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`ERIC M. ACKER (BAR NO. 135805)
`EAcker@mofo.com
`MARY PRENDERGAST (BAR NO. 272737)
`MPrendergast@mofo.com
`MORRISON & FOERSTER LLP
`12531 High Bluff Drive
`San Diego, California 92130-2040
`Telephone: 858.720.5100
`Facsimile: 858.720.5125
`
`Attorneys for Alcon LenSx, Inc.
`
`
`
`
`JAMS ARBITRATION
`BEFORE THE HONORABLE FERN M. SMITH
`
`ALCON LENSX, INC.,
`
`Reference Number: 1200046131
`
`Claimant,
`
`DEMAND FOR ARBITRATION
`
`
`
`Respondent.
`
`
`
`v.
`
`JOSEPH NEEV,
`
`
`
`Claimant Alcon LenSx, Inc. (“LenSx”) submits this Complaint and Demand for
`
`Arbitration arising from Respondent Joseph Neev’s (“Neev”) breach of a License Agreement
`
`between the parties.
`
`I.
`1.
`
`THE PARTIES.
`Claimant LenSx is a Delaware Corporation with its primary place of business in
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`Aliso Viejo, California. LenSx is a wholly-owned subsidiary of Alcon Laboratories, Inc., which
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`is a wholly-owned subsidiary of Novartis AG.
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`2.
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`LenSx designs and manufactures the innovative LenSx Laser System in Aliso
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`Viejo, California. The LenSx Laser System is a fully-integrated, image-guided femtosecond laser
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`designed specifically for refractive cataract surgery. Using a customizable 3-D surgical platform,
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`the LenSx Laser System allows a doctor to visualize, customize and perform many of the most
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`DEMAND FOR ARBITRATION
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`challenging steps of cataract surgery, offering a new level of precision, accuracy and
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`reproducibility.
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`3.
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`On information and belief, Respondent Joseph Neev, an individual, is a resident of
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`Aliso Viejo, California.
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`4.
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`Neev is listed as inventor on the face of US. Patent No. 6,482,199 (the “’ 199
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`patent,” attached hereto as Exhibit B). On information and belief, Neev, nor any of his entities,
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`either design, manufacture or sell any products in the field of ophthalmology.
`
`II.
`
`5.
`
`JURISDICTION.
`
`On or about February 3, 2010, LenSx, then named LenSx Lasers, Inc., and Neev
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`entered into a License Agreement (the “Agreement,” attached hereto as Exhibit A) granting
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`LenSx certain rights to the ’199 patent.
`
`6.
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`Section 11.1 of the Agreement between the parties states that “[a]ll disputes arising
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`between the Parties hereunder or as a result of this Agreement shall be resolved solely as
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`provided in this Article.” (Ex. A, at § 11.1.)
`
`7.
`
`The parties agreed in Section 11.2 of the License Agreement that, in the event of a
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`dispute, “[e]ither Party may seek to resolve the dispute through arbitration in front of
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`JAMS/Endispute by a retired federal judge appointed by agreement of the Parties or in
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`accordance with JAMS/Endispute rules.” (Id. at § 11.2.)
`
`8.
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`The License Agreement further states that any arbitration hearings are to take
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`place in Orange County, California, and that the Agreement shall be governed by the laws of the
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`State of California without regard to conflicts of law principles.
`
`(Id. at § 11.3.)
`
`III.
`
`THE LICENSE AGREEMENT.
`
`9.
`
`The ’ 199 patent is entitled “Method and apparatus for high precision variable rate
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`material, removal and modification.” (Ex. B.)
`
`10.
`
`The invention of the ’ 199 patent relates generally to a method for modifying
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`materials, such as bodily tissues, using pulsed laser bursts at short and frequent intervals. The
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`’ 199 patent claims to improve on the prior art by reducing collateral damage caused by the laser
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`to the surrounding tissues. The ’199 patent claims to achieve this more precise modification of a
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`target area through utilizing repeated laser pulses to continually modify the target area and then
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`allowing the residual energy transients in the area to dissipate so as to minimize collateral
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`damage.
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`11.
