A decade-plus-old trade secrets legal battle is closer to a resolution after an East Texas federal jury awarded nearly $86 million to the plaintiff, light sensor maker AMS Sensors USA, in a damages trial that ended Friday.
The dispute has gone on so long that both parties have changed names since the litigation began in 2008.
“As I told the jury during jury selection, I have a 13-year-old daughter and she was 9 months old [when this litigation started],” AMS’ lead attorney, Michael McCabe of Munck Wilson Mandala, told The Texas Lawbook.
Friday’s verdict ordered California-based Renesas Electronics America to pay Plano-based AMS $8.5 million in disgorgement for misappropriating trade secrets related to AMS’ patented light sensor display technology, which allows electronic devices to extend battery life and provide optimum viewing in diverse lighting conditions.
Separately, the jury ordered Renesas to pay AMS $64 million in punitive damages for misappropriating the trade secrets and $13.3 million in royalties for breaching a confidentiality agreement it entered with AMS.
The disgorgement award is purely advisory, according to the lawyers, and U.S. District Judge Amos Mazzant will determine the ultimate amount in a later ruling.
The verdict follows a 2015 trial in East Texas in which a previous jury found Renesas, known at the time as Intersil, liable for breach of contract, misappropriation of trade secrets, tortious interference and patent infringement for the same technology at issue and ordered Intersil to pay AMS, previously called TAOS, $58.7 million. Last week’s trial was solely on the issue of damages for the trade secrets and breach of contract claims, and occurred after a 2018 appellate ruling by the U.S. Court of Appeals for the Federal Circuit vacated the previous damages award and remanded the issue to the trial court.
The legal battle dates back to 2004, when TAOS and Intersil entered into talks for a potential merger agreement and both signed nondisclosure agreements. During those talks, TAOS provided Intersil with confidential documents related to its trade secrets. The parties never reached an agreement, and Intersil sent TAOS a certificate of destruction that showed TAOS’ trade secret information documents had been destroyed.
But two years later, TAOS said it learned that Intersil released a product that used the very trade secrets that Intersil said it had erased record of. Moreover, TAOS said Intersil used the company’s confidential pricing information to undercut TAOS and win supply contracts for Apple’s second-generation iPhone 3G and iPod Touch.
McCabe said TAOS chief executive Kirk Laney was immediately suspicious of the competing product, as well as Intersil’s response when they were confronted.
“They denied at the time misappropriation of anything and claimed they had developed the technology on their own before the due diligence meeting took place,” McCabe said.
But it never made sense to Laney, McCabe said, because Intersil offered TAOS “millions” to buy Laney’s company during the course of the due diligence period in their potential merger negotiations.
“Why would they offer money for technology they already had?” McCabe said. “Intersil was really starting to get traction … and began to sell to Apple, who had always been an important client of TAOS.”
This led Laney to contact McCabe in 2008, who he had already known for a couple of years through a prior engagement. At the time, McCabe had just moved to Munck Wilson Mandala from Haynes and Boone.
“Intersil is a much larger company in California, so TAOS had real concerns about getting into litigation,” McCabe said. “But by the time 2008 rolled around, TAOS started losing business to Intersil, so TAOS had to do something.
“[TAOS was] just a startup and part of it was coming up with a business solution to allow [Laney] to get the legal representation needed without breaking the bank,” McCabe added. “We had to come up with some creative arrangements in financing to help him go ahead and hire a law firm like ours.”
The Munck Wilson team got to work and filed a lawsuit in 2008 in the Eastern District of Texas, which landed in U.S. District Judge Richard Schell’s court. But because of a three-year stay in the case, a time-consuming discovery process and the “sophisticated and complicated” nature of the litigation, it took seven years for the dispute to be tried before a jury, McCabe said.
Judge Schell transferred the case to Judge Mazzant in 2019 after the Federal Circuit had vacated the damages rendered in the 2015 jury verdict, which led to this month’s retrial over damages.
During trial, which began April 5, McCabe said it was a “team effort from top to bottom” to put on the evidence for the six-woman, two-man, predominantly college-educated jury.
McCabe said some young associates at Munck Wilson played a significant role in the trial, including Chase Cobern, who argued the jury charge and challenged the defendant’s Rule 59a motion to dismiss, and first year associate Clayton Lynn, who McCabe said was “heavily involved in the presentation of evidence.”
The team also included partners Mike Wilson, Jordan Strauss, Robert McCutcheon, Bill Munck and Gabriela Monahan.
After seven hours of deliberation over the course of two days, the jury rendered its verdict Friday afternoon — the same amount of time that the 2015 jury needed. McCabe said the lawyers had the opportunity to speak with the jurors after, and that they told his team they found “the presentation made by our expert compelling and genuine.”
McCabe added that he believed the jury appreciated how TAOS’ three founding members, who are all now retired, showed up to testify in person.
“They all explained to the jury that they had no dog in the fight, no incentive monetarily to come and testify other than they wanted this to be made right,” he said.
Asked for a comment on the outcome, “see the Law 360 article” was lead Renasas attorney Bill Robinson’s only response.
In a Law 360 article published Friday evening, Robinson, a partner in Foley & Lardner’s Los Angeles office, told the reporter that the parties are “far away” from an actual verdict and said the jury’s verdict is just “a very, very preliminary step on the road to what the final judgment will be.” He added that the amount of punitive damages allowed under Texas law to be awarded in this case cannot exceed $17 million.
“This was a jury verdict, it’s online, it shows the verdict and is signed by the foreperson,” McCabe said in response to Robinson’s characterization. “Two juries have now spoken loudly and clearly, and it’s unfortunate that Intersil, which is now Renesas, just refuses to accept responsibility.
“I think it’s vindication.”