Merck is exposed to litigation risks. These include in particular risks in the areas of product liability, competition and antitrust law, pharmaceutical law, patent law, tax law and environmental protection. As a research-based company, Merck has a valuable portfolio of industrial property rights, such as patents and trademarks. These property rights can become the target of attacks and infringements.
We are engaged in legal proceedings and government investigations, the outcome of which cannot currently be predicted. We also continue to bear the risks from certain proceedings against companies of the Generics group that we sold to Mylan in 2007. Thus Merck continues to be responsible for risks arising from cases concerning drug pricing in the United States. In addition, the Merck Serono division is involved in a licensing dispute in Israel as well as a dispute with a former sales partner in Italy. In the United States, our subsidiary EMD Serono is engaged in settlement negotiations with the U.S. Department of Justice and at the state level. The settlement negotiations concern a civil claim relating to sales of a product. In Germany, Merck is involved in antitrust proceedings concerning its exclusive distribution agreement with the laboratory wholesale distributor VWR International. Owing to a decision by the German Federal Antitrust Office, Merck is obliged to supply a number of products from its Laboratory business to other laboratory wholesale distributors in Germany. The company has taken all possible measures to protect its own legal position.
Generally, Merck strives to minimize and manage its legal risks. We have taken the necessary precautions to identify threats and defend our rights where necessary. Risks arising in connection with litigation are continually identified, assessed and communicated.
A compliance program applies to our employees worldwide, which enjoins them to comply with laws and guidelines, and provides them with the relevant training and support. The core of the program is the Merck Code of Conduct, which defines guidelines for ethical behavior. This is complemented by a training and testing program, a SpeakUp Line for reporting compliance violations, as well as a global network of compliance officers.
Insofar as possible and practical, the company limits liability and damage risks through insurance coverage, the type and scope of which is continually adjusted to current requirements.