Trade Secret Misappropriation and Employee Fiduciary Breach in ASML v. XTAL Results in Large Judgment
On May 3, 2019, following a jury verdict rendered last November, a Santa Clara, California court entered a final judgment for $845 million in favor of semiconductor maker, ASML, in its suit against rival, XTAL, for stealing trade secrets related to lithography technology and inducing, aiding and abetting former employees of ASML to breach their contracts with and their fiduciary duties to ASML.
The former employees, with Chinese and U.S. nationalities, misappropriated certain source code and intellectual property from Brion, a U.S. subsidiary of ASML. XTAL is a Silicon Valley based company with funding from entities from South-Korea and China.
This judgment followed a jury award that included potential punitive damages because the jury found XTAL’s conduct to be malicious. The final judgment includes AMSL's costs of investigation related to XTAL’s theft.
The case was delayed because XTAL filed bankruptcy before the trial court could enter judgment. Although XTAL is in bankruptcy, impairing AMSL’s ability to collect on this large judgment, AMSL receives XTAL’s intellectual property under a settlement agreement arising out of the bankruptcy.
According to the ASML statement published on its website, no actual damage was sustained. Its related business is small and not a core business. XTAL’s business deal with the South-Korean customer was thwarted, hence ASML did not lose any business. The stolen information was not lost. The basis for the monetary award to ASML was not actual damages incurred by ASML, but the award was for the R&D costs that XTAL avoided by stealing the IP and trade secrets.
ASML also obtained an injunction that prohibits XTAL from conducting any software development activities on products contaminated by ASML’s stolen trade secrets; authorizes ASML to contact XTAL’s potential or existing customers to notify them of the outcome of the case; and prohibits XTAL from working in the related field.
Spilman Intellectual Property
attorneys and litigators can assist you with trade secret misappropriation and breach of intellectual property provisions by employees.