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Jury Finds for TSMC Over SMIC in Trade Secrets Case

A California jury found for TSMC in its trade-secrets case against SMIC in November 2009. The companies later settled, including $200 million in additional payments—not a jury damages award.
From TheFinanceBase Team2 min to read
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A California jury found that Semiconductor Manufacturing International Corporation (SMIC) breached its 2005 settlement agreement with Taiwan Semiconductor Manufacturing Company (TSMC) and misappropriated TSMC trade secrets. TSMC dates the verdict to November 4, 2009, after a two-month trial. The companies later settled; the often-cited $200 million was settlement consideration, not a jury damages award.

What the jury decided

TSMC’s 2009 annual report says the jury found SMIC liable for breaching the parties’ 2005 settlement agreement and misappropriating TSMC trade secrets. The report identifies November 4, 2009, as the verdict date and describes the trial as lasting two months. TSMC 2009 annual report

A secondary case account says the jury found for TSMC on 61 of 65 trade-secret claims. Because the exact verdict form is not available in the sources cited here, treat that count as the account’s reporting rather than a complete description of the jury’s individual findings. Courtroom View Network case coverage

Why the 2005 agreement mattered

On January 30, 2005, TSMC announced an earlier settlement with SMIC that included a $175 million payment and a patent cross-license running through December 2010. TSMC said the agreement did not grant SMIC a license to use TSMC trade secrets. TSMC’s 2005 announcement

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TSMC brought the California action in 2006 over alleged misappropriation and breach of that settlement. The jury’s 2009 findings addressed liability under the agreement and the trade-secret claims; they should be distinguished from the financial terms the companies negotiated afterward. TSMC’s 2009 settlement announcement

What the companies agreed to after the verdict

On November 10, 2009, TSMC announced that the parties had settled their California and Beijing matters. The agreement provided for a stipulated judgment in TSMC’s favor in California, dismissal of SMIC’s Beijing appeal, and $200 million in additional cash payments, along with other consideration. TSMC said the $200 million was in addition to $135 million previously paid under the 2005 settlement. The later agreement also terminated the patent cross-license. TSMC’s 2009 settlement announcement

The $200 million figure was part of the negotiated settlement, not a jury award. Coverage describes the settlement as occurring during the damages phase, and the cited sources do not establish a separate jury-assessed damages amount. TSMC’s 2009 settlement announcement Courtroom View Network case coverage

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How to read the figures

Figure What it refers to Source and date
$175 million Payment announced in the 2005 settlement TSMC, January 30, 2005 Announcement
$135 million Amount TSMC said had already been paid under the 2005 agreement by the time of the later settlement announcement TSMC, November 10, 2009 Announcement
$200 million Additional cash payments provided for in the 2009 settlement, plus other consideration; not a jury damages award TSMC, November 10, 2009 Announcement

These amounts describe different stages and terms. In particular, the $175 million announced in 2005 and the $135 million TSMC later said had already been paid are not interchangeable figures; the available announcement does not explain their relationship in further detail.

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