S.O.I.TEC Silicon on Insulator Technologies S.A. v. MEMC, Inc.
On May 19, 2008, Soitec and Commissariat A LEnergie Atomique (CEA) filed a complaint against MEMC in the U.S. District Court for the
District of Delaware (Civil Action No. 08-292) alleging infringement, including willful infringement, by MEMC of three U.S. patents related to silicon-on-insulator technology, and requested damages and an injunction. Soitec and CEA filed an
amended complaint on July 21, 2009, adding a fourth, related patent to the lawsuit. MEMC filed a counterclaim against Soitec for infringement of one of MEMCs U.S. patents. The Court bifurcated the case into two phases, a first
liability phase, which, to the extent liability is found, will be followed by a second damages phase. In a memorandum opinion dated October 13, 2010, the Court found that all of MEMCs current products and processes do not infringe
any valid claim of the four asserted Soitec patents.
The Court held a jury trial from October 25, 2010 to November 2, 2010. After the
Courts October 13, 2010 ruling in favor of MEMC, the only remaining claim that Soitec continued to assert at trial was a single patent claim directed against some mono-implant research and development efforts conducted by MEMC
approximately six to eight years ago, none of which have occurred since 2006, and none of which are material or relevant to the current operations at MEMC. MEMC continued to assert at trial its counterclaim for infringement of MEMCs patent. On
November 2, 2010, the jury found that certain of Soitecs wafers infringed the patent asserted by MEMC at trial. The jury also found that one of the Soitec patent claims was valid. This single patent claim covers MEMCs mono-implant
research and development efforts that ended in 2006. On July 13, 2011, the court denied all post trial motions. Soitec subsequently filed an appeal and MEMC filed a cross-appeal. The appeal is now fully briefed in the
U.S. Court of Appeals for the Federal Circuit. The appeal was stayed pending en banc review of a jurisdictional question unrelated to the merits of the appeal. The stay has now been lifted and the case will be heard by the Court of Appeals
later this year. The damages phase of this trial will occur, if at all, after the appeal. We believe that Soitec and CEAs suit against us has no merit, and we are asserting a vigorous defense, as well as the infringement counterclaim.
Although it is not possible to predict the outcome of such matters, we believe that the ultimate outcome of this proceeding will not have a material adverse effect on our financial position, cash flows or results of operations.
Semi-Materials Co., Ltd. v. MEMC, Inc. and MEMC Pasadena, Inc.
On September 28, 2006, Semi-Materials Co., Ltd. (Semi-Materials) filed a complaint against MEMC in the U.S. District Court for the
Eastern District of Missouri (Case No. 4:06-CV-01426-FRB) alleging breach of contract, unjust enrichment, fraud, and conversion, and seeking specific performance, all related to a series of purchase orders for chunk polysilicon and polysilicon
solar ingot (the Ingot Action). This litigation resulted in a trial which commenced on February 22, 2011. On March 2, 2011, the jury found for MEMC on the fraud and unjust enrichment claims made by Semi-Materials against the
Company. The jury found for Semi-Materials on the breach of contract claim, awarding damages to Semi-Materials of $19.0 million. Approximately $5.1 million of this amount related to an amount previously recorded by MEMC. During the
first quarter of 2011, we recorded allocated amounts from our Parent of $4.7 million to marketing and administration expenses as a result of the jury verdict pending the appeal.
On March 31, 2008, Semi-Materials and its affiliate SMC Shanghai (SMC) filed two additional lawsuits against MEMC, one in the United States
District Court for the Southern District of Texas (Case No. 4:08-CV-00991) (the Texas Action) and another in the United States District Court for the Eastern District of Missouri (Case No. 4:08-CV-00434-JCH) (the Missouri
Action). In both cases, Semi-Materials and SMC alleged that: (i) MEMC Pasadena, Inc. (MEMC Pasadena) breached an agreement with SMC for SMC to act as MEMC Pasadenas exclusive sales agent in China; (ii) MEMC Pasadena
breached an agreement with Semi-Materials for Semi-Materials to act as MEMC Pasadenas exclusive sales agent in Korea; (iii) MEMC tortiously interfered with the purported sales agency agreements among MEMC Pasadena and SMC and
Semi-Materials; and (iv) MEMC tortiously interfered with a separate sales agency agreement Semi-Materials claimed existed with an unrelated party. In the Missouri Action, Semi-Materials also claimed that MEMC tortiously interfered with an