`
`In Section 2.1 of the Agreement, Neev granted to LenSx, and LenSx accepted, a
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`“non-exclusive, worldwide, royalty-bearing license under the [’ 199 patent] to manufacture,
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`develop, use, import, formulate, package, sell and offer for sale products and to develop, use,
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`implement, sell, and direct customers and end users in using the method in the Field[,]” (Ex. A,
`
`at § 2.1.)
`
`12.
`
`Section 1.7 of the Agreement defines the Field in which LenSx was granted patent
`
`rights under the ’ 199 patent as “subject to Section 2.4, below, ophthalmology and ophthalmic
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`surgery, excluding only the performance of laser assisted in situ keratomileusis (“LASIK”).” (Id.
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`at § 1.7.)
`
`
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`13.
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`Section 2.3 of the Agreement further provides that LenSx’s license in the Field
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`may be made exclusive under certain conditions.
`
`14.
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`Section 7.1 of the Agreement required LenSx to make an initial payment of
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`$60,000 and a second payment of $90,000. (Id at § 7.1.) Both of those payments were made.
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`15.
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`Section 7.2 of the Agreement requires LenSx to pay minimum annual royalty
`
`payments regardless of LenSx’s sales of licensed products. (Id. at § 7.2). LenSx has satisfied that
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`minimal annual royalty obligation through 2012.
`
`16.
`
`Section 7.3 of the Agreement requires LenSx to pay royalties on LenSx’s sales of
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`“Products,” defined in Section 1.13 of the Agreement as “any product or compound the
`
`manufacture, use or sale of which either falls within the scope of, or utilizes any method or
`
`process which falls within the scope of a Valid Claim” of the ’ 199 patent.
`
`(Id. at §§ 7.3, 1.13.)
`
`17.
`
`LenSx’s Laser System does not fall within the scope of any valid claim of the ’ 199
`
`patent, and thus LenSx has not made any sales of “Products” as defined in Section 1.13. Thus,
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`LenSx is not obligated to and has not made any royalty payments under Section 7.3.
`
`18.
`
`Regarding termination, the Agreement states “[i]f either Party materially breaches
`
`this Agreement at any time, which breach is not cured within 30 days of notice thereof from the
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`non—breaching Party, the non—breaching Party shall have the right to terminate this Agreement on
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`notice to the Party in breach following the expiration of such cure period[.]” (Id. at § 9.2.)
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`19.
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`However, the Agreement also provides that if the party alleged to be in breach has
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`“invoked the dispute resolution mechanism of Article 11 below, prior to the expiration of such
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`cure period and is thereafter diligently pursuing resolution of the matter in dispute, then
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`termination shall not be effective until the sooner of” abandonment of the dispute resolution
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`proceedings or a non—appealable finding in arbitration in favor of the non—breaching party.
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`(Id. at
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`§ 9.2.)
`
`IV.
`
`PROVISIONS OF THE AGREEMENT RELATED TO THE LAWSUIT
`BETWEEN NEEV AND ABBOTT MEDICAL OPTICS.
`
`20.
`
`At the time the parties entered into the Agreement, Neev was engaged in litigation
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`against Abbott Medical Optics (“AMO”) in Neev v. Abbott Medical Optics, Inc, et (11., CA. no.
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`09-cv-146-RBK-JS (D. Del.) (the “AMO Litigation”), in which Neev alleged that AMO infringed
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`the ’199 patent. AMO counterclaimed that the ’199 patent is invalid, leading the parties to
`
`include in the Agreement that LenSx had a direct financial interest in the outcome of the AMO
`
`litigation. (Ex. A., § 6.)
`
`21.
`Neev agreed to keep LenSx apprised of developments in the lawsuit, and agreed to
`afford LenSx the ability to comment on proposed actions Neev might take that could impact the
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`outcome of AMO’s counterclaims. Specifically, Neev agreed that
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`[t]o assure that such interest is reasonably reflected in the actions of
`Neev in the AMO Suit, Neev shall provide LenSx with copies of all
`pleadings filed by either party in the AMO and with all orders
`issued by the court, and consult regularly with LenSx and its
`designated counsel to keep LenSx advised of the status of Neev’s
`planned activities with respect to the AMO Suit, and afford LenSx,
`to the extent practical, with a meaningful opportunity to comment
`on proposed actions which could reasonably be expected to have a
`potential impact on the scope or enforceability of the patent-in—suit
`in the AMO Suit.
