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After Big Jury Verdict, Both Sides May Dislike Judge’s Latest Rulings

April 27, 2016 Mark Curriden

By Jeff Bounds

Both a Plano chip business and a one-time suitor turned rival could be pardoned if they both felt some disappointment about a federal district judge’s rulings Tuesday in their seven-year legal war.

In total, Plano judge Richard Schell’s pair of opinions awarded AMS-TAOS USA Inc. more than $77 million in damages from California’s Intersil Corp. (Nasdaq: ISIL) in AMS-TAOS’ claims that Intersil breached a confidentiality agreement between the two businesses and illegally used AMS-TAOS’ trade secrets to create a competing product line.

That marks a drop from the total of $88 million-plus that a jury in the Eastern District of Texas jurist’s court awarded AMS-TAOS in March 2015.

However, there are still numbers to be worked out, notably a royalty rate that Schell gave the two sides 30 days to negotiate.

The royalty would pay AMS-TAOS a yet-to-be determined amount for Intersil’s sales on products found to infringe on an AMS-TAOS patent. It is to run from March 2014 until the patent expires, court records say.

Schell will eventually either approve a proposed royalty from both sides or, if they can’t agree on one, impose one himself, court records say. At that point, the judge will likely issue a final judgment.

Soon thereafter, however, the case is likely headed to the U.S. Court of Appeals for the Federal Circuit. AMS-TAOS’ lead attorney, Munck Wilson Mandala partner Jamil Alibhai, noted that in a quarterly earnings call Tuesday, Intersil executives said they planned to appeal.

Jamil Alibhai
Jamil Alibhai

“This dispute involved many different types of wrongful conduct,” said Alibhai, whose trial team included fellow Munck Wilson partner Michael McCabe. “Those included the breach of the parties’ confidentiality agreement, the infringement of the AMS-TAOS patent, and the misappropriation of our client’s trade secrets. This made it a complex case.”

But, Alibhai added, “the jury found, and the judge affirmed, that Intersil’s conduct hurt AMS-TAOS, that conduct was actionable, and that our client merited significant damages for that wrongful conduct.”

An Intersil spokesman declined comment.

Some of this, some of that

Whatever form Schell’s final judgment takes, it likely will not completely please either side.

AMS-TAOS, which is part of Austrian analog chip maker AMS, will lose out on $10 million in exemplary damages that the jury awarded last year for tortious interference. Schell’s Tuesday rulings said claims AMS-TAOS made about trade secret misappropriation and tortious interference arose from the same operative facts. That would entail a possible “double recovery of damages,” which the law doesn’t allow, Schell ruled.

On the flip side, Schell did allow AMS-TAOS to collect pre-judgment interest on the more than $48.7 million that the jury awarded the company for Intersil’s alleged misappropriation of its trade secrets.

That number totaled more than $18 million through Tuesday – and will grow by $6,682.60 every day until Schell signs the final judgment.

The judge’s Tuesday opinions were a mixed bag for both sides on other fronts as well.

For instance, Schell declined Intersil’s request for a new trial, while simultaneously turning down AMS-TAOS’ request for a permanent injunction that would have barred Intersil from making and selling products that infringe on AMT-TAOS’ patent.

Schell also declined to award AMS-TAOS supplemental damages for Intersil’s misappropriation of its trade secrets.

The dispute’s origins date to 2004, when Intersil sought to purchase what was then Texas Advanced Optoelectronic Solutions, or TAOS.

Two years before, TAOS had acquired a patent on technology that allows flat-panel video displays to adjust brightness based on surrounding levels of ambient light. Called dual-diode light sensor technology, TAOS’ system allows electronic devices to extend battery life and provide for the best viewing of displays no matter how much ambient light is shining, according to the plaintiff.

Negotiations on a buyout did not pan out, and a year after talks broke off, Intersil released a competing product that TAOS claimed it had created using the same technology it had learned from TAOS, the Plano firm has claimed.

Intersil used that technology, along with TAOS’ confidential pricing information, to “undercut” its new rival, TAOS alleged. Intersil got the technical and pricing information from TAOS under non-disclosure agreements during the buyout talks, TAOS said.

Intersil has denied wrongdoing in court filings.

The case is No. 4:08-00451 in the Eastern District of Texas.

Mark Curriden

Mark Curriden is a lawyer/journalist and founder of The Texas Lawbook. In addition, he is a contributing legal correspondent for The Dallas Morning News.

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