1037-00004 · Solstice Biomedical Devices Ltd · Settlement Negotiation

settlement-proposal-letter-sc-to-htb.docx DOCUMENT Litigation

75 / 75 ← ✕

Contract analysis Extract to table

CALDERWOOD & HARKNESS LLP

Attorneys at Law

1201 Market Street, Suite 2500 Wilmington, Delaware 19801

299 Park Avenue, 35th Floor New York, New York 10171

Telephone: (302) 555-7800 Facsimile: (302) 555-7801

May 22, 2025

VIA EMAIL AND FIRST CLASS MAIL

WITHOUT PREJUDICE — FOR SETTLEMENT PURPOSES ONLY PROTECTED UNDER FRE 408 AND DEL. R. EVID. 408

Victoria Stanton, Esq. Hargrove, Tate & Bennington LLP 900 North King Street, Suite 1200 Wilmington, Delaware 19801

Re: Apex Surgical Innovations, Inc. v. Solstice Biomedical, Inc., Case No. 1:24-cv-00587-RGA, United States District Court for the District of Delaware — Settlement Proposal — License-and-Dismissal Framework

Dear Victoria:

I. Opening and Purpose

I write on behalf of our clients, Solstice Biomedical Devices Ltd. and its wholly owned United States subsidiary, Solstice Biomedical, Inc. (collectively, "Solstice"), to present a comprehensive settlement proposal for consideration by your client, Apex Surgical Innovations, Inc. ("Apex"), in the above-referenced action.

As you know, both parties participated in a second settlement conference on May 12, 2025, before Magistrate Judge Colleen Pratt. At that conference, counsel for both sides expressed a mutual willingness to continue settlement discussions outside of the judicial mediation framework, and Judge Pratt encouraged the parties to exchange written proposals that could serve as a foundation for further negotiation. This letter is intended to fulfill that objective.

You will also recall that the parties participated in a full-day mediation session on March 17, 2025, before the Honorable Margaret Forsythe (Ret.) at Amberstone ADR Services in Wilmington. Although that session did not result in a final resolution, the mediation was productive in narrowing the parties' respective positions on a number of material issues, including the appropriate royalty base, the relevance of certain comparable licenses, and the scope of any prospective license that would form part of a settlement. This proposal builds upon the progress made during that mediation and the subsequent settlement conference.

The purpose of this letter is to present, in detail, a comprehensive settlement proposal structured as a license-and-dismissal framework that would resolve all claims, counterclaims, and defenses in the pending action. The framework encompasses a lump-sum payment, a running royalty on future sales of licensed products, a non-exclusive patent license under the asserted patents, a covenant not to sue covering the broader Apex trocar patent family, a mutual release of all claims and counterclaims, dismissal with prejudice of Case No. 1:24-cv-00587-RGA, and mutual confidentiality obligations.

This letter is transmitted without prejudice and solely for the purpose of facilitating settlement discussions. The entire contents of this letter are subject to the protections afforded by Federal Rule of Evidence 408 and Delaware Rule of Evidence 408, and nothing herein shall be construed as an admission of liability, infringement, or validity, or as a waiver of any rights, claims, defenses, or counterclaims that Solstice has asserted or may assert in the pending action or otherwise.

II. Background and Context

The current litigation posture warrants a candid assessment by both parties of the costs, risks, and benefits of continuing to trial versus reaching a negotiated resolution.

The parties have engaged in extensive and hotly contested discovery over the past fourteen months. Fact discovery is complete, and the Court has ruled on multiple discovery disputes. On December 6, 2024, the Honorable Richard G. Andrews issued a detailed Claim Construction Order construing nine disputed claim terms across the three asserted patents. As both sides recognize, the Claim Construction Order produced mixed results — certain constructions favored Apex's theories of infringement, while others materially supported Solstice's non-infringement and invalidity positions. Both sides have exchanged opening and rebuttal expert reports on liability and damages, including detailed infringement analyses, invalidity analyses incorporating prior art references and prosecution history, and competing damages models.

On May 5, 2025, the Court denied without prejudice cross-motions for summary judgment, indicating that material factual disputes precluded resolution of the case short of trial. While the Court's order did not address the merits in depth, both sides have expressed their respective views on the strength of those motions, and we note that the Court expressly preserved the parties' ability to renew dispositive motions on a more developed record.

As the case now stands, trial is scheduled to commence on September 30, 2025, before Judge Andrews. Pretrial submissions are due beginning in August, and the parties face the substantial expense and burden of trial preparation, including exhibit preparation, deposition designation practice, witness preparation, demonstrative development, and pre-trial briefing.

Both parties have invested substantial resources in this litigation to date. While we do not propose to quantify the combined expenditures of both sides, it is evident that the costs have been significant and that trial preparation alone would add considerably to those figures. More importantly, both parties face the inherent uncertainty and risk that attend any patent trial — regardless of the strength of either side's case, no outcome can be guaranteed.

The three asserted patents at issue are: United States Patent No. 9,814,237 (the "'237 Patent"), entitled "Self-Sealing Trocar Assembly with Variable-Compliance Cannula," United States Patent No. 10,271,884 (the "'884 Patent"), entitled "Laparoscopic Access Device with Integrated Insufflation Channel," and United States Patent No. 10,932,105 (the "'105 Patent"), entitled "Multi-Port Trocar System with Radially Expanding Seal Mechanism." All three patents name Dr. Raymond Szabo as the sole inventor and are assigned to Apex Surgical Innovations, Inc.

The accused products are Solstice's PrecisionEdge™ PE-5000 Series, PE-12000 Series, and PE-15000 Series laparoscopic trocar assemblies. These products represent a significant and growing segment of Solstice's U.S. surgical device business and are widely used across hundreds of hospitals and surgical centers throughout the United States.

Against this backdrop, we believe a negotiated resolution on reasonable commercial terms would serve the interests of both parties, providing Apex with fair compensation for any use of its patented technology while preserving Solstice's ability to serve its customers and continue to innovate in the laparoscopic surgical device space.

III. Assessment of Litigation Risk Informing the Proposal

The settlement framework presented in this letter is informed by a realistic and balanced assessment of both parties' litigation positions and the inherent uncertainties of patent litigation. While Solstice does not concede any liability — and Indeed maintains robust defenses to each of Apex's infringement claims — Solstice acknowledges the commercial desirability of certainty and continued market access for the PrecisionEdge™ product line.

Solstice's non-infringement and invalidity defenses remain strong, particularly in light of the Court's Claim Construction Order. Of the nine disputed claim terms construed on December 6, 2024, five were construed in a manner favorable to Solstice's positions, including critical terms relating to the "variable-compliance seal interface" of the '237 Patent, the "integrated insufflation pathway" of the '884 Patent, and the "radially expanding engagement surface" of the '105 Patent. These constructions meaningfully narrow the scope of Apex's infringement theories and, in Solstice's view, render non-infringement findings probable on at least the PE-5000 Series with respect to all three patents and the PE-12000 Series with respect to the '237 and '884 Patents.