`
`(Ex. A, at § 6.6.)
`
`22.
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`The AMO Litigation is also relevant to LenSx’s right to enlarge its patent rights
`
`under the Agreement. Specifically, Section 2.3 of the Agreement allows LenSx, within the first
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`three years of the Agreement, to convert its license from a non—exclusive license to an exclusive
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`license in the Field. (Ex. A at § 2.3.) The only exception to this provision is that Neev is allowed
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`to grant a non—exclusive, non-transferable license within the Field to AMO in the areas of corneal
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`transplantation and intra-comeal ring segment insertion (“ICRS”), but only to the extent the grant
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`of such a license was required in the context of settling the AMO Litigation. (Id)
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`23.
`In Section 2.3 of the Agreement, Neev also warranted that “[d]uring such three
`year period Neev shall refrain from granting to any third party [including AMO except as carved
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`out above] any license in or other rights with respect to the Licensed Patents that are inconsistent
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`with or otherwise derogate a grant to LenSx of exclusive rights in the Field.” (Id)
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`V.
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`NEEV’S ALLEGATION OF INFRINGEMENT AND THE PARTIES’
`
`SUBSEQUENT DISCUSSIONS.
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`24.
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`On August 4, 2011, LenSx wrote Neev to inform him that its LenSx Laser System
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`did not infringe the ’ 199 patent, because “the Alcon LenSx system does not manipulate the beam
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`parameters while performing a procedure on a target region. Further, the Alcon LenSx system
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`does not apply pulses repeatedly to the same volume in the target region” as required by the ’ 199
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`patent. Thus, LenSx concluded that no royalties were due to Neev for sales of the LenSx Laser
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`System. (Ex. C.)
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`25.
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`On December 15, 2011, Neev’s counsel sent a letter to LenSx alleging that LenSx
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`had breached the Agreement by making and selling devices falling within the claims of the ’ 199
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`patent, specifically the LenSx Laser System, without paying the agreed-upon royalties. (Ex. D.)
`
`26.
`
`On January 11, 2012, LenSx responded with a detailed explanation and claims
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`chart demonstrating why the LenSx laser system did not infringe the ’199 patent, and
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`commenting that Neev had chosen to accuse LenSx of violating the agreement, rather than
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`request further information that would allow Neev to evaluate his allegations of infringement.
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`(Ex. E.) The January 11, 2012 letter also enclosed a LenSx patent application that LenSx
`
`explained covers the LenSx Laser System, and which demonstrates that the system does not
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`infringe Neev’s ’199 patent. (Id)
`
`27.
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`By January 16, 2012 thirty days had elapsed since Neev’s original December 15,
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`2011 letter; however, Neev had not terminated the Agreement by that date, and instead continued
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`to engage in discussions with LenSx regarding whether or not the LenSx Laser System infringed
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`the ’ 199 patent.
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`28.
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`On February 28, 2012, counsel for Neev wrote LenSx to put LenSx on notice that
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`it was allegedly in breach of its Agreement regarding the ’ 199 patent and a separate contract
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`concerning two unrelated patents not covered under the Agreement. Neev alleged that LenSx
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`owed a payment of $20,000.00 that was due in February 2012 under the separate contract and
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`notified LenSx of his belief that LenSx had thirty days to cure that alleged failure to pay. (Ex. F.)
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`29.
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`Also in the February 28, 2012 letter, Neev alleged that LenSx had failed to
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`respond to his December 15, 2011 letter by providing a noninfringement position as to the two
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`unrelated patents, and an explanation as to why it had not paid royalties on its LenSx Laser
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`System. Neev asked for LenSx’s noninfringement positions, which LenSx had previously
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`provided as to the ’199 patent, along with a claim chart, in its January 11, 2012 letter. (Id)
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`30.
