ASML US Inc. v. XTAL Inc.

Trade secrets

Santa Clara County

Superior Court Judge Sunil R. Kulkarni

$845 million

Plaintiff's lawyers: Patrick M. Ryan, Stephen C. Steinberg, Sean R. McTigue, Brian A.E. Smith, Joseph J. Fraresso, Alden K. Lee, Chad E. DeVeaux, Bartko, Zankel, Bunzel & Miller APLC

Defense lawyers: Donald J. Putterman, George E. Chikovani, Constance J. Yu, Putterman + Yu LLP

A legal team led by Patrick M. Ryan, with Bartko, Zankel, Bunzel & Miller, persuaded a Santa Clara County Superior Court judge to finalize an $845 million award to ASML, a Dutch semiconductor chip processing software company after it sued XTAL in a trade secrets trial.

XTAL was founded in 2014 by two former employees of ASML's subsidiary Brion Technologies in Santa Clara. The lawsuit alleged that then-ASML employees secretly worked for XTAL and stole trade secrets and other confidential information. The lawsuit also claimed those workers helped XTAL obtain a multi-million-dollar contract with one of ASML's largest customers, and that XTAL would not have been able to develop the same products and technology without ASML's information.

"One thing that's always a challenge in a trade secret or intellectual property trial is the need to make complex technology simple and easy to understand for the jury," Ryan said. "Over the course of the trial, we really went through the technology and explained how it worked and why it was important, and the jury really got it."

Witnesses were called and animations were created to explain complex technology for the jury, Ryan said.

The defense argued that XTAL didn't take any trade secrets from ASML, and even if XTAL did, the information wasn't used. The XTAL legal team, led by Donald J. Putterman with George E. Chikovani and Constance J. Yu of Putterman + Yu LLP also argued ASML didn't make reasonable efforts to protect its trade secrets.

The jury disagreed with XTAL, finding ASML had indeed reasonably protected its trade secrets.

"The law does not require companies to use best practices to protect their trade secrets. Rather they need to be reasonable under the circumstances," Ryan said. "For example, a company could completely lock its employees in a vault with little chance of data being shared outside of the company. But productivity and innovation would be stifled. This company's policies and procedures need to take into account their unique business environment in which they operate and not be overly restrictive."

During the trial, Ryan and his legal team argued XTAL saved hundreds of millions of dollars in research and development costs by pilfering ASML's trade secrets.

The jury returned a verdict in November 2018, in favor of ASML but XTAL filed for bankruptcy the next month. Judge Sunil R. Kulkarni finalized the verdict in May 2019. Saved research and development costs were calculated and included in the damages award.

The judgment was largely uncollectible on account of XTAL's bankruptcy. XTAL was required to transfer most of its intellectual property to ASML.

Putterman Yu said it no longer represents XTAL. Putterman Yu declined to comment further.

Ryan said that the amount of the judgment sends a powerful message.

"This was an absolute and total victory for ASML. And the saved-research-and-development damages model used in our case can serve as a roadmap for other innovative technology companies pursuing theft of trade secret actions against companies who have not yet fully monetized the stolen technology."

--Henrik Nilsson