Solstice's summary judgment motion on non-infringement of the PE-5000 Series was denied without prejudice on May 5, 2025, solely on the basis that factual disputes concerning the accused device's seal mechanism precluded summary adjudication. Solstice respectfully maintains that, on a more fully developed trial record, its non-infringement position on the PE-5000 Series is compelling and would likely have been granted had the Court reached the merits in full.

With respect to damages, Apex has asserted reasonable royalty damages of $31,800,000, as opined by Hugh Danaher, CFA, of Keystone Valuation Advisors LLC. That figure is predicated on a royalty base encompassing the entirety of combined U.S. sales of the accused PrecisionEdge™ products — totaling $74.6 million from calendar year 2021 through September 30, 2024 — and a proposed royalty rate that Solstice's damages expert, Dr. Elena Marchetti of Pinnacle Economics Group LLC, has demonstrated to be substantially overstated. Dr. Marchetti's rebuttal report identifies significant methodological deficiencies in Mr. Danaher's analysis, including the use of inapposite comparable licenses, failure to properly apportion for unpatented features and Solstice's own proprietary innovations, and an inflated royalty rate that disregards the competitive landscape and the availability of non-infringing alternatives. The weighted average gross margin of the accused products over the damages period is 61.3%, and Dr. Marchetti's analysis demonstrates that a properly constructed Georgia-Pacific analysis yields a reasonable royalty that is a fraction of Apex's asserted figure.

In short, while Apex has the right to take this case to trial and present its damages theory to a jury, the litigation risk facing Apex is substantial — and, conversely, while Solstice is confident in its defenses, the cost and distraction of trial preparation and trial itself counsel in favor of a negotiated resolution. The proposal set forth below reflects Solstice's good-faith effort to find a middle ground that accounts for both parties' realistic assessments of risk and reward.

IV. Proposed Settlement Framework — Overview

Solstice proposes a comprehensive license-and-dismissal settlement comprising the following seven integrated elements:

1. A lump-sum payment from Solstice to Apex, as compensation for past sales of the accused PrecisionEdge™ products during the damages period;

2. A running royalty on future sales of Licensed Products for the remaining life of the Licensed Patents;

3. A non-exclusive patent license under the three asserted patents and related continuations, divisionals, and reissues;

4. A covenant not to sue covering the broader Apex trocar patent family, providing Solstice with commercial certainty beyond the three specifically asserted patents;

5. A mutual release of all claims, counterclaims, and defenses in the pending action;

6. Dismissal with prejudice of Case No. 1:24-cv-00587-RGA, with each party bearing its own costs and attorneys' fees; and

7. Mutual confidentiality obligations governing the terms of the settlement.

Each of these elements is discussed in detail below.

V. Proposed Lump-Sum Payment

Solstice proposes a lump-sum payment to Apex in the amount of Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000) as compensation for past sales of the accused PrecisionEdge™ products during the damages period.

To accommodate Solstice's cash flow requirements and capital planning cycle, Solstice proposes that the lump-sum payment be made in two tranches, as follows:

Tranche 1: Five Million Two Hundred Fifty Thousand Dollars ($5,250,000), payable within ten (10) business days following execution of the definitive settlement agreement by all parties.

Tranche 2: Three Million Five Hundred Thousand Dollars ($3,500,000), payable on or before September 15, 2025.

Both payments would be deposited into an escrow account maintained by a mutually agreed escrow agent, with release to Apex within three (3) business days of deposit. Solstice suggests Tidewater Fiduciary Services, Inc., located at 300 Delaware Avenue, Suite 1400, Wilmington, Delaware 19801, as a neutral and experienced fiduciary for this purpose. Tidewater is a Delaware-chartered trust company with substantial experience administering intellectual property and litigation settlement escrows. If Apex prefers an alternative escrow agent, Solstice is open to discussing alternatives.

The proposed lump-sum payment represents a reasonable and commercially realistic resolution of the parties' respective damages positions when viewed against the full range of potential trial outcomes. At one end of the spectrum, Solstice could obtain a complete defense verdict — no infringement, no damages. At the other end, Apex's asserted damages figure of $31.8 million represents the theoretical ceiling, which, as discussed above, Solstice believes to be substantially overstated and which would itself be subject to post-trial motions and appellate review. The lump-sum payment of $8,750,000 reflects an appropriate discount for Solstice's strong defenses, the litigation risk inherent on both sides, the costs both parties would incur in proceeding through trial and any subsequent appeal, and the time value of money associated with a resolution that delivers immediate, certain value to Apex rather than the uncertain prospect of a jury verdict months or years in the future.

VI. Proposed Running Royalty

In addition to the lump-sum payment described above, Solstice proposes a running royalty at a rate of 3.75% of Net Sales of Licensed Products for the remaining life of the Licensed Patents. The key terms of the running royalty are as follows:

Licensed Products. "Licensed Products" shall mean the PrecisionEdge™ PE-5000 Series, PE-12000 Series, and PE-15000 Series laparoscopic trocar assemblies and their successors (i.e., next-generation products that are covered by one or more claims of the Licensed Patents).

Net Sales. "Net Sales" shall be defined as gross invoiced sales of Licensed Products, less the following customary deductions: (a) actual returns and allowances; (b) trade, quantity, and cash rebates; (c) chargebacks, including group purchasing organization and hospital system chargebacks; (d) freight, insurance, and shipping charges separately stated on the invoice; and (e) sales taxes, value-added taxes, and other governmental charges imposed on the sale. Net Sales shall be calculated on an accrual basis in accordance with generally accepted accounting principles, consistently applied.

Royalty Rate. The running royalty rate shall be 3.75% of Net Sales of Licensed Products, calculated and payable on a quarterly basis. Each quarterly payment shall be due within forty-five (45) days following the close of the applicable calendar quarter.

Annual Royalty Floor. To provide Apex with a guaranteed minimum revenue stream from the license, Solstice proposes an annual royalty floor of Five Hundred Thousand Dollars ($500,000) per calendar year, commencing with calendar year 2026. If the royalties otherwise calculated for a given calendar year fall below $500,000, Solstice would pay the difference to Apex as a "true-up" payment within forty-five (45) days following the close of such calendar year.

Annual Royalty Cap. To provide Solstice with cost certainty as product sales grow, Solstice proposes an annual royalty cap of One Million Eight Hundred Thousand Dollars ($1,800,000) per calendar year. If the royalties otherwise calculated for a given calendar year exceed $1,800,000, Solstice's obligation for that calendar year would be limited to $1,800,000.

