I don't think the legal question is whether they have been making payments or not. According to the agreement, Iconic supposedly had the right to convert to equity whenever they wanted, not just if the company defaulted on payments (which let's assume isn't the case).
The company didn't allow the conversion. This decision is huge because if it doesn't go in Arrayit's favor, then we are likely all screwed.
Think I have this right - but I'll let me fact checkers correct me :)