XTAL’s theft of trade secrets, inducing former employees to breach their contracts with ASML, aiding and abetting former employees to breach their fiduciary duty of loyalty to ASML, and multiple violations of California’s Computer Data Access and Fraud Act – all of that lead the Santa Clara County Superior Court to an $845 million fine for (what’s left of) XTAL. The fine will be uncollectable as XTAL is in bankruptcy, ASML says in a statement. “But under a settlement arrangement, ASML will end up owning most, if not all, of XTAL’s intellectual property (IP) through the bankruptcy process.”
The case got recent attention because of the suggestion that the Chinese government coordinated the theft. ASML denies this. According to ASML, some of the employees who stole the company’s secrets just happen to include Chinese citizens. “The suggestion that we were somehow the victim of a national conspiracy is wrong. The facts of the matter are that we were robbed by a handful of our own employees based in Silicon Valley, who had broken the law to enrich themselves.”
The judgment finalizes the verdict returned by the jury on 28 November 2018. The jury found that XTAL’s conduct as to all counts was malicious, entitling ASML to an award of punitive damages on all five counts pleaded against XTAL.
In addition to the $845 million judgment, the trial court issued an injunction. The injunction orders XTAL not to conduct any software development activities on its software products that ASML alleged are contaminated with ASML’s IP, grants ASML explicit permission to reach out to actual or potential customers of XTAL and inform them of the jury’s verdict and result of the lawsuit, and bars XTAL from continued work in the same field of business as Brion for a certain period of time.
There was a delay between the jury reaching a verdict in November 2018 and the final judgment being entered on 3 May 2019, due to XTAL’s attempt to avoid it by filing for bankruptcy before the trial court could enter its final judgment. In the bankruptcy case, XTAL sought to sell its intellectual property, which ASML had claimed was contaminated with ASML’s trade secrets.
In the statement, ASML repeated it took “numerous steps to protect its trade secrets and other confidential information”. The jury agreed with that statement, ASML says: “According to the jury, ASML made reasonable efforts under the circumstances to keep those items secret.”
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