Third parties may assert that we are
infringing their intellectual property rights.
Successfully commercializing our products will
depend in part on not infringing patents held by third parties.
It is possible that one or more of our products, including those
that we have developed in conjunction with third parties,
infringes existing patents. We may also be liable for patent
infringement by third parties whose products we use or combine
with our own and for which we have no right to indemnification.
In addition, because patent applications are maintained under
conditions of confidentiality and can take many years to issue,
there may be applications now pending of which we are unaware
and which may later result in issued patents that our products
infringe. Whether a product infringes a patent involves complex
legal and factual issues and may not become clear until finally
determined by a court in litigation. Our competitors may assert
that our products infringe patents held by them. Moreover, as
the number of competitors in our market grows, the possibility
of a patent infringement claim against us increases. If we were
not successful in obtaining a license or redesigning our
products, we could be subject to litigation. If we lose in this
kind of litigation, a court could require us to pay substantial
damages or prohibit us from using technologies essential to our
products covered by third-party patents. An inability to use
technologies essential to our products would have a material
adverse effect on our financial condition, results of operations
and cash flow and could undermine our ability to continue
operating as a going concern.
Expensive intellectual property litigation is
frequent in the medical device industry.
Infringement actions, validity challenges and
other intellectual property claims and proceedings, whether with
or without merit, can be expensive and time-consuming and would
divert managements attention from our business. We have
incurred, and expect to continue to incur, substantial costs in
obtaining patents and may have to incur substantial costs
defending our proprietary rights. Incurring such costs could
have a material adverse effect on our financial condition,
results of operations and cash flow.
We may not be able to obtain all the licenses
from third parties necessary for the development of new
As we develop additional disposable
interventional devices for use with our system, we may find it
advisable or necessary to seek licenses from third parties who
hold patents covering technology used in specific interventional
procedures. If we cannot obtain those licenses, we could be
forced to try to design around those patents at additional cost
or abandon the product altogether, which could adversely affect
revenues and results of operations. If we have to abandon a
product, our ability to develop and grow our business in new
directions and markets would be adversely affected.
Our products and related technologies can be
applied in different industries, and we may fail to focus on the
most profitable areas.
The Stereotaxis System is designed to have the
potential for expanded applications beyond interventional
cardiology and electrophysiology, including interventional
neurosurgery, interventional neuroradiology, peripheral
vascular, pulmonology, urology, gynecology and gastrointestinal
medicine. However, we have limited financial and managerial
resources and therefore may be required to focus on products in
selected industries and to forego efforts with regard to other
products and industries. Our decisions may not produce viable
commercial products and may divert our resources from more
profitable market opportunities. Moreover, we may devote
resources to developing products in these additional areas but
may be unable to justify the value proposition or otherwise
develop a commercial market for products we develop in these
areas, if any. In that case, the return on investment in these
additional areas may be limited, which could negatively affect
our results of operations.