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Commitments and Contingencies | 12 Months Ended
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Dec. 29, 2018
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingencies | 9. Commitments and Contingencies Lease Agreements. We lease our operating facilities in Mountain View, California, under a non-cancelable operating lease through February 28, 2022. There are no remaining options to extend or renew the terms of this lease. Rent expense for fiscal years 2018 and 2017 was approximately $1.2 million and $1.1 million, respectively. Our operating lease commitments consist of facility and office equipment leases. Future minimum lease payments under current operating leases as of December 29, 2018 are summarized as follows (in thousands):
Fiscal Year |  | Operating Lease Payments |
2019 |  | $ | 1,430 |
2020 |  |  | 1,509 |
2021 |  |  | 1,495 |
2022 |  |  | 310 |
2023 |  |  | — |
Total future minimum lease payments |  | $ | 4,744 |
Manufacture and Supply Agreement. Future minimum payments for manufacture and supply commitments as of December 29, 2018 are summarized as follows (in thousands):
Fiscal Year |  | Contract Manufacturing and Supply Commitments |
2019 |  | $ | 9,035 |
2020 |  |  | 1,407 |
Total contract manufacturing and supply commitments |  | $ | 10,442 |
License Agreements. We are obligated to pay royalties equivalent to 5% of sales on certain products under certain license agreements with termination dates as early as the end of 2018 and as late as the end of 2021. Royalty expense, charged to cost of revenues, was approximately $0.3 million for each of the fiscal years 2018 and 2017. Indemnification Arrangements. We enter into standard indemnification arrangements in our ordinary course of business. Pursuant to these arrangements, we indemnify, hold harmless, and agree to reimburse the indemnified parties for losses suffered or incurred by the indemnified parties (generally our business partners or customers) in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third-party with respect to our products. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments we could be required to make under these agreements is not determinable. We have never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, we believe the estimated fair value of these agreements is minimal. We have entered into indemnification agreements with our directors and officers that may require us to indemnify our directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of a culpable nature. These agreements also require us to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified and to make good faith determination whether or not it is practicable for us to obtain directors and officers insurance. We currently have directors and officers liability insurance. Legal Proceedings. In January 2018, we filed a lawsuit against Quantel Medical, S.A., Quantel USA, Inc., and Quantel, S.A. (collectively, “Quantel”) in the U.S. District Court for the Northern District of California. The lawsuit alleges that Quantel products infringe U.S. Patent No. 7,771,417, that Quantel breached an earlier agreement between Quantel and the Company, and that Quantel has infringed upon the Company’s MicroPulse® trademark, Registration No. 4550188 on the principal register. Quantel previously had a limited license to the asserted Company patent and trademark. Our complaint filed in connection with this matter asserts that the license was terminated in early 2017 for material breach, but that Quantel continued to use our intellectual property without authorization. In March 2017, OD-OS GmbH noticed an opposition to the Company’s European Patent No. currently EP 1 856 774 at the European Patent Office (“EPO”). On June 8, 2018, Quantel intervened in the Opposition. Oral proceedings on the opposition took place on July 13, 2018. At the conclusion of those proceedings, the EPO’s Opposition Division communicated that it would move to revoke the patent. The formal written decision from the Opposition Division was issued on October 1, 2018. The Company filed its notice of appeal on October 10, 2018. In late May of 2018, Quantel applied to the Paris District Court in Paris, France for a ruling that its products do not infringe the French Part of Iridex’s European Patent at issue in the opposition, EP 1 856 774. On February 12, 2019, we announced the resolution of our dispute with Quantel and dismissed the lawsuit we filed against Quantel in the U.S. District Court for the Northern District of California. Quantel dismissed and ceased its participation in parallel proceedings against us in Europe. In addition, from time to time, we may be involved in legal proceedings arising in the ordinary course of business. In general, management believes that claims which are pending or known to be threatened, will not have a material adverse effect on our financial position or results of operations and are adequately covered by our liability insurance. However, it is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one of more of these contingencies or because of the diversion of management’s attention and the incurrence of significant expenses.

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