UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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FORM
CURRENT REPORT
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Section 8 — Other Events
Item 8.01. Other Events.
As previously disclosed, Avery Dennison Corporation, a Delaware corporation (the “Company”), has been party to a litigation in which ADASA Inc. (“Adasa”), an unrelated third party, alleged that certain of the Company’s radio-frequency identification (“RFID”) products infringed Adasa’s patent. The Company recorded a contingent liability in the amount of $26.6 million related to this matter in the second quarter of 2021 based on a jury verdict. The Company appealed the trial court’s first instance judgment based on the jury verdict to the United States Court of Appeals for the Federal Circuit (“CAFC”). During the fourth quarter of 2022, the CAFC issued its judgment reversing the trial court’s grant of summary judgment of validity as to anticipation and obviousness; vacating the trial court’s sanctions ruling and remanding the case for retrial; and affirming subject-matter eligibility and damages if liability were to be determined on retrial. The Company sought the U.S. Supreme Court’s review of the CAFC’s decision on subject-matter eligibility.
In its Form 10-Q for the fiscal quarter ended April 1, 2023, the Company disclosed that it estimated the range of potential outcomes in this matter to be between $5 million and $71 million based on the first instance judgment associated with the jury verdict, which resulted in additional potential liability for RFID tags sold during the period from the jury verdict to the issuance of the first instance judgment, as well as a royalty on additional late-disclosed tags; sanctions, prejudgment interest, costs and attorneys’ fees; and an ongoing royalty on in-scope tags sold after October 14, 2021.
After the U.S. Supreme Court denied the Company’s writ of certiorari petition on May 30, 2023, the trial court’s retrial began on July 10, 2023. On July 18, 2023, the jury in the retrial issued a verdict that Adasa’s patent is valid; therefore, the Company’s defenses of anticipation and obviousness based on prior art were rejected by the jury. As a result of the jury verdict, the potential liability related to this matter could be modestly above the Company’s previously disclosed range. The Company has strong grounds to appeal and plans to appeal any judgment based on the jury verdict.
The Company has largely completed its migration to alternative encoding methods for its RFID tags.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AVERY DENNISON CORPORATION | ||||||
| Date: July 19, 2023 | By: | /s/ Ignacio J. Walker | ||||
| Name: | Ignacio J. Walker | |||||
| Title: | Senior Vice President and Chief Legal Officer | |||||