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`Counsel for Neev also stated that LenSx’s January 11, 2012 letter “provides a
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`basis for dialogue[,]” and proposed that the parties “set a meeting to discuss infringement issues
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`in person and see whether there is a way to resolve our differences.” (Id) Neev’s counsel then
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`laid out a response to LenSx’s noninfringement positions, stated that he suspected “Alcon’s non—
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`infringement contentions are based on claim constructions[,]” and requested further technical
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`specifications for the LenSx Laser System as well as any claim constructions on which LenSx
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`was relying for its noninfringement contentions. (Id)
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`31.
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`At the time of the February 28, 2012 letter, claim construction was ongoing in the
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`AMO Litigation, but no claim construction order had been issued.
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`32.
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`In a response dated March 23, 2012, LenSx noted that it would be Neev’s burden
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`to prove infringement, and stated that it would be difficult to provide further information as to
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`noninfringement without a better understanding of the substance of Neev’s infringement
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`allegations. (Ex. G.) Thus, LenSx requested a detailed claim chart along with a reasonable
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`construction of each element and an explanation of Neev’s belief that all elements were present in
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`the LenSx Laser System. (Id) These materials were never provided to LenSx by Neev.
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`33.
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`Along with the March 23, 2012 letter, LenSx provided Neev with a copy of the
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`manual to the LenSx Laser System, which corroborated the description of the product contained
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`within the previously provided patent application. In addition, LenSx directed Neev to the
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`particular sections of the manual that would demonstrate noninfringement.
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`(1d,)
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`34.
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`Finally, in its March 23, 2012 letter, LenSx noted that it would be difficult to have
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`productive discussions on the infringement issue until LenSx received the requested detail on
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`Neev’s infringement allegations, but emphasized that it was still willing to discuss the proposals
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`made to Neev in LenSx’s August 4, 2011 letter. (Id)
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`35.
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`From the time of LenSX’s March 23, 2012 letter and continuing until on or about
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`April 24, 2012, LenSx believed that discussions between the parties were continuing, and had no
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`reason to believe Neev would attempt to terminate the license at any point in the near future.
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`36.
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`The district court in the AMO Litigation issued a claim construction order on
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`March 26, 2012. (Ex. H.)
`
`37.
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`Despite the fact that both parties had acknowledged its importance to the
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`noninfringement inquiry, Neev did not send LenSx a copy of the claim construction order from
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`the AMO Litigation until April 16, 2012, when counsel for Neev emailed a copy of the order to
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`LenSx. (Ex. I.)
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`38.
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`In that April 16, 2012 e—mail, counsel for Neev asked if, in light of the claim
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`construction order in the AMO Litigation, LenSx would reconsider its noninfringement position.
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`(Id.). Counsel for Neev also indicated Neev’s willingness to continue discussions, noting that
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`LenSx had “indicated that [it] may be willing to give up its option of exclusivity,” and inquiring
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`what LenSx “ha[d] in mind in that regard?” (Id.)
`
`39.
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`Only eight days later, on April 24, 2012, and without waiting for a response from
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`LenSx, Neev sent a letter to LenSx “to provide formal notice that Neev is terminating [LenSx]’s
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`license to the ’ 199 patent.” (Ex. J.) In that letter, counsel for Neev stated that “[t]he District
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`Court’s Claim Construction Order demonstrates that [LenSx]’s non-infringement arguments have
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`no merit.” (Id)
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`40.
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`Counsel for Neev further alleged that LenSx had agreed to meet to “settle all
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`issues[,]” but argued that he had received “no indication that [LenSx] plans to cure.” Counsel for
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`Neev thus informed LenSx that Neev had “no choice but to terminate[,]” and warned that Neev
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`intended to initiate arbitration in an attempt to recover past royalties. At that point, the parties
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`had been engaged in discussions for almost five months, far longer than the thirty-day cure period
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`provided for in the Agreement. (Id)
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`41.
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`Two days later, on April 26, 2012, Neev informed the district court in the AMO
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`Litigation that a settlement had been reached between Neev and AMO.
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`42.
