SAN FRANCISCO (February 12, 2009) – After three years of intense litigation, Morrison & Foerster has won a closely watched trade secrets case for Cypress Semiconductor Corporation against Silvaco Data Systems, who had alleged that Cypress had misappropriated its trade secrets. On Tuesday, Judge Kevin J. Murphy of the Santa Clara County Superior Court granted Cypress’ summary judgment motion after initially denying it back in August 2007. This ruling will provide greater protection to semiconductor and other electronics companies in similar types of trade theft lawsuits.
Arturo J. González, partner at Morrison & Foerster and lead trial counsel for Cypress, said, “This is a significant victory for Cypress and all other companies being victimized for unknowingly purchasing software or other products allegedly containing trade secrets. Today’s ruling will prevent companies from allowing innocent purchasers to use their products only to turn around and sue them after several years of investments have been made.”
In 2003 and 2004, Silvaco filed actions against 12 semiconductor companies, including Cypress. Silvaco did not claim that the defendants had directly stolen its secrets, but that they had purchased commercially available Electronic Design Automation (EDA) software containing its trade secrets from an alleged thief, Circuit Semantics, Inc. (CSI). EDA software is used in the design of semiconductor chips to power computers, cell phones, MP3 players, and many other electronic devices. Silvaco claimed three of its former employees had stolen its source code and incorporated it into CSI’s EDA products.
Seven of the defendants chose to settle with Silvaco, but Cypress and four others did not. Of the five outstanding actions, Cypress’ was the first case set for trial in September 2007. Prior to trial, Morrison & Foerster moved for summary judgment based on the fact that Cypress had never received Silvaco’s source code. Judge Murphy denied the motion, and the case proceeded to trial. The trial was bifurcated, with the statute of limitations to be tried first. In response to an in limine motion, the trial court ruled in favor of Silvaco on the statute of limitations defense. Morrison & Foerster then obtained a stay of the trial from the Sixth District Court of Appeal, and in May 2008, the Sixth District reversed the trial court and remanded for a trial on the statute of limitations (Cypress Semiconductor Corp. v. Superior Court (2008) 163 Cal.App.4th 575).
While Silvaco’s case was on appeal, three other defendants (Intel Corporation, Agilent, and Cirrus Logic) who did not settle moved for summary judgment using the same arguments Morrison & Foerster had previously made on behalf of Cypress. Judge Murphy granted those motions. When Silvaco’s case was remanded, the Morrison & Foerster team challenged the trial judge under Civil Code Section 170.6, and the case was sent back to Judge Murphy, the coordinating judge. The trial team persuaded Judge Murphy to revisit the initial summary judgment motion, which resulted in a favorable ruling for Cypress and denial of Silvaco’s motion for reconsideration.