F-43
9. Employment Benefits
We have an employee 401(k) salarydeferral plan, covering all employees. Employeesmaymake contributions by
withholding a percentage of their salaryup to the IRS annual limit ($17,500 and$23,000 in2013 for employees under 50years old
and employees 50 years oldor over, respectively).Wemade approximately$574,000, $529,000 and$487,000 inmatching
contributions for the years endedDecember 31, 2013, 2012 and2011, respectively.
10. Legal Proceedings
From time to time, we are involved in legal proceedings arising in the ordinary course of our business. Periodically, we
evaluate the status of each legalmatter and assess our potential financial exposure. If the potential loss from any legal proceeding is
consideredprobable and the amount canbe reasonably estimated, we accrue a liability for the estimated loss. Significant judgment is
required to determine the probability of a loss andwhether the amount of the loss is reasonably estimable. The outcome of any
proceeding is not determinable in advance. As a result, the assessment of a potential liability and the amount of accruals recorded are
basedonlyon the information available tous at the time. As additional informationbecomes available, we reassess the potential
liability related to the legal proceeding, andmay revise our estimates. We donot believe, relative toour current legal proceedings,
that a loss is bothprobable and estimable. As such, as ofDecember 31, 2013, we donot have a liability related to any of our current
legal proceedings, including the followingmatters.
Santaris Litigation
InSeptember 2011, we filed a patent infringement lawsuit against Santaris PharmaA/S andSantaris PharmaA/SCorp. in the
UnitedStatesDistrict Court of theSouthernDistrict of California. Our infringement lawsuit alleges that Santaris’ activities providing
antisense drugs and antisense drug discovery services to several pharmaceutical companies infringesU.S. PatentNo. 6,326,199,
entitled “Gapped2’ModifiedOligonucleotides” andU.S. PatentNo. 6,066,500, entitled “AntisenseModulationofBetaCatenin
Expression.” In the lawsuitwe are seekingmonetarydamages and an injunction enjoiningSantaris from conductingor participating in
the infringing activities. InDecember 2011, Santaris filed an answer toour complaint, denyingour allegations, and seeking a
declaration from the court that Santaris has not, anddoes not, infringe the patentswe asserted against Santaris in the suit. In
January2012, Santaris filed amotion for summary judgment asking the court to decide as amatter of law that Santaris’ activities do
not infringe the patentswe assert in the suit. InSeptember 2012, the court deniedSantaris’motion for summary judgment andopened
limited discovery related towhether Santaris’ alleged infringing activities are permitted by the safe harbor under 35U.S.C.
Section271(e)(1). InApril 2013, we amendedour complaint related to the lawsuit to include additional claims alleging that Santaris’
activities providing antisense drugs and antisense drugdiscovery services to a pharmaceutical company infringesU.S. Patent
No. 6,440,739 entitled “AntisenseModulation ofGlioma-AssociatedOncogene-2Expression”; and that Santaris induced its actual and
prospective pharmaceutical partners to infringeU.S. Patent No. 6,326,199. InDecember 2013, Santaris filed a newmotion for
summary judgment asking the court todecide as amatter of law that Santaris’ alleged infringing activities are permitted by the safe
harbor under 35U.S.C. Section271(e)(1). OnFebruary27, 2014, the court denied thismotion, and the case is proceeding.
GileadLitigation
InAugust 2013, GileadSciences Inc. filed a suit in theUnitedStatesDistrict Court of theNorthernDistrict ofCalifornia
related toUnitedStates PatentNos. 7,105,499 and8,481,712 that are jointlyownedbyMerckSharp&DohmeCorp. and Isis
Pharmaceuticals, Inc. In the suit Gilead is asking the court todetermine that Gilead’s activities donot infringe anyvalid claimof the
named patents and that the patents are not valid. Isis andMerckSharp&DohmeCorp. filed their answer denyingGilead’s
noninfringement and invalidity contentions, contending thatGilead’s commercial sale andoffer for sale of sofosbuvir prior to the
expiration of the ‘499 and ‘712patentswill infringe those patents, and requestingmonetary damages to compensate for such
infringement. Under Isis’ agreementwithMerck,Merck is responsible for the costs of this suit.
11.QuarterlyFinancialData (Unaudited)
The following financial information reflects all normal recurring adjustments, which are, in the opinionofmanagement,
necessary for a fair statement of the results of the interimperiods. Summarized quarterlydata for the years endedDecember 31, 2013
and2012 are as follows (in thousands, except per share data).