Estimated Year 1 Royalty. Based on Solstice's current sales projections, Net Sales of Licensed Products for calendar year 2026 are estimated at approximately $24.2 million, reflecting approximately 8% year-over-year growth over fiscal year 2023 Net Sales of approximately $22.4 million. At a 3.75% royalty rate, the estimated Year 1 royalty would be approximately $907,500, which falls comfortably within the proposed floor-to-cap range.

Rationale. The proposed 3.75% royalty rate reflects a balanced assessment of the parties' respective positions on the Georgia-Pacific reasonable royalty analysis. It properly accounts for the contribution of the patented technology to the commercial value of the Licensed Products, while also giving due weight to Solstice's own substantial engineering innovations, proprietary manufacturing processes, established distribution network, and brand goodwill — factors that independently drive the commercial success of the PrecisionEdge™ line. The proposed rate is also consistent with licensing benchmarks in the minimally invasive surgical device space, where published and reported license rates for component-level patented technology in trocar, cannula, and related surgical access device products typically range from 2% to 6% of net sales, depending on the scope of the licensed technology and the relative bargaining positions of the parties.

Royalty Reporting. Solstice shall provide Apex with quarterly royalty reports in a mutually agreed form, including, at a minimum: (a) the quantity of Licensed Products sold during the applicable quarter; (b) gross invoiced sales; (c) a breakdown of permitted deductions; (d) Net Sales; and (e) the royalty payment due. Reports shall be delivered concurrently with each quarterly royalty payment.

Audit Right. Apex shall have the right, exercisable no more than once per calendar year, to engage an independent certified public accountant to audit Solstice's books and records solely to the extent necessary to verify the accuracy of royalty payments. Such audits shall be conducted during normal business hours upon no fewer than thirty (30) days' prior written notice. The cost of the audit shall be borne by Apex; provided, however, that if the audit reveals an underpayment exceeding five percent (5%) of the royalties due for any audited period, Solstice shall bear the reasonable cost of the audit and shall promptly remit the underpayment amount together with interest at the rate of 1% per month from the date such amount was originally due.

VII. Proposed Patent License Terms

The patent license to be included in the definitive settlement agreement would contain the following material terms:

License Grant. Apex would grant to Solstice a non-exclusive, non-transferable license under the Licensed Patents, subject to the running royalty and other terms described herein. The license would be transferable solely in connection with a change of control of Solstice (whether by merger, acquisition, sale of all or substantially all assets, or otherwise), provided that the acquiring entity agrees to be bound by the terms of the license.

Licensed Patents. The Licensed Patents shall include:

(a) U.S. Patent No. 9,814,237 (the '237 Patent), "Self-Sealing Trocar Assembly with Variable-Compliance Cannula," expiring June 22, 2035;

(b) U.S. Patent No. 10,271,884 (the '884 Patent), "Laparoscopic Access Device with Integrated Insufflation Channel," expiring September 15, 2036;

(c) U.S. Patent No. 10,932,105 (the '105 Patent), "Multi-Port Trocar System with Radially Expanding Seal Mechanism," expiring January 10, 2038; and

(d) Any continuations, continuations-in-part, divisionals, reissues, or reexaminations of any of the foregoing patents.

License Scope. The license shall be worldwide in scope. While the pending litigation involves only U.S. patent rights, Solstice's business operations extend globally, and a worldwide license will avoid the need for separate negotiations regarding any corresponding foreign patents or patent applications.

Field of Use. The license shall be limited to the field of laparoscopic surgical access devices, including trocar assemblies, cannula systems, and related components and accessories.

Sublicense Right. Solstice shall have the limited right to sublicense under the Licensed Patents solely to contract manufacturers engaged by Solstice for the manufacture or assembly of Licensed Products. This sublicense right is necessary to ensure that Solstice can maintain its current manufacturing arrangements and adapt its supply chain as needed without risk of infringement claims against its manufacturing partners. Any sublicense shall be subject to the terms and conditions of the definitive license agreement, and Solstice shall remain responsible for the acts and omissions of its sublicensees.

Term. The license shall remain in effect for the remaining life of the Licensed Patents, expiring upon the expiration of the last-to-expire Licensed Patent. Based on current patent term information, the license would expire on January 10, 2038, upon expiration of the '105 Patent.

VIII. Proposed Covenant Not to Sue

As a critical component of the proposed settlement framework, Solstice requests that Apex provide a covenant not to sue with respect to the broader Apex Trocar Patent Family.

Solstice understands that the Apex Trocar Patent Family encompasses a portfolio of fourteen (14) issued United States patents and six (6) pending continuation applications, of which only the three asserted patents are at issue in the current litigation. The proposed covenant not to sue would provide that Apex shall not assert any patent within the Apex Trocar Patent Family — including, without limitation, any patent issuing from the six pending continuation applications — against Solstice, its subsidiaries, its successors, or its sublicensees for the manufacture, use, sale, offer for sale, or importation of products within the licensed field of use during the term of the license.

This broader covenant is essential to providing Solstice with the commercial certainty it requires to justify the proposed settlement payments and to continue investing in the development and marketing of its PrecisionEdge™ product line. Without such a covenant, Solstice would face the prospect of serial litigation on related patent claims from the same patent family — a result that would undermine the purpose and finality of any settlement. The covenant not to sue is a standard feature of patent license agreements in the life sciences and medical device industries and is consistent with the approach taken in comparable settlements involving related patent portfolios.

IX. Most-Favored Licensee Provision

Solstice proposes the inclusion of a most-favored licensee clause in the definitive settlement and license agreement. Specifically, if Apex enters into a license agreement with any third party for the Licensed Patents — whether in settlement of litigation or otherwise — at a running royalty rate lower than 3.75% of net sales, Solstice's running royalty rate would adjust prospectively (from the effective date of the lower-rate license) to match the lower rate granted to such third-party licensee.

This provision ensures equitable treatment of Solstice relative to other licensees and reflects the commercial reality that subsequent licenses may be granted at different rates as the competitive landscape, the proximity to patent expiration, and other market conditions evolve over the remaining life of the Licensed Patents. The most-favored licensee provision would not apply retroactively and would not affect the lump-sum payment or any royalties already paid or accrued prior to the effective date of the lower-rate license.

Solstice recognizes that the most-favored licensee provision may require negotiation around appropriate carve-outs — for example, for licenses granted in connection with cross-license agreements where the value of the cross-license consideration is difficult to allocate, or for licenses granted under exigent circumstances such as a settlement of an ITC investigation. We are prepared to discuss reasonable limitations on this provision.

X. Mutual Release and Dismissal

The definitive settlement agreement would include a full and unconditional mutual release of all claims, counterclaims, defenses, causes of action, and demands of every kind and nature, whether known or unknown, that have been asserted or could have been asserted by either party in Case No. 1:24-cv-00587-RGA, arising out of or relating to the manufacture, use, sale, offer for sale, or importation of the accused PrecisionEdge™ products and the Licensed Patents during the period from the inception of the accused conduct through the date of execution of the definitive settlement agreement.

