Personalis Inc

Note 11. Contingencies

On August 2, 2022, the Company filed a complaint in the U.S. District Court for the District of Colorado (the "District Court") against Foresight Diagnostics Inc. (“Foresight”) for infringement of four of the Company's U.S. patents. The patents are part of the Company's intellectual property portfolio relating to detection of MRD. The Company is seeking remedies including injunctive relief, damages and costs. In October 2022, Foresight filed its answer and counterclaims in the matter, seeking declaratory judgment and alleging that its solid tumor recurrence test does not infringe the Company’s asserted patents and that the claims of the Company's asserted patents are invalid and/or unenforceable. In November 2022, the Company filed its answer to Foresight’s counterclaims. The Company intends to vigorously defend against these counterclaims.

Between November 2022 and February 2023, Foresight filed four inter partes review petitions with the U.S. Patent and Trademark Office ("USPTO"), seeking to invalidate the four patents. Also, in November 2022, Foresight filed a motion to stay the Company's patent infringement action in the District Court pending the resolution of theinter partes review proceedings. In January 2023, the District Court granted Foresight’s motion to stay. In June 2023, the USPTO issued decisions granting inter partes reviews of two of the patents. In August 2023, the USPTO issued decisions granting inter partes reviews of the other two patents.

On June 26, 2023, the Company filed a second complaint in the District Court against Foresight for infringement of three of the Company's U.S. patents. The second suit brings the total number of patents that the Company alleges Foresight has infringed to seven. These patents also relate to the Company's intellectual property portfolio relating to detection of MRD. The Company is seeking remedies including injunctive relief, damages and costs. In September 2023, Foresight filed counterclaims in the matter, seeking declaratory judgment and alleging that its solid tumor recurrence test does not infringe the Company’s asserted patents in the Company’s second patent infringement action and that the Company’s asserted patents are invalid and/or unenforceable. The Company filed its answer to Foresight’s counterclaims in October 2023. The Company intends to vigorously defend against these counterclaims.

In October 2023, Foresight filed a motion to consolidate and stay the Company’s two patent infringement actions in the District Court. In November 2023, the Company filed its opposition to Foresight’s motion to consolidate and stay the infringement actions. Also in November 2023, Foresight filed its fifth inter partes review petition with the USPTO, seeking to invalidate one of the patents involved in the second patent infringement action. In January 2024, the District Court granted Foresight’s motion to consolidate and stay the two infringement actions against Foresight. The USPTO has yet to issue a decision regarding whether it will institute aninter partes review of the fifth patent.

Except for events that have already occurred, it is too early in the foregoing proceedings to predict the outcome of these proceedings, or any impact they may have on the Company. As such, the estimated financial effect associated with these proceedings cannot be made as of the date of filing of this Quarterly Report on Form 10-Q. This litigation is a significant ongoing expense with an uncertain outcome. Management believes this investment is important to protect the Company's intellectual property position, even recognizing the uncertainty of the outcome.

Apart from the matter described above, the Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully resolved. The outcome of litigation is inherently uncertain. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss concerning loss contingencies for asserted legal and other claims.