This excerpt taken from the DSCP 10-Q filed Nov 9, 2006.
We are subject to certain legal actions, including product liability matters, arising in the ordinary course of our business. We believe we have meritorious defenses in all material pending lawsuits. We also believe that we maintain adequate insurance against any potential liability for product liability litigation. In accordance with accounting principles generally accepted in the United States of America we accrue for legal matters if it is probable that a liability has been incurred and an amount is reasonably estimable.
As noted in our Form 10-K for the fiscal year ended June 30, 2006, on March 18, 2005, Johns Hopkins University and Arrow International, Inc. filed a complaint in the United States District Court for the District of Maryland, seeking a permanent injunction and damages for patent infringement. They allege that the Company's ProLumen Rotational Thrombectomy System infringes the claims of their U.S. patents 5,766,191 and 6,824,551. The Company has filed an answer denying such infringement and discovery has begun. On October 13, 2006, Johns Hopkins and Arrow filed a second complaint based upon their newly issued U.S. patent 7,108,704 claiming the Companys ProLumen device infringes the claims of this patent. The parties have agreed that this matter should be consolidated with the first case and are preparing the necessary document to accomplish this. As with the first two patents, the Company believes that it has meritorious defenses to such claims and intends to defend this action vigorously.