TSMC Wins Major Trade Secrets Verdict Against SMIC - Damage Award Not Yet Declared

The Wall Street Journal is reporting the jury in Oakland ruled Tuesday in favor of Taiwan Semiconductor Manufacturing Co. in a long-running legal battle against rival Chinese chip maker Semiconductor Manufacturing International Corp., which TSMC had accused of stealing trade secrets and violating a prior settlement between the companies.

An Alameda County Superior Court jury still must rule on what damages SMIC might have to pay in the case, but they could be hefty. An attorney for TSMC said it hasn't asked for a particular figure, but noted its expert witness on damages put the amount in the range of "ten figures," or $1 billion.

Jeffrey Chanin, the attorney at Keker & Van Nest LLP representing TSMC, said the case involved 65 instances of trade-secrets theft, which he said amounted to "the biggest case of wholesale corporate espionage" he had encountered.

After a nine-week trial, the jury agreed that SMIC had improperly "acquired, used or disclosed" the TMSC trade secrets and violated the 2005 agreement.

SMIC, among other things, argued that the information in question didn't constitute trade secrets and was widely disclosed in technical literature, said David Steuer, an attorney with Wilson Sonsini Goodrich & Rosati who is representing SMIC.

SMIC also raised counterclaims against TSMC, including the argument that the Taiwan company took trade secrets from SMIC. Some of those issues remain to be tried, Mr. Steuer said.

"Obviously, it's a good day for them," Mr. Steuer said, referring to TSMC. But he said the battle remains "in the middle, because our claims haven't been decided."

Stay tuned, folks. We have never reported a billion dollar trade secret theft verdict - but this might be the case where we do.