Semiconductor Trial Gets Testy in Oakland

Semiconductor International has published an interesting piece on the pending trial between Taiwan Semiconductor Manufacturing Company (TSMC) and Semiconductor Manufacturing International Corp. (SMIC) that is being litigated in Oakland, California.

The companies reached a contingent settlement agreement in 2005 that permitted additional litigation if SMIC did not comply with that settlement agreement - a whopper, too, in that SMIC was supposed to pay TSMC $175 million.

Well, TSMC claims SMIC did breach the agreement and it brought the suit. The report is that the courtroom testimony of an in-house SMIC attorney and SMIC expert from Duke University resulted in some courtroom fireworks. The piece reports:

"These "meet and confer" sessions were part of the 2005 settlement, which called upon both parties to act in good faith to settle any disputes. Chen said SMIC proposed that a third party expert be called in to assess the TSMC claims and recommend ways that SMIC could resolve differences, which TSMC allegedly did not respond to.

By late August, after several meetings, Dick Thurston, vice president and general counsel of TSMC, wrote to Chen informing her that TSMC would file a lawsuit in California. Chen said that after she received the Aug. 25 letter, she was "shocked and furious, because we were arranging a further meeting."

Later, during cross-examination of Chen by Ashok Ramani, another lawyer at Keker and Van Nest, Chen briefly lost her composure. She said that she was a commercial lawyer, not a litigation lawyer, and accused the TSMC trial attorneys as being "very tricky. You put words in our mouths and distort what we say."

At that point, Chen was advised to limit her answers to yes or no responses. She later asked the judge, "Can I tell the jury?" her version of events. Judge Steven Brick said, "No. Miss Chen, you are in a court of law. Please comply with the rules.""

Trials are often messy affairs. We'll continue to report on this trade secrets trial as the matter progresses.