Promptly following execution of the definitive settlement agreement — and in no event later than five (5) business days thereafter — the parties would file a joint Stipulation of Dismissal with Prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii), dismissing all claims and counterclaims in Case No. 1:24-cv-00587-RGA with prejudice, with each party bearing its own costs and attorneys' fees.

Solstice proposes a target filing date of July 1, 2025, for the Stipulation of Dismissal, which aligns with the proposed timeline for execution of the definitive agreement and the Tranche 1 payment described in Section V above. The Stipulation of Dismissal would include customary provisions for the Court's retention of jurisdiction to enforce the terms of the settlement agreement, if the parties agree that such a provision is appropriate, or alternatively, the settlement agreement would include a standalone dispute resolution mechanism (such as binding arbitration before a neutral in Wilmington, Delaware) for any disputes arising under the agreement.

XI. Confidentiality

All terms and conditions of the settlement, including the financial terms, the license terms, and the existence and content of this proposal letter and all related communications, shall be subject to mutual confidentiality obligations in the definitive settlement agreement.

Neither party shall disclose the terms of the settlement to any third party except as follows:

(a) to each party's directors, officers, employees, accountants, auditors, tax advisors, financial advisors, and legal counsel who have a reasonable need to know such information, provided that such persons are bound by obligations of confidentiality no less restrictive than those in the settlement agreement;

(b) as may be required by applicable law, regulation, or legal process, including any required disclosures in regulatory filings (e.g., Securities and Exchange Commission filings, if applicable), tax filings, or financial audits; provided that, to the extent permitted, the disclosing party shall provide the non-disclosing party with reasonable prior notice of such disclosure and shall use commercially reasonable efforts to minimize the scope of such disclosure; and

(c) pursuant to a mutually agreed joint public statement, which Solstice proposes be limited to the following language: "The matter has been resolved on mutually agreeable terms."

XII. Governing Law

The definitive settlement agreement, including the patent license agreement, shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict-of-laws principles. Any dispute arising out of or relating to the settlement agreement or patent license that is not resolved by the Court in the exercise of retained jurisdiction (if applicable) shall be resolved by binding arbitration administered by the American Arbitration Association in Wilmington, Delaware, in accordance with its Commercial Arbitration Rules.

XIII. Proposed Process and Timeline

Solstice proposes the following timeline for concluding a settlement based on this framework:

If Apex is amenable to this framework — whether in its current form or with modifications that the parties negotiate — Calderwood & Harkness LLP will prepare an initial draft of the definitive settlement agreement, patent license agreement, escrow agreement, Stipulation of Dismissal, and any other ancillary documentation necessary to effectuate the settlement, and will deliver such drafts to Hargrove, Tate & Bennington LLP for your review and comment.

In the interim, both parties shall continue to comply in all respects with the existing scheduling order and all Court-imposed deadlines, with the understanding that the September 30, 2025 trial date and all associated pre-trial deadlines would be vacated by stipulation or motion upon execution of the definitive settlement agreement. If the parties reach agreement in principle on the settlement framework prior to the execution of definitive documentation, we would suggest that the parties jointly inform the Court that they have reached a settlement in principle and request a brief administrative stay of upcoming deadlines, subject to the Court's approval.

XIV. Reservation of Rights

This proposal is made without prejudice and without any admission of liability, infringement, validity, or enforceability. Solstice expressly reserves all rights, claims, defenses, counterclaims, and affirmative defenses it has asserted or may assert in Case No. 1:24-cv-00587-RGA or in any other forum.

Nothing in this letter or in any discussions arising from this letter constitutes or shall be deemed to constitute a binding agreement, obligation, or commitment of any kind. Any settlement of the pending action is expressly contingent upon the successful negotiation and execution of mutually acceptable definitive documentation, including a settlement agreement, patent license agreement, and related ancillary agreements.

This letter, and any discussions or negotiations related hereto, are inadmissible in evidence in any proceeding pursuant to Federal Rule of Evidence 408, Delaware Rule of Evidence 408, and any analogous rule or statute in any jurisdiction, and may not be used for any purpose other than settlement negotiations between the parties.

XV. Closing

We believe the proposal set forth in this letter provides a constructive, good-faith basis for resolving this matter on terms that are fair and commercially reasonable for both parties. The framework is designed to provide Apex with meaningful near-term compensation through the lump-sum payment, an ongoing revenue stream through the running royalty with a guaranteed annual floor, and the protection of its patent portfolio through the non-exclusive nature of the license. At the same time, the framework provides Solstice with the commercial certainty, market access, and freedom to operate that it requires to continue serving its customers and investing in its business.

I invite you to call or write at any time to discuss any aspect of this proposal. We are, of course, happy to address questions, consider counterproposals, or explore modifications to any of the terms outlined above. We are also prepared to arrange a meeting or conference call among the parties' principals, including Eamon Rourke, General Counsel of Solstice, and Martin Hale, General Counsel of Apex, or, if it would be productive, Dr. Fiona Tierney, Chief Executive Officer of Solstice, and Gerald K. Whitford, Chief Executive Officer of Apex. We are available in person in Wilmington or by videoconference, at whatever time and in whatever format is most convenient for your client.

I can be reached directly at my Wilmington office at (302) 555-7812, by mobile at (302) 555-9431, or by email at mdelgado@calderwoodharkness.com. I look forward to hearing from you.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Marcus Delgado Partner, intellectual Property Calderwood & Harkness LLP 1201 Market Street, Suite 2500 Wilmington, Delaware 19801 Tel: (302) 555-7812

Email: mdelgado@calderwoodharkness.com

cc (via email):

Eamon Rourke, General Counsel, Solstice Biomedical Devices Ltd.

Dr. Fiona Tierney, Chief Executive Officer, Solstice Biomedical Devices Ltd.

Brendan Molloy, Chief Financial Officer, Solstice Biomedical Devices Ltd.

Catherine Bloom, Billing Partner, Calderwood & Harkness LLP

Christy Bauer, Lead Associate, Calderwood & Harkness LLP

Note: Copies to client personnel have been transmitted separately under the protection of the attorney-client privilege and work product doctrine.

Enclosures: None. This letter constitutes a standalone settlement proposal. Definitive documentation, including a draft settlement agreement, patent license agreement, and ancillary agreements, will be prepared and circulated upon the parties' agreement on the material terms of the framework outlined herein.