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`LenSx provided a response to Neev’s attempt to terminate on May 9, 2012, noting
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`that:
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`Your e—mail of Aprill6, 2012, summarily and incorrectly dismissed
`Alcon LenSx’s explanations as to why the claims of the ’ 199 patent
`do not apply to the LenSx Laser System, based on the claim
`construction issued by the District Court in the AMO Suit, but at
`the same time invited Alcon LenSx to continue the dialogue that
`has been taking place since last year. The timing of the attempted
`termination Via your letter of April 24, 2012, therefore seems odd,
`at best.
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`(Ex. K.) LenSx further indicated its suspicions that Neev’s attempt to terminate the Agreement
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`was motivated by Neev’s desire to provide rights to AMO in a settlement between AMO and
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`Neev that were prohibited by the Agreement.
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`43.
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`The May 9, 2012 letter explained LenSx’s noninfringement positions following the
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`claim construction order from the AMO Litigation (without conceding the correctness of the
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`claim construction), and confirmed that, contrary to Neev’s assertion, the claim construction order
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`did not materially change LenSx’s position that the ’ 199 patent was not infringed by the LenSx
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`Laser System. (Id)
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`44.
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`In the May 9, 2012 letter, LenSx also requested a copy of the settlement agreement
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`between Neev and AMO, or at least an explanation of its terms, as well as confirmation of the
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`impact of that settlement agreement on LenSx’s rights under the Agreement, and specifically
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`Sections 2.3 and 2.4. (141.)
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`45.
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`Finally, in its May 9, 2012 letter, LenSx informed Neev that it remained willing to
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`meet and resolve the dispute, but as a result of Neev’s attempt to terminate, LenSx was forced to
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`initiate arbitration pursuant to Section 9.2 and Article 11 of the Agreement. (Id)
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`46.
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`LenSx initiated this arbitration on May 9, 2012.
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`VI.
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`NEEV’S BAD FAITH BREACH OF THE AGREEMENT.
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`47.
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`On April 26, 2012, just two days after Neev’s counsel attempted to unilaterally
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`terminate the Agreement with LenSx, counsel for AMO sent a letter to the district court in the
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`AMO Litigation informing the court that “[t]he parties have reached a settlement in principle and
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`have begun to document it.” (Ex. L.)
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`48.
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`From on or about December 15, 2011 until on or about April 24, 2012, Neev
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`continued to negotiate with LenSx regarding alleged infringement of the ’199 patent by the
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`LenSx Laser System, despite the fact that, on information and belief, Neev planned to terminate
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`the Agreement in order to enter into a settlement agreement with AMO that was prohibited by the
`terms ofthe Agreement.
`1
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`49.
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`The timing of Neev’s attempted termination of the Agreement and Neev’s
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`settlement agreement with AMO only days apart reveals that, on information and belief, Neev
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`attempted to unilaterally terminate the Agreement with LenSx so that Neev could enter into an
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`agreement with AMO, and grant AMO patent rights that would infringe upon LenSx’s field of
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`use, as well as LenSx’s options to expand that field and/or convert its license to an exclusive one.
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`VH.
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`LENSX DOES NOT INFRINGE THE ’199 PATENT.
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`50.
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`The ’ 199 patent contains 86 claims, including 10 independent claims from which
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`all other claims in the patent depend directly or indirectly. (Ex. B, claims 1, 5, 79-86.)
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`51.
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`All of the claims of the ’ 199 patent require that the parameters or characteristics
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`of the electromagnetic radiation beam (or laser) are manipulated during use by varying at least
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`one of a number of listed parameters, such as beam spot size, duration, energy or wavelength of
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`the electromagnetic pulse.
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`(See, e. g,, id, claim 1.)
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`52.
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`The LenSx Laser System does not manipulate any of the beam parameters while
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`performing a procedure on a target region. To the extent that the district court in the AMO
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`Litigation construed the claims of the ’ 199 patent to allow manipulation of the beam parameters
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`prior to performing a procedure on the target region, the district court’s interpretation is
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`erroneous.
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`53.
