Form 10QSB for IGENE BIOTECHNOLOGY INC filed on Nov 9 1999
Item 1. Legal Proceedings
On July 21, 1997, ADM filed suit against the Company in the
U.S. District Court in Baltimore, Maryland alleging patent
infringement and requesting a preliminary injunction against
the Company to cease the use of its astaxanthin
manufacturing process. On August 4, 1997, the Company filed
a $300,450,000 contract and trade secrets counterclaim
against ADM, alleging theft of trade secrets. The Company
is also claiming breach of contract, in regards to a
licensing agreement entered into by the Company and ADM in
1995. The Company contends that it complied with all
material terms of this agreement. On September 10, 1997 the
District Court denied ADM's request for a preliminary
injunction on the basis that ADM could not demonstrate a
likelihood of success on the merits of its patent
infringement allegations. To date, a stay on all discovery
has been imposed by the court, while a court-appointed
expert analyzed the yeast products of both parties. Most
recently, and pursuant to an order issued by the judge on
July 16, 1999, both the Company and ADM communicated to the
court their willingness to pursue a mediated settlement of
this dispute. During the period from October 1, 1999
through October 28, 1999, the parties were unable to resolve
the dispute through mediation. Thus, the litigation has
been returned to the court for a judicial disposition. It
is management's contention that it is not probable that this
dispute will result in an unfavorable outcome. Accordingly,
no liability has been reflected in the accompanying balance
sheet. The Company had expenses of $433,973 and $222,016,
respectively, in the nine months ended September 30, 1999
and 1998 relating to this litigation, which is on-going.
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