Generally, we strive to minimize and control our legal risks. To this end, we have taken the necessary precautions to identify threats and defend our rights where necessary. Nevertheless, we are still exposed to risks from litigations or legal proceedings. In particular, these include risks in the areas of product liability, competition and antitrust law, pharmaceutical law, patent law, trademark law, data protection law, tax law, and environmental protection. As a research-based company, we have a valuable portfolio of industrial property rights, patents and brands that could become the target of attacks and infringements. The outcome of future proceedings or those currently pending is difficult to foresee. For instance, we are currently involved in litigation with Merck & Co. Inc., Rahway, New Jersey (USA) (outside the United States and Canada: MSD), against whom we have filed lawsuits in various countries. This company has also sued us in the United States for trademark infringement, among other things.
Due to long statutes of limitations or in some cases the absence thereof, it is not possible to rule out that we will face third-party claims arising from the same issue despite the conclusion of legal proceedings. Court or official rulings or settlements that we consider as “highly improbable” to “more likely than not” could lead to expenses with a significant to critical impact on our business and earnings. Despite extensive precautionary measures, non-compliance with laws and regulations leading to related consequences can never be completely excluded. In our opinion, the lawsuit described below is the most significant legal risk, however this should not be seen as an exhaustive overview of all legal disputes currently ongoing.
Product liability risks
We are exposed to product liability risks, which can lead to considerable claims for damages and defense costs. In view of this, we have taken out liability insurance to mitigate such risks. However, it could be that the insurance coverage is insufficient for individual cases. Although the occurrence of product liability claims in excess of the existing insurance coverage is considered improbable, individual cases could still have a critical effect.