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`All of the claims of the ’ 199 patent also require allowing interaction energy
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`transients created by the beam “to substantially decay” or “to decay sufficiently.” (See, 6. g. , id. ,
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`claims 1, 2, 20-25, 27-28, 30, 34, 50-54, 61, 67, 71, 77, and 80—83.) Claim 5 analogously recites
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`“allowing the electromagnetic energy absorbed by the material to complete the material ablation,
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`so that substantially most of the deposited electromagnetic energy is removed from the target
`
`material with an ejected portion of the material.” As correctly construed by the district court in
`
`the AMO Litigation, and in accordance with Neev’s own suggested construction, the purpose of
`
`this decay (and analogously, energy removal) is to minimize collateral damage to the surrounding
`
`material.
`
`54.
`
`The LenSx Laser System employs a photodisruption process that creates a bubble
`
`of superheated plasma in the target area, which then vaporizes the surrounding tissue in an
`
`explosive process, causing substantial collateral damage from the plasma explosion. In contrast
`
`with the method claimed in the ’ 199 patent, the LenSx Laser System allows the energy in the
`
`plasma to be deposited into the surrounding material so as to remove material almost entirely by
`
`collateral damage.
`
`55.
`
`In addition to the required decay, the claims of the ’ 199 patent also require that the
`
`electromagnetic pulses employed by the patented system be repeated at various rates of at least
`
`0.1 Hertz, for example, “greater than 0.1 pulses per second until a target volume of the material in
`
`the target region has been modified.” (Id. , claim 1.)
`
`56.
`
`The LenSx Laser System does not repeatedly target pulses to any given location or
`
`target region. To the extent that the district court’s construction in the AMO Litigation did not
`
`require any pulses to be directed at the same location, the district court’s construction is
`
`BITOI160LIS.
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`57.
`
`Claim 1 of the ’ 199 patent also requires that the target region of the target material
`
`be prepared by “spatially or temporally varying at least one of an absorption characteristic of the
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`material or a scattering characteristic of the material[.]”
`
`58.
`
`In the LenSx Laser System, no scattering and/or absorption centers, defects, highly
`
`absorbing components or other kinds of doping agents capable of varying absorption or scattering
`
`characteristics are added to prepare the target material. To the extent that the district court in the
`
`AMO Litigation construed the claims of the ’ 199 patent to allow a broader interpretation than
`
`adding scattering and/or absorption centers, defects, highly absorbing components or other kinds
`
`of doping agents, the district court’s construction is erroneous.
`
`59.
`
`Claim 5 of the ’ 199 patent recites a “method for a high precision, highly
`
`controllable, variable rate, material removal by a continuously emitting, continuous wave (CW)
`
`beam of electromagnetic radiation” that requires “providing a source capable of generating an
`
`output beam comprised of continuously emitted electromagnetic radiation.”
`
`60.
`
`The laser source of the LenSx Laser System is inherently pulsed; it cannot
`
`generate an output beam of continuously emitted electromagnetic radiation.
`
`FIRST CAUSE OF ACTION: DECLARATORY JUDGMENT OF
`
`NONINFRINGEMENT OF US. PATENT 6,482,199
`
`61.
`
`LenSx realleges and incorporates by reference all of the allegations of paragraphs
`
`1—60 as if fully set forth herein.
`
`62.
`
`Neev has alleged, through repeated communications with LenSx and through
`
`counsel, that LenSx and the LenSx Laser System infringe the ’ 199 patent, and that as the owner
`
`of the ’ 199 patent, Neev is entitled to relief for LenSx’s alleged infringement of the ’199 patent.
`
`LenSx has denied that the LenSx Laser System infringes, either directly or indirectly, the ’ 199
`
`patent, or any valid claims thereof. A justiciable controversy therefore exists between Neev and
`
`LenSx.
`
`63.
`
`The LenSx Laser System does not infringe, contribute to the infringement of,
`
`and/or induce the infringement of any valid and enforceable claim of the ’ 199 patent.
`
`p—a
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`©W\JO\M4>WN
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`NNNNNNNNNr—It—tr—tn—Ip—Ip—An—Ap—AHy—nWHQM-hWNHoomflQm-hWNt—‘O
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`64.
`
`LenSx has not infringed, contributed to the infringement of, and/or induced the
`
`infringement of any valid and enforceable claim of the ’199 patent.
`
`65.
