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U.S. court issues preliminary injunction against SMIC

Posted: 18 Sep 2007 ?? ?Print Version ?Bookmark and Share

Keywords:preliminary injunction? SMIC? TSMC?

Taiwan Semiconductor Manufacturing Co. (TSMC) has announced that the California State Superior Court of Alameda County has issued an order on TSMC's pre-trial motion for a preliminary injunction against Semiconductor Manufacturing International Corp. (SMIC).

The Court found that the Taiwan foundry has demonstrated a significant likelihood that it will prevail on the merits of its claim of the 2005 settlement agreement with SMIC. It also found that TSMC has demonstrated probability of establishing that SMIC retains and is using TSMC information in SMIC's 0.13?m and smaller technologies that should have been returned under the settlement agreement.

In addition, there is significant threat of serious irreparable harm to TSMC if SMIC were to disclose or transfer that information before final resolution of the case. The court, therefore ordered that, effective immediately, SMIC must provide advance notice and an opportunity for TSMC to object before disclosing items enumerated in the court order to SMIC's third party partners.

Instead of issuing a full pre-trial injunction, the court issued the order due to several considerations including being reluctant to issue a preliminary injunction that will almost certainly require ongoing discovery and repeated compliance hearings in the next 12-16 months. Also, the court found there was no demonstration that SMIC is distributing its assets or in imminent danger of bankruptcy. Lastly, the court found that "if an injunction is issued in error, the intangible injury to the significantly smaller SMIC would be severe in terms of loss of cash flow, customer relationships, and reputation."

The Court stated that it expects to move promptly to full discovery and to a trial on the merits, which both parties have anticipated will take place in 2008.

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