When is a settlement not a settlement?
That’s the issue being hashed out at a rather interesting bench trial in Alameda County Court this week before Judge Steven Brick.
The dispute is between two Asian semiconductor foundries: China-based foundry Semiconductor Manufacturing International Corp. and its rival, Taiwan Semiconductor Manufacturing International Corp. SMIC agreed to pay TSMC $175 million to settle a pretty serious trade secret theft case in 2005, but TSMC claims that SMIC breached the settlement terms by continuing to use the stolen information. SMIC claims that TSMC changed the terms of the settlement on them and that there was no official settlement.
SMIC is represented by Wilson Sonsini Goodrich & Rosati, and the company’s CEO Richard Chang (who’s on the stand as we write this) flew in from China. Wilson lawyers showed Chang a good time taking him out to the tony Village Pub in Woodside on Monday night — the night before the trial started. Carmen Chang (no relation), a corporate partner who represents SMIC, was there. So was David Steuer, who’s heading the trial team. “I told David he could only have one drink,” Carmen Chang joked on her way to the courtroom.
Wilson puts TSMC GC Dick Thurston on the stand, after the jump.
Steuer didn’t look like he was suffering on Tuesday morning. With a comfortable and slightly sarcastic style he grilled TSMC and in-house luminary Dick Thurston on the minutia of who signed the settlement that was reached in 2005, whether it was changed after the fact and whether SMIC’s GC at the time Michelle Gon really had the authority to settle the case.
It’s interesting to see a settlement get dissected so thoroughly. For instance, we learned that early in the settlement discussions, the price to settle was $125 million, but when SMIC wanted to beef up the covenant not to sue, TSMC demanded that the price be boosted to $175 million in exchange for the changes.
It’s also interesting to see lawyers face off with Thurston on the stand. The GC didn’t appear to slip up with Steuer’s questioning, answering in short yeses and nos with a frown. But when Steuer had a good question — or a really lawyerly one based on semantics — Thurston offered the knowing “I’m a lawyer, you’re a lawyer” smile.
We’ll keep you posted as the trial goes on.
— Zusha Elinson
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