Federal Circuit Affirms Trade Secret/ Contract Damages Award But Remands for Interest Correction

On April 4, 2025, the U.S. Court of Appeals for the Federal Circuit (CAFC) in a precedential decision largely upheld damages awarded to ams-OSRAM USA Inc. (formerly Texas Advanced Optoelectronic Solutions, or TAOS) in a long-running trade secret and contract dispute against Renesas Electronics America Inc. (formerly Intersil). The court affirmed tens of millions of dollars in disgorgement, exemplary damages, and reasonable royalties—but remanded for a narrow correction to the prejudgment interest calculation.

The case, first filed in 2008, arose from confidential technology that was shared during brief merger talks between the companies in 2004. At issue was TAOS’s ambient-light sensor technology—critical components in smartphones and tablets that adjust screen brightness based on environmental light. Although negotiations ended without a deal, Intersil used TAOS’s proprietary information to develop competing products, sparking a lawsuit that included claims of patent infringement, trade secret misappropriation, and breach of contract.

In 2015, a jury initially found in TAOS’s favor, but the case bounced through years of further proceedings and culminated in this latest Federal Circuit decision that left TAOS’s significant monetary recovery largely intact.

In mid-2004, TAOS and Intersil explored a potential merger. Under a confidentiality agreement, TAOS disclosed sensitive information about its ambient-light sensor designs. When negotiations collapsed, Intersil allegedly incorporated that information into its own products and secured key customer “design wins.”  One win in particular was a licensing agreement with Apple for the iPod Touch.

TAOS then sued Intersil in 2008 in the Eastern District of Texas, asserting multiple causes of action. In 2015, a jury returned a broad verdict for TAOS, awarding substantial compensatory and punitive damages. However, overlapping legal theories and the scope of infringing sales led to a complex post-trial and appellate process.

The 2018 Federal Circuit Decision

In 2018, the Federal Circuit affirmed Intersil’s liability for trade secret misappropriation but narrowed the grounds. Additionally, the court held that TAOS’s request for disgorgement of Intersil’s profits was an equitable remedy that required a judge—not a jury—to determine the award. As a result, the panel vacated the original jury award for trade secret damages and remanded for further proceedings.

This 2018 decision also directed the district court to reassess TAOS’s breach of contract claim separately. TAOS had sought royalties for Intersil’s use of non-trade-secret confidential information, and the Federal Circuit clarified that damages must be allocated between the two theories.

The 2021 Remand Proceedings

On remand, the district court conducted a bench trial on disgorgement and convened a second jury trial for other factual issues. Ultimately, the court awarded:

• Disgorgement of Intersil’s Profits (Trade Secret Claim): Approximately $8.5 million based on profits from the ISL29003 sensor, reflecting a 26-month “head start” Intersil gained through misappropriation.
• Exemplary (Punitive) Damages: A jury found that Intersil acted with fraud, malice, or gross negligence. The district court, applying Texas law, capped punitive damages at twice the disgorgement amount—$17 million.
• Reasonable Royalty for Breach of Contract: $6.6 million for Intersil’s use of confidential but non-trade-secret information in other sensor products.
• Attorney’s fees: TAOS also secured an award of attorney’s fees for prevailing on the contract claim.

The 2025 Appeal and the CAFC’s Ruling

Intersil appealed again, challenging both the disgorgement and exemplary damages awards. TAOS cross-appealed, seeking a broader disgorgement that included additional Apple product sales.

The Federal Circuit corrected a factual finding and held that TAOS’s trade secret became publicly accessible by February 28, 2005—not January 2006 as the district court ruled. However, this earlier date ultimately did not affect the damages, as Intersil’s misappropriation and key design wins still fell within the applicable 26-month “head start” period.

The court rejected Intersil’s arguments that exemplary damages were impermissible because disgorgement is an equitable remedy and said Intersil waived its argument by failing to raise it in the prior appeal. The court also rejected Intersil’s double recovery argument, affirming the district court’s ruling that awarding both contract royalties and trade secret disgorgement did not constitute double recovery, since the awards covered separate and distinct sets of products.

On TAOS’s cross-appeal, the CAFC affirmed the district court’s refusal to extend disgorgement to profits from later Apple design wins related to the iPhone 3G, concluding that those sales occurred after the head start period ended.

The only point of reversal concerned prejudgment interest. The Federal Circuit held that prejudgment interest should run from the date TAOS suffered actual financial injury—not automatically from the date the lawsuit was filed in 2008. Because some of Intersil’s relevant sales occurred later, the district court must recalculate the interest to reflect the proper accrual dates.

Image Source: Deposit Photos
Author: zimmytws
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