Texas company claims bad faith deal led to theft of trade secrets, patent infringement

Marilyn Tennissen Dec. 4, 2008, 2:34am

Light-sensor company Texas Advanced Optoelectronic Solutions has filed suit against Intersil Corp., alleging the California-based maker of semiconductors infringed a patent for digital ambient light sensors used in flat panel displays.

TAOS claims Intersil obtained confidential information about the company and the patent during negotiations for a business partnership with TAOS that it later reneged on.

The suit was filed Nov. 25 in the Sherman Division, Eastern District of Texas.

Plaintiff TAOS was organized under the laws of Nevada and has its principal place of business in Plano, Texas, and claims to own the rights to U.S. Patent No. 6,596,981 issued July 22, 2003, for a Method and Apparatus for Optical Detector with Special Discrimination.

According the original complaint, TAOS develops, manufactures and markets numerous optoelectronic products, including photo-diode sensors.

The photo-diode, or light sensors, are incorporated into numerous products, including meters used to calibrate color displays and determine paint colors, hand dryers to detect the presence of a person to signal the fan blower and flat panel display screens used in computers, laptops, cell phones and PDAs.

TAOS claims that "through expenditure of tremendous resources" it invented and developed "patented state-of-the-art technology to produce the first digital ambient light sensors that are used … to automatically adjust the brightness of flat panel display screens."

"TAOS achieved remarkable success with its device, selling it to customers for use in high-profile products such as the Apple iPhone," according to the original complaint.

"The purpose of TAOS' design is two fold," the complaint states. "First, it extends the battery life of electronic devices by automatically reducing unnecessary illumination on display screens in relation to ambient light conditions. Second, it provides optimum viewing of display screens in adverse lighting conditions."

The plaintiff alleges that under the auspices of evaluating the purchase of TAOS, and under obligations of confidentiality, Intersil conducted a complete detailed analysis of TAOS and its products in 2004.

The 26-page original complaint gives detailed descriptions of meeting, correspondence and negotiations between TAOS and Intersil executives, including PowerPoint presentations given at Intersil offices in California and dinner meetings in Texas.

"Throughout these discussions, Intersil repeatedly claimed that Intersil was not developing technology for infrared light reduction similar to that used in the TAOS TSL256x sensors; and Intersil wanted to enter that market as quickly as possible through a business deal with TAOS," the complaint states.

TAOS claims a draft of a Preliminary Term Sheet outlining the deal "was not a good faith offer," and differed from previous discussions of the terms between the executives. TAOS states it was reluctant to sign off on the draft, and attempted further negotiations with Intersil.

The plaintiff alleges that Intersil delayed in responding to TAOS, and eventually withdrew its draft term sheet and "made clear that no offer would be forthcoming."

"Prior to this …, Intersil did not have a product that competed directly against TAOS' light sensor," the petition states. "Now, Intersil markets a family of competitive light sensors. Indeed, of all the TAOS competitors that develop and sell ambient light sensors, it appears that Intersil's products are the only ones that use the same patented technology and method as that utilized in the TAOS light sensors."

TAOS is claiming not only patent infringement, but also breach of contract under California law, trade secret misappropriation under Texas law and tortious interference with prospective relations under Texas law.

The company alleges that it had engaged in negotiations with Apple and Dell to provide light-to-digital optical sensors for use in the next generation Apple iPhone (3G), the Apple iPod Touch and Dell's notebook computers, but Intersil interfered with the prospective contracts and marketed its own products at a lower price than that offfered by TAOS.

The plaintiff is seeking injunctive relief; compensatory, enhanced and exemplary damages; attorneys' fees and costs; pre- and post-judgment interest; and other relief to which it may be entitled.

Jamil N. Alibhai and other attorneys from Munck Carter PC in Dallas are representing the plaintiff.

The case has been assigned to U.S. District Judge Richard A. Schell.

Case No. 4:08-cv-451-RAS

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