`
`This Court should declare that LenSx and the LenSx Laser System have not and do
`
`not infringe, contribute to the infringement of, and/or induce the infringement of any valid and
`
`enforceable claim of the ’ 199 patent .
`
`66.
`
`A declaration that LenSx and the LenSx Laser System have not and do not
`
`infringe, contribute to the infringement of, and/or induce the infringement of any valid and
`
`enforceable claim of the ’ 199 patent is necessary and appropriate at this time in order that LenSx
`
`may ascertain its rights and duties with respect to the ’ 199 patent.
`
`SECOND CAUSE OF ACTION: DECLARATORY JUDGMENT OF
`INVALIDITY OF US. PATENT 6,482,199
`
`67.
`
`LenSx realleges and incorporates by reference all of the allegations of paragraphs
`
`1—66 as if fully set forth herein.
`
`68.
`
`Neev has alleged, through communications with LenSx and through counsel, and
`
`in the Agreement, that the ’ 199 patent is valid. LenSx denies these allegations and contends that
`
`Claims 1-86 of the ’199 patent are invalid under 35 U.S.C. §§ 101, 102, 103, 112 and/or 305. A
`
`justiciable controversy therefore exists between Neev and LenSx. As a “dispute between the
`
`Parties hereunder” under Section 11.1 of the Agreement, it can be resolved by this Court.
`
`69.
`
`This Court should declare that the ’199 patent is invalid under 35 U.S.C. §§ 101 ,
`
`102,103,112 and/or 305.
`
`70.
`
`A declaration that the ’199 patent is invalid under 35 U.S.C. §§ 101, 102, 103, 112
`
`and/or 305 is necessary and appropriate at this time in order that LenSx may ascertain its rights
`
`and duties with respect to the ’ 199 patent.
`
`THIRD CAUSE OF ACTION: BREACH OF CONTRACT
`
`71.
`
`LenSx realleges and incorporates by reference all of the allegations of paragraphs
`
`1—70 as if fully set forth herein.
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`sd-598269
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`\OOONONU‘AWNH
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`
`
`72.
`
`Neev has materially breached Section 2.3 of the Agreement by granting to a third
`
`party, AMO, a “license in or other rights with respect to the Licensed Patents that are inconsistent
`
`with or otherwise derogate a grant to LenSx of exclusive rights in the Field.”
`
`73.
`
`LenSx has performed all conditions, covenants and promises required of LenSx
`
`under the Agreement.
`
`74.
`
`As a result of Neev’s material breach of the Agreement, LenSx has suffered and
`
`will suffer loss and damage, including but not limited to consequential damages, out-of-pocket
`
`expenses and other damages.
`
`FOURTH CAUSE OF ACTION: BREACH OF THE COVENANT OF
`GOOD FAITH AND FAIR DEALING
`
`75.
`
`LenSx realleges and incorporates by reference all of the allegations of paragraphs
`
`1-74 as if fully set forth herein.
`
`76.
`
`In every contract or agreement, including the Agreement between LenSx and
`
`Neev, there is an implied covenant of good faith and fair dealing on behalf of each party.
`
`77.
`
`Neev has deprived and/or unfairly interfered with LenSx’s right to receive the
`
`benefits of the Agreement by: (l) wrongfully alleging that LenSx has breached the Agreement
`
`and refusing to evaluate LenSx’s noninfringement positions in good faith; (2) attempting to
`
`unilaterally terminate the agreement after nearly five months of ongoing discussions without
`
`reasonable notice to LenSx; and (3) committing the above actions so that, on information and
`
`belief, Neev could enter into an agreement with AMO in violation of Section 2.3 of the
`
`Agreement.
`
`78.
`
`Neev breached the implied covenant of good faith and fair dealing by the
`
`aforementioned acts.
`
`79.
`
`LenSx has performed all conditions, covenants and promises required of LenSx
`
`under the Agreement.
`
`80.
`
`As a result of Neev’s material breach of the implied covenant of good faith and
`
`fair dealing, LenSx has suffered and will suffer loss and damage, including but not limited to
`
`consequential damages, out—of—pocket expenses and other damages.
