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Commitments and Contingencies
 9 Months Ended
Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Litigation
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
10x Genomics
On May 6, 2021, 10x Genomics, Inc. and Prognosys Biosciences, Inc. (“Prognosys”) filed a complaint, and on May 19, 2021, an amended complaint, and on May 4, 2022, a second amended complaint, against the Company in the U.S. District Court for the District of Delaware. The complaint, as amended, alleges that certain of the Company’s products, services and components sold by the Company for use in connection with its GeoMx system (the “Identified GeoMx Products”) infringe seven patents owned by Prognosys: (a) U.S. Patent No. 10,472,669, “Spatially encoded biological assays,” (b) U.S. Patent No. 10,961,566, “Spatially encoded biological assays,” (c) U.S. Patent No. 10,983,113, “Spatially encoded biological assays,” (d) U.S. Patent No. 10,996,219, “Spatially encoded biological assays,” (e) U.S. Patent No. 11,001,878, “Spatially encoded biological assays,” (f) U.S. Patent No. 11,008,607, “Spatially encoded biological assays,” and (g) U.S. Patent No. 11,293,917, “Systems for analyzing target biological molecules via sample imaging and delivery of probes to substrate well” (the “Asserted Prognosys Patents”). The complaint seeks, among other relief, injunctive relief and unspecified damages (including treble damages and attorneys’ fees) in relation to the Company’s making, using, selling, offering to sell, exporting and/or importing in the United States the Identified GeoMx Products, as well as the alleged infringement by others of the Asserted Prognosys Patents through their use of the Identified GeoMx Products. The Company has evaluated the plaintiffs’ claims and does not believe that its activities infringe any patent rights held by the plaintiffs and it intends to vigorously defend itself. On November 17, 2021, the Court granted the Company’s motion to dismiss the plaintiffs’ claims of pre-suit indirect infringement and willful infringement with leave to amend the complaint. A claim construction hearing was held on February 17, 2023. A trial is scheduled for November 13-17, 2023. The Company is unable to estimate a range of loss, if any, that could result should there be an adverse final decision in this case.
On February 28, 2022, 10x Genomics, Inc. and President and Fellows of Harvard College (“Harvard”) filed a complaint, and on May 12, 2022, an amended complaint, and on March 1, 2023, a second amended complaint, against the Company in the U.S. District Court for the District of Delaware (the “U.S. 10x CosMx Case”). The complaint, as amended, alleges that certain of the Company’s products, services and components sold by it for use in connection with its CosMx system (the “Identified CosMx Products”) infringe six patents owned by Harvard: (a) U.S. Patent No. 10,227,639, “Compositions and Methods for Analyte Detection,” (b) U.S. Patent No. 11,021,737, “Compositions and Methods for Analyte Detection,” (c) U.S. Patent No. 11,293,051, “Compositions and Methods for Analyte Detection,” (d) U.S. Patent No. 11,293,052, “Compositions and Methods for Analyte Detection,” (e) U.S. Patent No. 11,293,054, “Compositions and Methods for Analyte Detection,” and (f) U.S. Patent No. 11,542,554, “Method and Apparatus for Volumetric Imaging.” The complaint seeks, among other relief, injunctive relief and unspecified damages (including attorneys’ fees) in relation to the Company’s making, using, selling, offering to sell, exporting and/or importing in the United States the Identified CosMx Products. The Company has evaluated the plaintiffs’ claims and does not believe that its activities infringe any patent rights held by the plaintiffs and intends to vigorously defend itself. On July 10, 2023, the Delaware District Court granted the Company’s motion to add new counterclaims for antitrust and unfair competition violations as well as the affirmative defense of “unclean hands” by 10x Genomics and Harvard. The ruling relates to the Company’s claim that Harvard made a non-exclusive licensing commitment in order to secure grant funding from the National Institutes of Health for work that led to the patents at issue in the litigation. Discovery is in progress. A claim construction hearing is scheduled for December 2023 and a trial is scheduled for September-October 2024. The Company is unable to estimate a range of loss, if any, that could result should there be an adverse final decision in this case.
On May 9, 2022, the Company was notified of a complaint, dated March 4, 2022, naming the Company and its wholly-owned subsidiary, NanoString Technologies Germany GmbH, which 10x Genomics, Inc. filed in the Munich Regional Court I in Germany, alleging that the Company’s CosMx system and associated products and services infringe European Patent No. 2794928B1 (the “928 Patent”), which is owned by Harvard. The complaint seeks, among other relief, injunctive relief and damages in relation to the Company’s selling and offering to sell its CosMx system and associated products and services in Germany. The Company has evaluated the claims and does not believe that its activities infringe any patent rights held by 10x or Harvard and it intends to vigorously defend itself. On May 17, 2023, the Munich court found that the CosMx system, when used to detect RNA targets, infringes the 928 Patent. The Munich court granted 10x Genomics and Harvard the right to enforce an injunction against the sale and use of the CosMx instrument and reagents for RNA detection in Germany. The Company believes the Munich court came to an erroneous conclusion and is appealing the decision. The scope and impact of the Munich’s court’s decision is limited solely to Germany. In addition, the decision does not apply to the use of the CosMx instrument for detection of proteins. The Company is unable to estimate a range of loss, if any, that could result should there be an adverse final decision in this case.
