Risks related to our intellectual property
One of ArcherDXs competitors has alleged that its Anchored Multiplex PCR, or AMP, chemistry and products using AMP are infringing on its intellectual property, and ArcherDX may be required to redesign
the technology, obtain a license, cease using the AMP chemistry altogether and/or pay significant damages, among other consequences, any of which would have a material adverse effect on ArcherDXs business as well as our financial condition and
results of operations, and the intended benefits of our recently completed acquisition of ArcherDX.
ArcherDXs AMP chemistry underlies all
of its RUO products and is also the foundation of STRATAFIDE and Personalized Cancer Monitoring, or PCM. On January 27, 2020, one of ArcherDXs competitors, Natera, Inc., or Natera, filed a complaint against ArcherDX in the United States
District Court for the District of Delaware, alleging that ArcherDXs products using AMP chemistry, and the manufacture, use, sale, and offer for sale of such products, infringe U.S. Patent No. 10,538,814. On April 15, 2020, Natera
amended its complaint to allege that ArcherDXs products using AMP chemistry and the manufacture, use, sale, and offer for sale of such products, infringe U.S. Patent No. 10,538,814, U.S. Patent No. 10,557,172, U.S. Patent
No. 10,590,482, and U.S. Patent No. 10,597,708, each of which are held by Natera. On August 6, 2020, Natera filed another complaint against ArcherDX in the United States District Court for the District of Delaware alleging that
ArcherDXs products using AMP chemistry, and the manufacture, use, sale, and offer for sale of such products, infringe U.S. Patent No. 10,731,220 (together with U.S. Patent Nos. 10,538,814, 10,557,172, 10,590,482, and 10,597,708, the
Natera Asserted Patents.) Natera seeks, among other things, damages and other monetary relief, costs and attorneys fees, and an order enjoining ArcherDX from further infringement of The Natera Asserted Patents. The litigations have
now been consolidated for all purposes, are ongoing, and trial has been scheduled for May 2022.
If any of ArcherDXs products or ArcherDXs
use of AMP chemistry is found to infringe any of the Natera Asserted Patents, it could be required to redesign its technology or obtain a license from Natera to continue developing, manufacturing, marketing, selling and commercializing AMP and its
products. However, ArcherDX may not be successful in the redesign of its technology or able to obtain any such license on commercially reasonable terms or at all. Even if ArcherDX were able to obtain a license, it could be non-exclusive, thereby giving Natera and other third parties the right to use the same technologies licensed to ArcherDX, and it could require ArcherDX to make substantial licensing, royalty and other payments.
ArcherDX also could be forced, including by court order, to permanently cease developing, manufacturing, marketing and commercializing ArcherDXs products that are found to be infringing. In addition, ArcherDX could be found liable for
significant monetary damages, including treble damages and attorneys fees, if ArcherDX is found to have willfully infringed any of the Natera Asserted Patents. Even if ArcherDX were ultimately to prevail, litigation with Natera could require
us to divert substantial financial and management resources that we would otherwise be able to devote to our business.
We cannot reasonably estimate the
final outcome, including any potential liability or any range of potential future charges associated with these litigations. However, any finding of infringement by ArcherDX of any of the Natera Asserted Patents could have a material adverse effect
on the business of ArcherDX and the benefits we expected to achieve through our acquisition of ArcherDX, as well as our financial condition and results of operations.
Litigation or other proceedings or third-party claims of intellectual property infringement or misappropriation will require us to spend significant time and money, and could in the future prevent us from
selling our tests or impact our stock price.
Our commercial success will depend in part on our avoiding infringement of patents and proprietary
rights of third parties, including for example the intellectual property rights of competitors. As we continue to commercialize our tests in their current or an updated form, launch different and expanded tests, and enter
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