Milestone	Proposed Date
Apex's response to this proposal	On or before May 30, 2025
Negotiation and finalization of definitive settlement agreement and license	Target execution by June 16, 2025
Tranche 1 payment into escrow ($5,250,000)	Within 10 business days of execution (approximately June 30, 2025)
Filing of joint Stipulation of Dismissal with Prejudice	On or about July 1, 2025
Tranche 2 payment ($3,500,000)	On or before September 15, 2025

CALDERWOOD & HARKNESS LLP
Attorneys at Law
1201 Market Street, Suite 2500 Wilmington, Delaware 19801
299 Park Avenue, 35th Floor New York, New York 10171
Telephone: (302) 555-7800 Facsimile: (302) 555-7801
May 22, 2025
VIA EMAIL AND FIRST CLASS MAIL
WITHOUT PREJUDICE — FOR SETTLEMENT PURPOSES ONLY PROTECTED UNDER FRE 408 AND DEL. R. EVID. 408
Victoria Stanton, Esq. Hargrove, Tate & Bennington LLP 900 North King Street, Suite 1200 Wilmington, Delaware 19801
Re: Apex Surgical Innovations, Inc. v. Solstice Biomedical, Inc., Case No. 1:24-cv-00587-RGA, United States District Court for the District of Delaware — Settlement Proposal — License-and-Dismissal Framework
Dear Victoria:
I. Opening and Purpose
I write on behalf of our clients, Solstice Biomedical Devices Ltd. and its wholly owned United States subsidiary, Solstice Biomedical, Inc. (collectively, "Solstice"), to present a comprehensive settlement proposal for consideration by your client, Apex Surgical Innovations, Inc. ("Apex"), in the above-referenced action.
As you know, both parties participated in a second settlement conference on May 12, 2025, before Magistrate Judge Colleen Pratt. At that conference, counsel for both sides expressed a mutual willingness to continue settlement discussions outside of the judicial mediation framework, and Judge Pratt encouraged the parties to exchange written proposals that could serve as a foundation for further negotiation. This letter is intended to fulfill that objective.
You will also recall that the parties participated in a full-day mediation session on March 17, 2025, before the Honorable Margaret Forsythe (Ret.) at Amberstone ADR Services in Wilmington. Although that session did not result in a final resolution, the mediation was productive in narrowing the parties' respective positions on a number of material issues, including the appropriate royalty base, the relevance of certain comparable licenses, and the scope of any prospective license that would form part of a settlement. This proposal builds upon the progress made during that mediation and the subsequent settlement conference.
The purpose of this letter is to present, in detail, a comprehensive settlement proposal structured as a license-and-dismissal framework that would resolve all claims, counterclaims, and defenses in the pending action. The framework encompasses a lump-sum payment, a running royalty on future sales of licensed products, a non-exclusive patent license under the asserted patents, a covenant not to sue covering the broader Apex trocar patent family, a mutual release of all claims and counterclaims, dismissal with prejudice of Case No. 1:24-cv-00587-RGA, and mutual confidentiality obligations.
This letter is transmitted without prejudice and solely for the purpose of facilitating settlement discussions. The entire contents of this letter are subject to the protections afforded by Federal Rule of Evidence 408 and Delaware Rule of Evidence 408, and nothing herein shall be construed as an admission of liability, infringement, or validity, or as a waiver of any rights, claims, defenses, or counterclaims that Solstice has asserted or may assert in the pending action or otherwise.
II. Background and Context
The current litigation posture warrants a candid assessment by both parties of the costs, risks, and benefits of continuing to trial versus reaching a negotiated resolution.
The parties have engaged in extensive and hotly contested discovery over the past fourteen months. Fact discovery is complete, and the Court has ruled on multiple discovery disputes. On December 6, 2024, the Honorable Richard G. Andrews issued a detailed Claim Construction Order construing nine disputed claim terms across the three asserted patents. As both sides recognize, the Claim Construction Order produced mixed results — certain constructions favored Apex's theories of infringement, while others materially supported Solstice's non-infringement and invalidity positions. Both sides have exchanged opening and rebuttal expert reports on liability and damages, including detailed infringement analyses, invalidity analyses incorporating prior art references and prosecution history, and competing damages models.
On May 5, 2025, the Court denied without prejudice cross-motions for summary judgment, indicating that material factual disputes precluded resolution of the case short of trial. While the Court's order did not address the merits in depth, both sides have expressed their respective views on the strength of those motions, and we note that the Court expressly preserved the parties' ability to renew dispositive motions on a more developed record.
As the case now stands, trial is scheduled to commence on September 30, 2025, before Judge Andrews. Pretrial submissions are due beginning in August, and the parties face the substantial expense and burden of trial preparation, including exhibit preparation, deposition designation practice, witness preparation, demonstrative development, and pre-trial briefing.
Both parties have invested substantial resources in this litigation to date. While we do not propose to quantify the combined expenditures of both sides, it is evident that the costs have been significant and that trial preparation alone would add considerably to those figures. More importantly, both parties face the inherent uncertainty and risk that attend any patent trial — regardless of the strength of either side's case, no outcome can be guaranteed.
The three asserted patents at issue are: United States Patent No. 9,814,237 (the "'237 Patent"), entitled "Self-Sealing Trocar Assembly with Variable-Compliance Cannula," United States Patent No. 10,271,884 (the "'884 Patent"), entitled "Laparoscopic Access Device with Integrated Insufflation Channel," and United States Patent No. 10,932,105 (the "'105 Patent"), entitled "Multi-Port Trocar System with Radially Expanding Seal Mechanism." All three patents name Dr. Raymond Szabo as the sole inventor and are assigned to Apex Surgical Innovations, Inc.
The accused products are Solstice's PrecisionEdge™ PE-5000 Series, PE-12000 Series, and PE-15000 Series laparoscopic trocar assemblies. These products represent a significant and growing segment of Solstice's U.S. surgical device business and are widely used across hundreds of hospitals and surgical centers throughout the United States.
Against this backdrop, we believe a negotiated resolution on reasonable commercial terms would serve the interests of both parties, providing Apex with fair compensation for any use of its patented technology while preserving Solstice's ability to serve its customers and continue to innovate in the laparoscopic surgical device space.
III. Assessment of Litigation Risk Informing the Proposal
The settlement framework presented in this letter is informed by a realistic and balanced assessment of both parties' litigation positions and the inherent uncertainties of patent litigation. While Solstice does not concede any liability — and Indeed maintains robust defenses to each of Apex's infringement claims — Solstice acknowledges the commercial desirability of certainty and continued market access for the PrecisionEdge™ product line.
Solstice's non-infringement and invalidity defenses remain strong, particularly in light of the Court's Claim Construction Order. Of the nine disputed claim terms construed on December 6, 2024, five were construed in a manner favorable to Solstice's positions, including critical terms relating to the "variable-compliance seal interface" of the '237 Patent, the "integrated insufflation pathway" of the '884 Patent, and the "radially expanding engagement surface" of the '105 Patent. These constructions meaningfully narrow the scope of Apex's infringement theories and, in Solstice's view, render non-infringement findings probable on at least the PE-5000 Series with respect to all three patents and the PE-12000 Series with respect to the '237 and '884 Patents.