`
`
`sd-598269
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`

`

`FIFTH CAUSE OF ACTION: DECLARATORY JUDGMENT OF
`INEFFECTIVE TERMINATION
`
`81.
`
`LenSx realleges and incorporates by reference all of the allegations of paragraphs
`
`1-80 as if fully set forth herein.
`
`82.
`
`Neev wrongfully alleged that LenSx has breached the Agreement, refused to
`
`evaluate LenSx’s noninfringement positions in good faith, and attempted to unilaterally terminate
`
`the Agreement after nearly five months of ongoing discussions without reasonable notice to
`
`LenSx. LenSx denies that the Agreement was effectively terminated by Neev.
`
`83.
`
`Neev’s actions effectively prevented LenSx from fiilfilling any obligation it may
`
`have had to cure any alleged breach under the Agreement.
`
`84.
`
`Neev’s attempted termination was not in compliance with Section 9.2 of the
`
`Agreement.
`
`85.
`
`LenSx has performed all conditions, covenants and promises required of LenSx
`
`under the Agreement.
`
`86.
`
`This Court should declare that Neev’s attempt to terminate the Agreement was
`
`ineffective.
`
`87.
`
`A declaration that Neev’s attempt to terminate the Agreement was ineffective is
`
`necessary and appropriate at this time in order that LenSx may ascertain its rights and duties with
`
`respect to the ’199 patent, as well as the continued existence of the Agreement.
`
`SIXTH CAUSE OF ACTION: PROMISSORY ESTOPPEL
`
`88.
`
`LenSx realleges and incorporates by reference all of the allegations of paragraphs
`
`1-87 as if fully set forth herein.
`
`89.
`
`From on or about December 15, 2011 until on or about April 24, 2012, Neev
`
`and/or his agents made representations to LenSx concerning the ongoing discussions between the
`
`parties related to the Agreement, including but not limited to Neev’s and/or his agents”
`
`willingness or intention to continue those discussions.
`
`\OOOQONUIAWNp—t
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`NNNNNNNNNt—HHHHHv—AHv—Iy—tOOQONM-hUJN—‘OOWNQMQWNHO
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`90.
`
`In so doing, Neev and/or his agents knew or should have known that LenSx would
`
`be reasonably induced to rely on Neev’s or his agents’ representations concerning the nature and
`
`progress of the discussions.
`
`91.
`
`LenSx reasonably relied upon Neev’s representations that the parties were
`
`continuing negotiations regarding the Agreement, by, among other things, continuing to provide
`
`requested information and materials to Neev, and by choosing not to immediately initiate
`
`arbitration under Section 9.2 of the Agreement.
`
`92.
`
`As a result of Neev’s representations and his subsequent attempt to unilaterally
`
`terminate the Agreement, LenSx has suffered and will suffer loss and damage, including but not
`
`limited to consequential damages, out-of-pocket expenses and other damages.
`
`93.
`
`Injustice can be avoided only by forcing Neev to pay damages to remedy the
`
`effects of these representations, and by issuance of a declaration that Neev’s attempt to terminate
`
`the Agreement was ineffective.
`
`©00\lO\Lh-l>b9NH
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`NNNNNNNNNHHv—tn—Av—tr—Ar—Ap—nu—Ah—tWQQMAWNt—‘OKOOONmm-bWNHO
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`sd-598269
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`AWN
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`RELIEF RE UESTED
`
`LenSx requests entry of an arbitration award in its favor finding that:
`
`(a)
`
`(b)
`
`(c)
`
`(d)
`
`(e)
`
`(f)
`
`Neev is in material breach of the Agreement;
`
`Neev is in breach of the covenant of good faith and fair dealing;
`
`Neev’s attempt to terminate the Agreement was ineffective;
`
`The claims of the ’ 199 patent are invalid;
`
`LenSx and the LenSx Laser System do not infringe, contribute to the
`infringement of, and/or induce the infringement of any valid claim of the
`’199 patent;
`
`LenSx is entitled to an award of damages against Neev in an amount to be
`determined by the Arbitrator;
`
`(g)
`
`LenSx is entitled to all other relief the Arbitrator deems just and proper.
`
`