This excerpt taken from the EYE 8-K filed Jul 13, 2005.
Reliance on Patents and Proprietary Technology
VISX owns over 200 United States and foreign patents and has more than 200 patent applications pending. VISX believes its patents provide a substantial proprietary position in system and application technology relating to the use of lasers for vision correction. VISX continually submits new patent applications and obtain new patents that cover its new technologies. No single patent by itself is critical to VISXs ability to license its intellectual property. As a result, if any one patent expires or otherwise becomes unavailable to license, VISX has other patents on which to base its licenses.
VISX is committed to protecting its proprietary technology. It is possible, however, that one or more of VISXs patents may be found to be invalid or unenforceable, or that a party against whom VISX is asserting claims of patent infringement may be found not to be infringing VISXs patents. Such an outcome could have a material adverse effect on VISXs business, financial position, and results of operation.
The following is a list of license agreements that VISX has entered into in connection with litigation settlements, as well as other license agreements. The cross-license with Summit Technology, Inc. (referenced below) is the only license agreement upon which VISXs business is substantially dependent.
Cross License between VISX and Nidek. On April 4, 2003, VISX and Nidek entered into a global litigation settlement and a worldwide cross-license of certain of the parties respective patents. This settlement resulted in the dismissal of all litigation between the parties worldwide, and involved a payment by VISX to Nidek of $9.0 million for the settlement of Nideks antitrust and unfair competition claims. The terms of the settlement and cross-license are confidential.
License to WaveLight. In September 2002, VISX and WaveLight Laser Technologies AG (WaveLight) signed an agreement whereby VISX licensed certain of VISXs patents relating to refractive excimer lasers to WaveLight. As consideration, WaveLight will pay VISX a royalty for each procedure performed in the United States using WaveLights refractive excimer laser and for international equipment sales. All pending disputes and litigation between the two companies were also settled at that time.
License to LaserSight. In May 2001, VISX and LaserSight Incorporated (LaserSight) signed an agreement whereby VISX licensed its patents relating to refractive excimer lasers to LaserSight. As consideration, LaserSight will pay VISX a royalty for each procedure performed in the United States using LaserSights refractive excimer laser. All pending disputes and litigation between the two companies were also settled at that time. Pursuant to a settlement and license agreement entered into in 1997, LaserSight continues to pay VISX a royalty for international equipment sales.
In May 2002, LaserSight granted VISX a worldwide, royalty-free, fully paid-up, nonexclusive license under United States Patent No. RE37,504 (5,520,697JT Lin Patent) and its foreign counterparts.
Cross License between VISX and Bausch & Lomb. In January 2001, VISX and Bausch & Lomb signed an agreement whereby VISX licensed its United States and international patents relating to refractive excimer lasers to Bausch & Lomb. As consideration, Bausch & Lomb licensed its United States and international patents relating to refractive excimer lasers to VISX and will pay VISX a royalty for each procedure performed in the United States using Bausch & Lombs refractive excimer laser. All pending disputes and litigation between the two companies were also settled at that time. In September, 1995 Chiron Vision Corporation, now owned by Bausch & Lomb, entered into a license agreement with VISX wherein VISX licensed certain international patents. Pursuant to these agreements, Bausch & Lomb pays a royalty for international equipment sales.
Cross License between VISX and Summit. In June 1998, VISX and Summit Technology, Inc. (Summit), now owned by Alcon, signed an agreement whereby VISX and Summit each granted the other a fully-paid worldwide license to its patents relating to laser ablation of corneal tissue. At that time, VISX dissolved Pillar Point Partners and settled all pending disputes and litigation between the two companies. The licenses cover, with certain exceptions, technology acquired by the recipient of the license. When Summit acquired Autonomous
Technologies Corporation (Autonomous) in April 1999, the settlement and cross license agreement with Summit was extended to Autonomous and all pending disputes and litigation between VISX and Autonomous were settled.
Other Licensing Agreements. VISX has licensed certain patents issued outside of the United States to the following companies: Aesculap-Meditec GmbH, now owned by Carl Zeiss, (Zeiss-Meditec), and Herbert Schwind GmbH & Co. KG (Schwind). Under these agreements, VISX receives royalties for international sales of Zeiss-Meditec and Schwind equipment that is covered by VISXs international patents.
In 1992, International Business Machines Corporation (IBM) granted VISX nonexclusive rights under United States and foreign IBM patents that include certain claims covering ultraviolet laser technology for removal of human tissue. Under the terms of this license, VISX agreed to pay a royalty on VISX STAR® Systems made, used, sold or otherwise transferred by or for VISX in the United States and certain other countries. In 1997, IBM advised VISX that it assigned the patents and the license to LaserSight. In February 1998, LaserSight advised VISX that Nidek had acquired the foreign IBM patents and the licenses to these foreign patents. As part of the agreement entered into by VISX and LaserSight in May 2001, VISX obtained a paid-up license to the United States IBM patent. VISX also entered into a nonexclusive, worldwide license agreement with Patlex Corporation (Patlex), which holds certain patents on lasers. Under this agreement, VISX pays Patlex a royalty on certain laser components of the VISX STAR® System.
Confidentiality Arrangements. VISX protect its proprietary technology, in part, through proprietary information and inventions agreements with employees, consultants and other parties. These agreements generally contain standard provisions requiring those individuals to assign to VISX, without additional consideration, inventions conceived or reduced to practice by them while employed or retained by VISX, subject to customary exceptions.