Solstice's summary judgment motion on non-infringement of the PE-5000 Series was denied without prejudice on May 5, 2025, solely on the basis that factual disputes concerning the accused device's seal mechanism precluded summary adjudication. Solstice respectfully maintains that, on a more fully developed trial record, its non-infringement position on the PE-5000 Series is compelling and would likely have been granted had the Court reached the merits in full.
With respect to damages, Apex has asserted reasonable royalty damages of $31,800,000, as opined by Hugh Danaher, CFA, of Keystone Valuation Advisors LLC. That figure is predicated on a royalty base encompassing the entirety of combined U.S. sales of the accused PrecisionEdge™ products — totaling $74.6 million from calendar year 2021 through September 30, 2024 — and a proposed royalty rate that Solstice's damages expert, Dr. Elena Marchetti of Pinnacle Economics Group LLC, has demonstrated to be substantially overstated. Dr. Marchetti's rebuttal report identifies significant methodological deficiencies in Mr. Danaher's analysis, including the use of inapposite comparable licenses, failure to properly apportion for unpatented features and Solstice's own proprietary innovations, and an inflated royalty rate that disregards the competitive landscape and the availability of non-infringing alternatives. The weighted average gross margin of the accused products over the damages period is 61.3%, and Dr. Marchetti's analysis demonstrates that a properly constructed Georgia-Pacific analysis yields a reasonable royalty that is a fraction of Apex's asserted figure.
In short, while Apex has the right to take this case to trial and present its damages theory to a jury, the litigation risk facing Apex is substantial — and, conversely, while Solstice is confident in its defenses, the cost and distraction of trial preparation and trial itself counsel in favor of a negotiated resolution. The proposal set forth below reflects Solstice's good-faith effort to find a middle ground that accounts for both parties' realistic assessments of risk and reward.
IV. Proposed Settlement Framework — Overview
Solstice proposes a comprehensive license-and-dismissal settlement comprising the following seven integrated elements:
1. A lump-sum payment from Solstice to Apex, as compensation for past sales of the accused PrecisionEdge™ products during the damages period;
2. A running royalty on future sales of Licensed Products for the remaining life of the Licensed Patents;
3. A non-exclusive patent license under the three asserted patents and related continuations, divisionals, and reissues;
4. A covenant not to sue covering the broader Apex trocar patent family, providing Solstice with commercial certainty beyond the three specifically asserted patents;
5. A mutual release of all claims, counterclaims, and defenses in the pending action;
6. Dismissal with prejudice of Case No. 1:24-cv-00587-RGA, with each party bearing its own costs and attorneys' fees; and
7. Mutual confidentiality obligations governing the terms of the settlement.
Each of these elements is discussed in detail below.
V. Proposed Lump-Sum Payment
Solstice proposes a lump-sum payment to Apex in the amount of Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000) as compensation for past sales of the accused PrecisionEdge™ products during the damages period.
To accommodate Solstice's cash flow requirements and capital planning cycle, Solstice proposes that the lump-sum payment be made in two tranches, as follows:
Tranche 1: Five Million Two Hundred Fifty Thousand Dollars ($5,250,000), payable within ten (10) business days following execution of the definitive settlement agreement by all parties.
Tranche 2: Three Million Five Hundred Thousand Dollars ($3,500,000), payable on or before September 15, 2025.
Both payments would be deposited into an escrow account maintained by a mutually agreed escrow agent, with release to Apex within three (3) business days of deposit. Solstice suggests Tidewater Fiduciary Services, Inc., located at 300 Delaware Avenue, Suite 1400, Wilmington, Delaware 19801, as a neutral and experienced fiduciary for this purpose. Tidewater is a Delaware-chartered trust company with substantial experience administering intellectual property and litigation settlement escrows. If Apex prefers an alternative escrow agent, Solstice is open to discussing alternatives.
The proposed lump-sum payment represents a reasonable and commercially realistic resolution of the parties' respective damages positions when viewed against the full range of potential trial outcomes. At one end of the spectrum, Solstice could obtain a complete defense verdict — no infringement, no damages. At the other end, Apex's asserted damages figure of $31.8 million represents the theoretical ceiling, which, as discussed above, Solstice believes to be substantially overstated and which would itself be subject to post-trial motions and appellate review. The lump-sum payment of $8,750,000 reflects an appropriate discount for Solstice's strong defenses, the litigation risk inherent on both sides, the costs both parties would incur in proceeding through trial and any subsequent appeal, and the time value of money associated with a resolution that delivers immediate, certain value to Apex rather than the uncertain prospect of a jury verdict months or years in the future.
VI. Proposed Running Royalty
In addition to the lump-sum payment described above, Solstice proposes a running royalty at a rate of 3.75% of Net Sales of Licensed Products for the remaining life of the Licensed Patents. The key terms of the running royalty are as follows:
Licensed Products. "Licensed Products" shall mean the PrecisionEdge™ PE-5000 Series, PE-12000 Series, and PE-15000 Series laparoscopic trocar assemblies and their successors (i.e., next-generation products that are covered by one or more claims of the Licensed Patents).
Net Sales. "Net Sales" shall be defined as gross invoiced sales of Licensed Products, less the following customary deductions: (a) actual returns and allowances; (b) trade, quantity, and cash rebates; (c) chargebacks, including group purchasing organization and hospital system chargebacks; (d) freight, insurance, and shipping charges separately stated on the invoice; and (e) sales taxes, value-added taxes, and other governmental charges imposed on the sale. Net Sales shall be calculated on an accrual basis in accordance with generally accepted accounting principles, consistently applied.
Royalty Rate. The running royalty rate shall be 3.75% of Net Sales of Licensed Products, calculated and payable on a quarterly basis. Each quarterly payment shall be due within forty-five (45) days following the close of the applicable calendar quarter.
Annual Royalty Floor. To provide Apex with a guaranteed minimum revenue stream from the license, Solstice proposes an annual royalty floor of Five Hundred Thousand Dollars ($500,000) per calendar year, commencing with calendar year 2026. If the royalties otherwise calculated for a given calendar year fall below $500,000, Solstice would pay the difference to Apex as a "true-up" payment within forty-five (45) days following the close of such calendar year.
Annual Royalty Cap. To provide Solstice with cost certainty as product sales grow, Solstice proposes an annual royalty cap of One Million Eight Hundred Thousand Dollars ($1,800,000) per calendar year. If the royalties otherwise calculated for a given calendar year exceed $1,800,000, Solstice's obligation for that calendar year would be limited to $1,800,000.
Estimated Year 1 Royalty. Based on Solstice's current sales projections, Net Sales of Licensed Products for calendar year 2026 are estimated at approximately $24.2 million, reflecting approximately 8% year-over-year growth over fiscal year 2023 Net Sales of approximately $22.4 million. At a 3.75% royalty rate, the estimated Year 1 royalty would be approximately $907,500, which falls comfortably within the proposed floor-to-cap range.
