Top Plaintiffs' Verdict by Dollar -- Grail Semiconductor v. Mitsubishi

See correction below

A hotbed for inventions and creativity, Silicon Valley cherishes its visionaries - something Niro, Haller & Niro Ltd. senior partner Raymond P. Niro used to his benefit in winning a lawsuit for Grail Semiconductor Inc. and its founder, Donald Stern. In the case, Grail Semiconductor Inc. v. Mitsubishi Electric & Electronics USA Inc., a jury awarded the plaintiff $124 million in damages after deciding that Mitsubishi had used confidential information regarding a new process for developing memory microchips.

In April 2001, Grail Semiconductor needed outside financing to continue operations, Niro said, so Stern met with Mitsubishi to discuss his newest memory microchip technology and its commercial prospects. During the meeting, Niro said, a nondisclosure agreement was signed. Two years later, Mitsubishi partnered with Hitachi Ltd. to form a new company: Renesas Technology Corp. The company, Niro said, just so happened to utilize a new memory chip strikingly similar to Stern's 2001 model.

Grail alleged that Mitsubishi had used the information to boost sales for Renesas and that the nondisclosure agreement was broken. The case went to a jury, which had to decide whether or not the information disclosed at the 2001 meeting was illegally used in Renesas' latest product.

Stern wanted a trial over the alleged breach and got it - and having a Silicon Valley jury helped.

"It was an extremely intelligent jury. Eight of the 12 were college graduates, five with master's degrees, some in computer science," Niro said. He said he's never had a smarter jury in his life.

Niro said he relied on the expertise of witness Joseph C. McAlexander III, who was able to determine whether the disclosed information from the 2001 meeting was used in Renesas' memory chip by analyzing enlarged photos.

"He was able to show the jury exactly how [the defendant] had appropriated the info. they had learned," Niro said.

Niro said he also proved that Mitsubishi and Hitachi were losing money in 2001 and benefited from the development of Renesas' new chip, an accomplishment that coincided too perfectly with the timing of the 2001 meeting.

After some cross-examination of past Grail Semiconductor executives, the jury decided to award the plaintiff $124 million in damages.

Mitsubishi was represented by Palo Alto- and San Francisco-based Squire Sanders partner David S. Elkins.

In an email, Elkins noted that in July 2012, a trial court "vacated the damages award on the ground that it was excessive and did not reflect the value of that which Mitsubishi Electric & Electronics USA Inc. purportedly took from Grail." Elkins could not be reached for further comment.

Niro said the judge in post-trial motions affirmed liability of Mitsubishi, but a new trial will be held to redetermine damages.

Correction: An earlier version of this article failed to include a firm that represented Grail Semiconductor. The story should have listed Davis Wright Tremaine LLP and partner Martin L. Fineman along with of counsel Sam N. Dawood. The Daily Journal regrets the error.

- DAVID RUIZ

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