RISK FACTORS 4 resolved in our favor, litigation or other legal proceedings relating Changes in patent law could diminish the value of patents in to intellectual property claims may cause us to incur significant general, thereby impairing our ability to obtain patent protection expenses, and could distract our technical and management for our product candidates. personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions In the United States, the European Union and elsewhere, patent or other interim proceedings or developments and if securities law and its interpretation is frequently in a state of development analysts or investors perceive these results to be negative, and flux routintely vulnerable to modification or repeal by it could have a substantial adverse effect on the price of our legislators and changes in policy or interpretation and application ordinary shares. Such litigation or proceedings could substantially by courts or patent offices. This also applies particularly to the increase our operating losses and reduce the resources available biotechnological and pharmaceutical areas. for development activities or any future sales, marketing or Recent patent reform legislation in the United States could distribution activities. We may not have sufficient financial or other increase the uncertainties and costs surrounding the prosecution resources to adequately conduct such litigation or proceedings. of patent applications and the enforcement or defense of issued Some of our competitors may be able to sustain the costs of such patents. On September 16, 2011, the Leahy-Smith America litigation or proceedings more effectively than we can because of Invents Act, or the Leahy-Smith Act, was signed into law. The their greater financial resources and more mature and developed Leahy-Smith Act includes several significant changes to U.S. intellectual property portfolios. Uncertainties resulting from the patent law. These include provisions that affect the way patent initiation and continuation of intellectual property litigation or applications are prosecuted and also may affect patent litigation. other proceedings could have a material adverse effect on our These also include provisions that switched the United States ability to compete in the marketplace. from a “first-to-invent” system to a “first-to-file” system, allow We may be subject to claims asserting that our employees, third-party submission of prior art to the USPTO during patent consultants or advisors have wrongfully used or disclosed alleged prosecution and set forth additional procedures to attack the trade secrets of their current or former employers or claims validity of a patent by the USPTO administered post-grant asserting ownership of what we regard as our own intellectual proceedings. Under a first-to-file system, assuming the other property. requirements for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an Many of our employees, consultants or advisors are currently, or invention regardless of whether another inventor had made the were previously, employed, consulted or advised at universities invention earlier. The USPTO recently developed new regulations or other biotechnology or pharmaceutical companies, including and procedures to govern administration of the Leahy-Smith Act, some of our competitors or potential competitors. We may and many of the substantive changes to patent law associated with be subject to claims that such individuals or we have used or the Leahy-Smith Act, and in particular, the first to file provisions, disclosed intellectual property, including trade secrets or other only became effective on March 16, 2013. Accordingly, it is not proprietary information, of any such individual’s current or former clear what, if any, impact the Leahy-Smith Act will have on the employer. Litigation may be necessary to defend against these operation of our business. However, the Leahy-Smith Act and claims. If we fail in defending any such claims, in addition to paying its implementation could increase the uncertainties and costs monetary damages, we may lose valuable intellectual property surrounding the prosecution of our patent applications of those rights or personnel. Even if we are successful in defending against of our licensors and the enforcement or defense of any patents such claims, litigation could result in substantial costs and be a issuing from these applications, all of which could have a material distraction to management. adverse effect on our business, financial condition, results of operations and prospects. In addition, while it is our policy to require our employees and contractors who may be involved in the conception or For example, the Leahy-Smith Act provides a new administrative development of intellectual property on our behalf to execute tribunal known as the Patent Trial and Appeals Board, or PTAB, agreements assigning such intellectual property to us, we may that provides a venue for companies to challenge the validity of be unsuccessful in executing such an agreement with each party competitor patents at a cost that is much lower than district court who, in fact, conceives or develops intel lectual property that litigation and on timelines that are much faster. Although it is not we regard as our own. The assignment of intellectual property clear what, if any, long term impact the PTAB proceedings will rights may not be self-executing or the assignment agreements have on the operation of our business, the initial results of patent may be breached, and we may be forced to bring claims against chal lenge proceedings before the PTAB since its inception in third parties, or defend claims that they may bring against us, to 2013 have resulted in the invalidation of many U.S. patent claims. determine the ownership of what we regard as our intellectual The availability of the PTAB as a lower-cost, faster and potentially property. more potent tribunal for chal lenging patents could therefore 50 – GENSIGHT BIOLOGICS – 2017 Registration Document