Rationale. The proposed 3.75% royalty rate reflects a balanced assessment of the parties' respective positions on the Georgia-Pacific reasonable royalty analysis. It properly accounts for the contribution of the patented technology to the commercial value of the Licensed Products, while also giving due weight to Solstice's own substantial engineering innovations, proprietary manufacturing processes, established distribution network, and brand goodwill — factors that independently drive the commercial success of the PrecisionEdge™ line. The proposed rate is also consistent with licensing benchmarks in the minimally invasive surgical device space, where published and reported license rates for component-level patented technology in trocar, cannula, and related surgical access device products typically range from 2% to 6% of net sales, depending on the scope of the licensed technology and the relative bargaining positions of the parties.
Royalty Reporting. Solstice shall provide Apex with quarterly royalty reports in a mutually agreed form, including, at a minimum: (a) the quantity of Licensed Products sold during the applicable quarter; (b) gross invoiced sales; (c) a breakdown of permitted deductions; (d) Net Sales; and (e) the royalty payment due. Reports shall be delivered concurrently with each quarterly royalty payment.
Audit Right. Apex shall have the right, exercisable no more than once per calendar year, to engage an independent certified public accountant to audit Solstice's books and records solely to the extent necessary to verify the accuracy of royalty payments. Such audits shall be conducted during normal business hours upon no fewer than thirty (30) days' prior written notice. The cost of the audit shall be borne by Apex; provided, however, that if the audit reveals an underpayment exceeding five percent (5%) of the royalties due for any audited period, Solstice shall bear the reasonable cost of the audit and shall promptly remit the underpayment amount together with interest at the rate of 1% per month from the date such amount was originally due.
VII. Proposed Patent License Terms
The patent license to be included in the definitive settlement agreement would contain the following material terms:
License Grant. Apex would grant to Solstice a non-exclusive, non-transferable license under the Licensed Patents, subject to the running royalty and other terms described herein. The license would be transferable solely in connection with a change of control of Solstice (whether by merger, acquisition, sale of all or substantially all assets, or otherwise), provided that the acquiring entity agrees to be bound by the terms of the license.
Licensed Patents. The Licensed Patents shall include:
(a) U.S. Patent No. 9,814,237 (the '237 Patent), "Self-Sealing Trocar Assembly with Variable-Compliance Cannula," expiring June 22, 2035;
(b) U.S. Patent No. 10,271,884 (the '884 Patent), "Laparoscopic Access Device with Integrated Insufflation Channel," expiring September 15, 2036;
(c) U.S. Patent No. 10,932,105 (the '105 Patent), "Multi-Port Trocar System with Radially Expanding Seal Mechanism," expiring January 10, 2038; and
(d) Any continuations, continuations-in-part, divisionals, reissues, or reexaminations of any of the foregoing patents.
License Scope. The license shall be worldwide in scope. While the pending litigation involves only U.S. patent rights, Solstice's business operations extend globally, and a worldwide license will avoid the need for separate negotiations regarding any corresponding foreign patents or patent applications.
Field of Use. The license shall be limited to the field of laparoscopic surgical access devices, including trocar assemblies, cannula systems, and related components and accessories.
Sublicense Right. Solstice shall have the limited right to sublicense under the Licensed Patents solely to contract manufacturers engaged by Solstice for the manufacture or assembly of Licensed Products. This sublicense right is necessary to ensure that Solstice can maintain its current manufacturing arrangements and adapt its supply chain as needed without risk of infringement claims against its manufacturing partners. Any sublicense shall be subject to the terms and conditions of the definitive license agreement, and Solstice shall remain responsible for the acts and omissions of its sublicensees.
Term. The license shall remain in effect for the remaining life of the Licensed Patents, expiring upon the expiration of the last-to-expire Licensed Patent. Based on current patent term information, the license would expire on January 10, 2038, upon expiration of the '105 Patent.
VIII. Proposed Covenant Not to Sue
As a critical component of the proposed settlement framework, Solstice requests that Apex provide a covenant not to sue with respect to the broader Apex Trocar Patent Family.
Solstice understands that the Apex Trocar Patent Family encompasses a portfolio of fourteen (14) issued United States patents and six (6) pending continuation applications, of which only the three asserted patents are at issue in the current litigation. The proposed covenant not to sue would provide that Apex shall not assert any patent within the Apex Trocar Patent Family — including, without limitation, any patent issuing from the six pending continuation applications — against Solstice, its subsidiaries, its successors, or its sublicensees for the manufacture, use, sale, offer for sale, or importation of products within the licensed field of use during the term of the license.
This broader covenant is essential to providing Solstice with the commercial certainty it requires to justify the proposed settlement payments and to continue investing in the development and marketing of its PrecisionEdge™ product line. Without such a covenant, Solstice would face the prospect of serial litigation on related patent claims from the same patent family — a result that would undermine the purpose and finality of any settlement. The covenant not to sue is a standard feature of patent license agreements in the life sciences and medical device industries and is consistent with the approach taken in comparable settlements involving related patent portfolios.
IX. Most-Favored Licensee Provision
Solstice proposes the inclusion of a most-favored licensee clause in the definitive settlement and license agreement. Specifically, if Apex enters into a license agreement with any third party for the Licensed Patents — whether in settlement of litigation or otherwise — at a running royalty rate lower than 3.75% of net sales, Solstice's running royalty rate would adjust prospectively (from the effective date of the lower-rate license) to match the lower rate granted to such third-party licensee.
This provision ensures equitable treatment of Solstice relative to other licensees and reflects the commercial reality that subsequent licenses may be granted at different rates as the competitive landscape, the proximity to patent expiration, and other market conditions evolve over the remaining life of the Licensed Patents. The most-favored licensee provision would not apply retroactively and would not affect the lump-sum payment or any royalties already paid or accrued prior to the effective date of the lower-rate license.
Solstice recognizes that the most-favored licensee provision may require negotiation around appropriate carve-outs — for example, for licenses granted in connection with cross-license agreements where the value of the cross-license consideration is difficult to allocate, or for licenses granted under exigent circumstances such as a settlement of an ITC investigation. We are prepared to discuss reasonable limitations on this provision.
X. Mutual Release and Dismissal
The definitive settlement agreement would include a full and unconditional mutual release of all claims, counterclaims, defenses, causes of action, and demands of every kind and nature, whether known or unknown, that have been asserted or could have been asserted by either party in Case No. 1:24-cv-00587-RGA, arising out of or relating to the manufacture, use, sale, offer for sale, or importation of the accused PrecisionEdge™ products and the Licensed Patents during the period from the inception of the accused conduct through the date of execution of the definitive settlement agreement.
