Amkor, Tessera continue bitter battle

SAN JOSE, Calif. - Amkor Technology Inc. and Tessera Technologies Inc. continue to battle on the legal front.

Tessera announced that on Feb. 17, 2011, it sent Amkor an official notice of termination of their license agreement with Tessera. ''The two companies are currently in arbitration regarding multiple issues, including several past breaches by Amkor of the license agreement,'' according to Tessera.  The move could impact Qualcomm Inc. and other Amkor customers.

Amkor confirmed that it received a notice from Tessera, purporting to terminate Amkor’s patent license agreement with them. “This latest letter is just another part of Amkor’s ongoing dispute with Tessera regarding the License Agreement and does not affect our business,” said Ken Joyce, Amkor’s president and chief executive, in a statement. 

Amkor and Tessera have a long-running feud. In January of 2009, Tessera announced that the International Chamber of Commerce's International Court of Arbitration issued an award of $60.6 million to Tessera for Amkor's material breach of its license agreement. This was part of a long-running dispute between the two parties over a licensing deal.

Then, in August of 2008, Amkor announced that it filed a request for arbitration in the International Court of Arbitration of the International Chamber of Commerce  against Tessera. Amkor undertook this action in order to obtain declaratory relief confirming that it is a licensee in good standing under its 1996 license agreement with Tessera and that the license agreement remained in effect.

In the request for arbitration, Amkor was also seeking damages and injunctive relief against Tessera for tortious interference with Amkor’s customer and other business relationships, including false and misleading statements questioning Amkor’s status as a licensee under the license agreement.

The final award in this prior arbitration was issued in January 2009 and covered the period through Dec. 1, 2008. ''Amkor satisfied in full this obligation when due in February 2009. Although the royalty payment for the six month period ended June 30, 2009 is not due until August 14, 2009, Tessera has recently made repeated statements claiming that Amkor is in breach of the royalty provisions of the license agreement. Amkor has informed Tessera that it is in full compliance with the license agreement and of its intent to continue making the royalty payments when due in accordance with the terms of the license agreement,'' according to Amkor.

There was a separate case, which had an indirect impact on Amkor. In May of 2009, the ITC issued a limited exclusion order prohibiting the import of chips found to infringe two Tessera chip-packaging patents. The chips are made by ATI Technologies (now part of Advanced Micro Devices Inc.), Freescale Semiconductor, Motorola Inc., Spansion LLC, ST Microelectronics NV and Qualcomm Inc.

Qualcomm said none of its products are affected because it moved some packaging operations to Amkor which has a Tessera license. However, Tessera said the move is not sufficient.

Then, on Nov. 2, 2009, Tessera denied ''Amkor’s accusations and accuses Amkor of failing to pay Tessera full royalties on products Amkor sold to Qualcomm and potentially others that are subject to ITC injunctions, of refusing to allow Tessera to audit in accordance with the parties’ license agreement, of interference with Tessera’s prospective economic relationships, of failing to pay royalties or full royalties on products that infringe various U.S. and foreign patents owned by Tessera, and of violating the implied covenant of good faith and fair dealing,'' according to a filing.

At the time, Tessera, according to a filing, wanted ''relief including judgment that the license agreement has been breached and that Tessera is entitled to terminate the license agreement; judgment that products on which Amkor has not paid the full contractual royalties to Tessera are not licensed under Tessera’s patents; damages for Amkor’s breaches of the license agreement; damages, including punitive damages, for Amkor’s interference with Tessera’s prospective business relationships; interest on any damages; attorneys’ fees and costs incurred by Tessera; denial of Amkor’s claims against Tessera; an order that awards Tessera all other relief recoverable under the rules of Arbitration of the ICC; and an order for such other and further relief as the arbitrators deem just and proper.''

On Jan. 15, 2010, Amkor ''denied Tessera’s counterclaims, arguing in part that Tessera’s counterclaims for royalties are barred by the doctrines of collateral estoppel and res judicata, and sought a declaratory judgment that it has not infringed and that its packages are not made under any of the patents asserted in Tessera’s answer and that the patents are invalid and unenforceable,'' according to Tessera.

On Feb. of 2010. Amkor also claimed ''a credit for royalties it alleges it overpaid Tessera,'' according to the Tessera filing. ''On March 28, 2010, the arbitrators ruled on Amkor’s motion for priority consideration, holding that certain issues—including royalties payable on a going-forward basis for the patents addressed in the previous arbitration, including but not limited to royalties applicable to packages assembled for Qualcomm, Inc., and Tessera’s counterclaim for breach of the audit provision—would be considered in an early hearing which is currently scheduled to last two days starting on December 9, 2010. The arbitrators scheduled a two-week hearing on the remaining issues for August 15, 2011.''

On May 14, 2010, ''Amkor filed a motion to bar Tessera’s counterclaims for royalties owed based on Amkor’s activities prior to December 1, 2008 as barred by the doctrine of res judicata. A hearing on Amkor’s motion occurred on August 25, 2010. A ruling on that motion has not yet been issued,'' according to Tessera.