The California Appellate Court Affirms Tokyo Electron Limited Victory

Date: Dec 08, 2011

SAN FRANCISCO, CALIF. – On November 22, 2011, a California Court of Appeal (6th district) affirmed the February 2010 defense judgment in favor of Tokyo Electron Limited ("TEL") in full, including the award of attorneys fees and costs. "Having reviewed the transcript of the trial, and recognizing that it was the exclusive province of the jury to determine the weight and sufficiency of the evidence, we cannot find a basis for overturning the verdict," wrote Sixth District Justice Franklin Elia in the November 22 ruling.


The lawsuit began in March 2002, when Linear filed a complaint against TEL and other semiconductor equipment suppliers in the Superior Court of Santa Clara County seeking damages (including punitive damages), declaratory relief and injunctions for alleged breach of contract, violations of the covenant of good faith and fair dealing, fraud, unfair competition and breach of warranty. A twelve-person jury in the Santa Clara County Superior Court has returned a verdict in favor of Tokyo Electron Limited ("TEL") on multiple causes of action – including breach of contract, and lack of good faith and fair dealing – asserted against TEL by Linear Technology Corporation ("Linear"). The case, originally filed in 2002, is believed to be the oldest active case in Santa Clara Superior Court. Linear had been seeking roughly $200 million in damages from TEL and its co-defendant, Novellus Systems.


At the center of the case was semiconductor-manufacturing equipment Linear purchased from TEL. Soon after, Texas Instruments ("TI") filed suit against Linear, alleging that its use of the TEL equipment infringed TI patents. TI revealed that it had previously won an infringement case against another tech company that had also purchased equipment from TEL. Linear, alleging it had been denied this information at the time of its purchase, filed suit against TEL.


TEL obtained a dismissal of Linear's claims for fraud and unfair competition in October 2004. The Court of Appeal for the Sixth Appellate District affirmed these dismissals in a published decision in June 2007.





The jury trial, which began on January 19, 2010, was limited to Linear's remaining claims for breach of warranty and a violation of the covenant of good faith and fair dealing. The jury began deliberations on the morning of February 26, 2010, and returned its verdict by about 3:15 that afternoon. The jury found that TEL had not breached its warranty to Linear, nor had it breached its covenant of good faith and fair dealing.


After the jury decided there was no breach, Linear moved for judgment notwithstanding the verdict, arguing that it had proved its case as a matter of law. The trial court denied the motion. Defendants moved for an award of fees and costs. The trial court granted the motions, awarding TEL and Novellus $8.4 million, collectively. The appellate panel affirmed the attorney fee award agreeing with Defendants that had Linear prevailed, it would have been entitled to fees.


Co-defendant Novellus, which also obtained a defense verdict, was represented at trial and on appeal by Irell & Manella. Linear was represented by The Law Offices of Allen Ruby at the trial level and by Latham & Watkins and Wilson Sonsini Goodrich & Rosati at the appellate level.


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