Promptly following execution of the definitive settlement agreement — and in no event later than five (5) business days thereafter — the parties would file a joint Stipulation of Dismissal with Prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii), dismissing all claims and counterclaims in Case No. 1:24-cv-00587-RGA with prejudice, with each party bearing its own costs and attorneys' fees.
Solstice proposes a target filing date of July 1, 2025, for the Stipulation of Dismissal, which aligns with the proposed timeline for execution of the definitive agreement and the Tranche 1 payment described in Section V above. The Stipulation of Dismissal would include customary provisions for the Court's retention of jurisdiction to enforce the terms of the settlement agreement, if the parties agree that such a provision is appropriate, or alternatively, the settlement agreement would include a standalone dispute resolution mechanism (such as binding arbitration before a neutral in Wilmington, Delaware) for any disputes arising under the agreement.
XI. Confidentiality
All terms and conditions of the settlement, including the financial terms, the license terms, and the existence and content of this proposal letter and all related communications, shall be subject to mutual confidentiality obligations in the definitive settlement agreement.
Neither party shall disclose the terms of the settlement to any third party except as follows:
(a) to each party's directors, officers, employees, accountants, auditors, tax advisors, financial advisors, and legal counsel who have a reasonable need to know such information, provided that such persons are bound by obligations of confidentiality no less restrictive than those in the settlement agreement;
(b) as may be required by applicable law, regulation, or legal process, including any required disclosures in regulatory filings (e.g., Securities and Exchange Commission filings, if applicable), tax filings, or financial audits; provided that, to the extent permitted, the disclosing party shall provide the non-disclosing party with reasonable prior notice of such disclosure and shall use commercially reasonable efforts to minimize the scope of such disclosure; and
(c) pursuant to a mutually agreed joint public statement, which Solstice proposes be limited to the following language: "The matter has been resolved on mutually agreeable terms."
XII. Governing Law
The definitive settlement agreement, including the patent license agreement, shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict-of-laws principles. Any dispute arising out of or relating to the settlement agreement or patent license that is not resolved by the Court in the exercise of retained jurisdiction (if applicable) shall be resolved by binding arbitration administered by the American Arbitration Association in Wilmington, Delaware, in accordance with its Commercial Arbitration Rules.
XIII. Proposed Process and Timeline
Solstice proposes the following timeline for concluding a settlement based on this framework:
If Apex is amenable to this framework — whether in its current form or with modifications that the parties negotiate — Calderwood & Harkness LLP will prepare an initial draft of the definitive settlement agreement, patent license agreement, escrow agreement, Stipulation of Dismissal, and any other ancillary documentation necessary to effectuate the settlement, and will deliver such drafts to Hargrove, Tate & Bennington LLP for your review and comment.
In the interim, both parties shall continue to comply in all respects with the existing scheduling order and all Court-imposed deadlines, with the understanding that the September 30, 2025 trial date and all associated pre-trial deadlines would be vacated by stipulation or motion upon execution of the definitive settlement agreement. If the parties reach agreement in principle on the settlement framework prior to the execution of definitive documentation, we would suggest that the parties jointly inform the Court that they have reached a settlement in principle and request a brief administrative stay of upcoming deadlines, subject to the Court's approval.
XIV. Reservation of Rights
This proposal is made without prejudice and without any admission of liability, infringement, validity, or enforceability. Solstice expressly reserves all rights, claims, defenses, counterclaims, and affirmative defenses it has asserted or may assert in Case No. 1:24-cv-00587-RGA or in any other forum.
Nothing in this letter or in any discussions arising from this letter constitutes or shall be deemed to constitute a binding agreement, obligation, or commitment of any kind. Any settlement of the pending action is expressly contingent upon the successful negotiation and execution of mutually acceptable definitive documentation, including a settlement agreement, patent license agreement, and related ancillary agreements.
This letter, and any discussions or negotiations related hereto, are inadmissible in evidence in any proceeding pursuant to Federal Rule of Evidence 408, Delaware Rule of Evidence 408, and any analogous rule or statute in any jurisdiction, and may not be used for any purpose other than settlement negotiations between the parties.
XV. Closing
We believe the proposal set forth in this letter provides a constructive, good-faith basis for resolving this matter on terms that are fair and commercially reasonable for both parties. The framework is designed to provide Apex with meaningful near-term compensation through the lump-sum payment, an ongoing revenue stream through the running royalty with a guaranteed annual floor, and the protection of its patent portfolio through the non-exclusive nature of the license. At the same time, the framework provides Solstice with the commercial certainty, market access, and freedom to operate that it requires to continue serving its customers and investing in its business.
I invite you to call or write at any time to discuss any aspect of this proposal. We are, of course, happy to address questions, consider counterproposals, or explore modifications to any of the terms outlined above. We are also prepared to arrange a meeting or conference call among the parties' principals, including Eamon Rourke, General Counsel of Solstice, and Martin Hale, General Counsel of Apex, or, if it would be productive, Dr. Fiona Tierney, Chief Executive Officer of Solstice, and Gerald K. Whitford, Chief Executive Officer of Apex. We are available in person in Wilmington or by videoconference, at whatever time and in whatever format is most convenient for your client.
I can be reached directly at my Wilmington office at (302) 555-7812, by mobile at (302) 555-9431, or by email at mdelgado@calderwoodharkness.com. I look forward to hearing from you.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Marcus Delgado Partner, intellectual Property Calderwood & Harkness LLP 1201 Market Street, Suite 2500 Wilmington, Delaware 19801 Tel: (302) 555-7812
Email: mdelgado@calderwoodharkness.com
cc (via email):
Eamon Rourke, General Counsel, Solstice Biomedical Devices Ltd.
Dr. Fiona Tierney, Chief Executive Officer, Solstice Biomedical Devices Ltd.
Brendan Molloy, Chief Financial Officer, Solstice Biomedical Devices Ltd.
Catherine Bloom, Billing Partner, Calderwood & Harkness LLP
Christy Bauer, Lead Associate, Calderwood & Harkness LLP
Note: Copies to client personnel have been transmitted separately under the protection of the attorney-client privilege and work product doctrine.
Enclosures: None. This letter constitutes a standalone settlement proposal. Definitive documentation, including a draft settlement agreement, patent license agreement, and ancillary agreements, will be prepared and circulated upon the parties' agreement on the material terms of the framework outlined herein.
Milestone | Proposed Date
Apex's response to this proposal | On or before May 30, 2025
Negotiation and finalization of definitive settlement agreement and license | Target execution by June 16, 2025
Tranche 1 payment into escrow ($5,250,000) | Within 10 business days of execution (approximately June 30, 2025)
Filing of joint Stipulation of Dismissal with Prejudice | On or about July 1, 2025
Tranche 2 payment ($3,500,000) | On or before September 15, 2025

CALDERWOOD & HARKNESS LLP

VIA EMAIL AND FIRST CLASS MAIL

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts