Patent Law

The following is excerpted from a November 5, 2009 article by Dan Nystedt at Computerworld:

Taiwan Semiconductor Manufacturing (TSMC) has won a major victory over China's biggest chip maker in a court case that could have wide ranging implications for the loser.

A jury at the Superior Court of California in Alameda County voted in favor of TSMC in the case against Semiconductor Manufacturing International (SMIC). TSMC had sued SMIC in a case involving theft of trade secrets, patent infringement and breach of contract over a prior settlement between the two companies.

The next phase of the trial, to assess damages against SMIC, begins Thursday. The damages alone could be enough to force SMIC to seek a buy-out, according to Randy Abrams, research analyst at investment bank Credit Suisse.

TSMC could be awarded up to US$1 billion in damages, and could also win an injunction preventing infringing chips from entering the U.S., Abrams wrote in a research note. Since SMIC ended the third quarter of this year with US$500 million in cash and $1.1 billion in debt, a big financial penalty and an injunction would seriously crimp SMIC's ability to do business, he said.

Read the full article here.