costs of such litigation or proceedings more effectively than Seelos can because of their greater financial resources. Uncertainties resulting from
the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on Seelos' ability to compete in the marketplace.
In addition, Seelos' licensed patents and patent applications, and patents and patent applications that Seelos may apply for, own or license in the future, could face
other challenges, such as interference proceedings, opposition proceedings, re-examination proceedings and other forms of post-grant review. Any of these challenges, if successful, could
result in the invalidation of, or in a narrowing of the scope of, any of Seelos' licensed patents and patent applications and patents and patent applications that Seelos may apply for, own or
license in the future subject to challenge. Any of these challenges, regardless of their success, would likely be time consuming and expensive to defend and resolve and would divert Seelos'
management and scientific personnel's time and attention.
Changes in U.S. patent law could diminish the value of patents in general, thereby impairing Seelos' ability to protect Seelos' products.
As is the case with other biopharmaceutical companies, Seelos' success is heavily dependent on intellectual property, particularly patents. Obtaining and
enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is costly, time-consuming and inherently uncertain. For example, the U.S. previously
enacted and is currently implementing wide-ranging patent reform legislation. Specifically, on September 16, 2011, the Leahy-Smith America Invents Act (the "Leahy-Smith Act")
was signed into law and included a number of significant changes to U.S. patent law, and many of the provisions became effective in March 2013. However, it may take the courts years to
interpret the provisions of the Leahy-Smith Act, and the implementation of the statute could increase the uncertainties and costs surrounding the prosecution of Seelos' licensed and future
patent applications and the enforcement or defense of Seelos' licensed and future patents, all of which could have a material adverse effect on Seelos' business, financial condition and results
In addition, the U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances
or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to Seelos' ability to obtain patents in the future, this combination of events has
created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing
patents could change in unpredictable ways that would weaken Seelos' ability to obtain new patents or to enforce patents that Seelos might obtain in the future.
Seelos may not be able to protect its intellectual property rights throughout the world.
Filing, prosecuting and defending patents on product candidates throughout the world would be prohibitively expensive. Competitors may use Seelos' licensed
and owned technologies in jurisdictions where Seelos has not licensed or obtained patent protection to develop their own products and, further, may export otherwise infringing products to
territories where Seelos may obtain or license patent protection, but where patent enforcement is not as strong as that in the U.S. These products may compete with Seelos' products in
jurisdictions where Seelos does not have any issued or licensed patents and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain
countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which
could make it difficult for Seelos to stop the infringement of Seelos' licensed patents and future patents Seelos may own, or marketing of competing products in violation of Seelos' proprietary
rights generally. Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the U.S. As a result, Seelos may
encounter significant problems in protecting and defending its licensed and owned intellectual property both in the U.S. and abroad. For example, China currently affords less protection to a
company's intellectual property than some other jurisdictions. As such, the lack of strong patent and other intellectual property protection in China may significantly increase Seelos' vulnerability
regarding unauthorized disclosure or use of its intellectual property and undermine its competitive position. Proceedings to enforce Seelos' future patent rights, if any, in foreign jurisdictions
could result in substantial cost and divert its efforts and attention from other aspects of Seelos' business.
Seelos may be unable to adequately prevent disclosure of trade secrets and other proprietary information.
In order to protect Seelos' proprietary and licensed technology and processes, Seelos relies in part on confidentiality agreements with its corporate partners,
employees, consultants, manufacturers, outside scientific collaborators and sponsored researchers and other advisors. These agreements may not effectively prevent disclosure of Seelos'
confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover Seelos'
trade secrets and proprietary information. Failure to obtain or maintain trade secret protection could adversely affect Seelos' competitive business position.
Seelos may be subject to claims that Seelos' employees, consultants or independent contractors have wrongfully used or disclosed confidential
information of third parties.
Seelos expects to employ individuals who were previously employed at other biopharmaceutical companies. Although Seelos has no knowledge of any such
claims against Seelos, Seelos may be subject to claims that it or its employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential
information of Seelos' employees' former employers or other third parties. Litigation may be necessary to defend against these claims. There is no guarantee of success in defending these
claims, and even if Seelos is successful, litigation could result in substantial cost and be a distraction to Seelos' management and other employees. To date, none of Seelos' employees have
been subject to such claims.