ON Semi to Pay $175 Million to Power Integrations: 15-Year Legal Battle Ends
According to recent filings with the U.S. Securities Exchange Commission (SEC), Power Integrations and ON Semiconductor have agreed to settle the on-going patent litigation between the companies and enter into a definitive agreement no later than October 22, 2019, a key element of which will be the payment of $175 million in cash from ON Semiconductor to Power Integrations.
According to its SEC filing, ON believes that the settlement will likely result in meaningful cost savings due to the elimination of litigation costs.
In addition, each party agreed to release the other party from any claims to damages or monetary relief for certain alleged acts of patent infringement across the various patent infringement litigations, occurring on or before June 30, 2020, and not to file any additional action for legal or equitable relief prior to June 30, 2023 (although following that date a party may file a legal action for alleged patent infringement occurring after June 30, 2020).
Neither party granted any licenses to the other.
The agreement between ON Semiconductor and Power Integrations brings to a close a series of legal actions between the companies that began on October 20, 2004, when Power Integrations filed a complaint against Fairchild Semiconductor International, Inc. and Fairchild Semiconductor Corporation (referred to collectively as Fairchild) in the United States District Court for the District of Delaware (Fairchild was acquired by ON Semiconductor on September 19, 2016).
In that original complaint, Power Integrations alleged that Fairchild had and was infringing four of Power Integrations' patents pertaining to pulse width modulation (PWM) integrated circuit devices. Fairchild denied infringement and asked for a declaration from the court that it did not infringe any Power Integrations patent and that the patents were invalid.
On December 18, 2015, Power Integrations announced the latest result in one of its ongoing patent cases against Fairchild, where a jury awarded Power Integrations $139.8 million in damages stemming from Fairchild's infringement of two Power Integrations patents. The infringement finding occurred in March 2014 and remained intact; the concluded trial was solely to retry damages after an earlier award of $105 million was set aside by the court in view of an intervening change in the law.
Over the years, the legal cases involving the companies continued and expanded and on August 11, 2016, ON Semiconductor filed a complaint against Power Integrations in the United States District Court for the District of Arizona. In its complaint, ON Semiconductor alleged that Power Integrations had infringed and was infringing six patents and requested injunctive relief. Power Integrations filed a motion to transfer the case to the Northern District of California, which the Court granted, and the case was consolidated with Power Integrations' affirmative case against ON Semiconductor in the Northern District of California.
As indicated in the recent filings with the SEC, Power Integrations and ON Semiconductor have agreed to settle the on-going patent litigation between the companies and enter into a definitive agreement no later than October 22, 2019.