, an inquiry into damages, other forms of injunctive and declaratory relief, and the award of attorney fees and costs.  On January 3, 2013, we filed an Acknowledgement of Service with the court and indicated that we intended to contest the jurisdiction of the United Kingdom court over these matters. A hearing date on our contest of jurisdiction took place on April 22-23, 2013.  A decision on jurisdiction is expected in a few months.   

On January 18, 2013, we filed a verified petition and applications for temporary and permanent injunction against CIT in the 284th Judicial District in Montgomery County, Texas (the “Texas Action”).  The case was assigned cause number 13-01-00561.  In the Texas Action, we asked the court to provide the following relief: issue a preliminary ruling that Montgomery County, Texas is the exclusive venue for the UK Actions, issue a preliminary ruling that CIT violated the terms of an agreement with us by filing the UK Actions, enter a judgment that we did not violate any duty of confidentiality to CIT, enter a judgment against CIT for breach of contract and award additional relief as set forth in the verified petition, including costs, pre and post judgment interest, and attorney’s fees.  A hearing on the temporary injunction application had been set for January 31, 2013.

On January 25, 2013, CIT removed the Texas Action from state court to federal court in the Southern District of Texas based on CIT’s non-Texas resident status.  The case was assigned to Federal Judge Sim Lake.  On February 4, 2013, we filed a motion to remand the Texas Action back to state court.  On February 8, 2013, CIT filed a motion to dismiss the Texas Action followed on February 11, 2013 with a response to our motion to remand.  On February 14, 2013, we filed a reply to CIT's response to the motion to remand.  As of April 16, 2013, the motion to remand is pending.  A response to CIT’s motion to dismiss was filed on March 1, 2013.  As of April 16, 2013, CIT’s motion to dismiss is also pending.

We believe these allegations to be without merit and intend to vigorously defend this action.  The potential impact of this action, which seeks unspecified damages, attorneys’ fees and expenses, is uncertain.