On July 29, 2022, the Company, through its German subsidiary, filed a nullity action with the German Federal Patent Court in Munich requesting a judgment that the 928 Patent, as in effect for Germany, be declared invalid and be revoked in its entirety. On February 10, 2023, the German Federal Patent Court issued a preliminary and non-binding opinion in this nullity action finding that the subject matter of the asserted independent claim 1 of the 928 Patent potentially lacked novelty and potentially lacked an inventive step over prior art. The preliminary opinion further addressed Harvard’s seven patent claim limitation requests, referred to as auxiliary requests, which 10x and Harvard seek to have applied in the event that claim 1 of the
928 Patent, as granted, proves not to be protectable. The preliminary opinion stated that the claim limitations in Auxiliary Request 1 could potentially be used to defend the 928 Patent over the cited prior art. The preliminary opinion further stated that Harvard would potentially not be able to use Auxiliary Requests 2 through 7 to establish patentability over the prior art. A hearing before the German Federal Patent Court is scheduled for May 2024 and a decision in the nullity action is expected following the hearing.
On August 16, 2022, the Company filed counterclaims in the U.S. 10x CosMx Case alleging that 10x Genomics’ Visium Spatial Gene Expression system and related products and services infringe the Company’s U.S. Patent No. 11,377,689, “Chemical Compositions and Uses Thereof.” On January 24, 2023, these counterclaims were consolidated with the claims of a separate patent infringement case that the Company filed against 10x Genomics on October 20, 2022, as discussed below.
On October 20, 2022, the Company filed suit against 10x Genomics, Inc. in the U.S. District Court for the District of Delaware alleging that 10x Genomics’ Visium Spatial Gene Expression system and related products and services infringe the Company’s U.S. Patent No. 11,473,142, “Chemical Compositions and Uses Thereof.” On January 24, 2023, the Company’s counterclaims from the U.S. 10x CosMx Case with respect to U.S. Patent No. 11,377,689 were consolidated with the claims in this action. The Company seeks, among other relief, injunctive relief and unspecified damages (including attorneys’ fees) in relation to 10x Genomics’ making, using, selling, offering to sell, exporting and/or importing in the United States the Visium Spatial Gene Expression system and related products and services. Discovery is in progress. A trial in this consolidated case is scheduled for December 2024. On August 16, 2023 and September 25, 2023, 10x Genomics filed petitions for Inter Partes Review of the two patents asserted by the Company in this case.
On June 1, 2023, 10x Genomics and Harvard filed suits against the Company in the European Unified Patent Court, or UPC, alleging that the use and distribution of the Company’s CosMx products for RNA detection infringe the 928 Patent and European Patent No. 4108782B1 (the “782 Patent”). The Company does not believe that its activities infringe any patent rights held by 10x Genomics or Harvard and intends to vigorously defend itself. On July 18, 2023, the Company filed an opposition in the European Patent Office challenging the validity of the 782 Patent. No schedule has yet been set for this opposition. On July 27, 2023, the Company filed a revocation action with the UPC challenging the validity of the 928 Patent. A hearing is scheduled for April 2024 in connection with this revocation action. 10x Genomics sought preliminary injunctions against use of the CosMx instrument for RNA detection in the jurisdictions of the UPC in which the 928 Patent and 782 Patent are in effect. On September 19, 2023, the UPC granted a preliminary injunction with respect to the 782 Patent. The preliminary injunction prevents the Company from selling CosMx products for RNA detection in the 17 UPC member countries while the case awaits a full hearing on the merits. On October 10, 2023, the UPC denied 10x Genomics’ request for a preliminary injunction with respect to the 928 Patent. The Company is appealing the preliminary injunction decision with respect to the 782 Patent to the UPC Court of Appeal in Luxembourg. A hearing in Luxembourg has been scheduled for December 18, 2023. On August 31, 2023 and September 18, 2023, 10x Genomics filed main requests with the UPC, meaning requests for full hearings on the merits of the cases, not limited to preliminary relief, alleging that the Company’s CosMx products for RNA detection infringe the 782 Patent and the 928 Patent, respectively. Dates for these hearings have not yet been set.
As a result of the aforementioned injunctions that exist in certain European countries, the Company has recorded a charge of $1.7 million in estimated losses as of September 30, 2023. Beyond this amount, the Company is unable to estimate a range of additional loss, if any, that could result should there be an adverse final decision in this case.
Contingencies
Other than the pending litigations with 10x Genomics and its co-plaintiffs, the Company is not engaged in any material legal proceedings. The Company is involved in other legal proceedings from time to time arising in the normal course of business. Additionally, the Company operates in various states and local jurisdictions for which sales, occupation, or franchise taxes may be payable to certain taxing authorities. Management believes that the outcome of these proceedings and any amounts that may become payable to certain taxing authorities will not have a material impact on the Company’s financial condition, results of operations, or liquidity.