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US Court Awards $854m to Dutch Chip Maker ASML

The Santa Clara County Superior Court ruled in favor of ASML, a Netherlands-based chipmaking company, against virtual reality headset manufacturer XTAL Inc. in an intellectual property case, awarding ASML $845 million in addition to an injunction, according to a May 4 ASML press release.

“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," the release said.

“The primary driver behind the jury’s verdict and the $845 million final judgment were saved research and development costs by XTAL, due to 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.”

The judgment finalizes the initial verdict returned by a jury ruling in favor of ASML. The charges claimed, “XTAL induced ASML employees, who had been entrusted with ASML’s most sensitive trade secrets, to secretly work for XTAL, steal trade secrets, and help XTAL obtain a lucrative contract with one of ASML’s largest customers. XTAL then used the stolen information to jumpstart its competing computational lithography business, accelerating its development well beyond what would have been possible had it not stolen and used ASML’s trade secrets. The stolen trade secrets included ASML’s proprietary algorithms as well as source code files.”

The initial verdict was returned to the jury on November 28, 2018. XTAL reportedly filed for bankruptcy on December 17, 2018. As a result, the May 4 judgment is “uncollectable as XTAL is in bankruptcy, but under a settlement arrangement ASML will end up owning most, if not all, of XTAL’s intellectual property (IP) through the bankruptcy process.”

In addition to the monetary reward, the court also issued an injunction that prohibits XTAL from any software development activities on products alleged to be using ASML’s IP.

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