Donny, patent ingringement lawsuits are pending against CCMP. This is no reason to short a stock unless it's close to judgement date. But just food for thought.
Regards,
Tom
In June 1998, one of our major competitors, Rodel Inc., filed a lawsuit
against Cabot Corporation in the United States District Court for the District
of Delaware entitled Rodel, Inc. v. Cabot Corporation (Civil Action No. 98-352).
In this lawsuit, Rodel has requested a jury trial and is seeking a permanent
injunction and an award of compensatory, punitive, and other damages relating to
allegations that Cabot Corporation is infringing United States Patent No.
4,959,113 (entitled "Method and Composition for Polishing Metal Surfaces"),
which is owned by an affiliate of Rodel. We refer to this patent as the Roberts
patent and this lawsuit as the Roberts lawsuit. Cabot Corporation filed an
answer and counterclaim seeking dismissal of the Roberts lawsuit with prejudice,
a judgment that Cabot Corporation is not infringing the Roberts patent and/or
that the Roberts patent is invalid, and other relief. Cabot Corporation
subsequently filed a motion for summary judgment that the Roberts patent is
invalid because all of the claims contained in the patent were not sufficiently
different under applicable patent law from subject matter contained in
previously granted patents, specifically United States Patents Nos. 4,705,566,
4,956,015 and 4,929,257, each of which is owned by a third party not affiliated
with Rodel or us. This motion was denied on September 30, 1999 based on the
court's finding that there were genuine issues of material fact to be determined
at trial. After the ruling on the summary judgment motion, Rodel filed a request
for reexamination of the Roberts patent with the United States Patent and
Trademark Office (PTO), which was granted on November 12, 1999. On March 28,
2000 the court issued an order staying the Roberts action, which presently is in
the discovery stage, pending completion of the reexamination of the Roberts
patent by the PTO. While to our knowledge, as of January 31, 2001, the
reexamination of the Roberts patent still has not been completed, in December,
2000 the PTO issued a notice of intent to issue a reexamination certificate for
the Roberts patent. In light of the reexamination, on September 29, 2000, the
court denied the parties' respective motions to amend and dismiss, with leave to
refile subsequent to completion of the reexamination.
In April 1999, Rodel commenced a second lawsuit against Cabot Corporation
in the United States District Court for the District of Delaware entitled Rodel,
Inc. v. Cabot Corporation (Civil Action No. 99-256). In this lawsuit, Rodel has
requested a jury trial and is seeking a permanent injunction and an award of
compensatory, punitive, and other damages relating to allegations that Cabot
Corporation is infringing two other patents owned by an affiliate of Rodel.
These two patents are United States Patent No. 5,391,258 (entitled "Compositions
and Methods for Polishing") and United States Patent No. 5,476,606 (entitled
"Compositions and Methods for Polishing"). We refer to these patents as the
Brancaleoni patents and this lawsuit as the Brancaleoni lawsuit. Cabot
Corporation has filed an answer and counterclaim to the complaint seeking
dismissal of the complaint with prejudice, a judgment that Cabot Corporation is
not infringing the Brancaleoni patents and/or that the Brancaleoni patents are
invalid, and other relief. On September 29, 2000, the court denied Cabot
Corporation's motion to dismiss, and granted Rodel's leave to amend the
Brancaleoni lawsuit to add Rodel's affiliate that owns the Brancaleoni patents,
Rodel Holdings, Inc. ("Rodel Holdings"), as a plaintiff. On October 24, 2000,
Rodel and Rodel Holdings filed an amended complaint that added
Rodel Holdings as a plaintiff to the Brancaleoni lawsuit. On November 6, 2000,
Cabot Corporation filed its answer and counterclaim seeking a judgement that
Cabot Corporation is not infringing the Brancaleoni patents and/or that the
Brancaleoni patents are invalid, and other relief. The Brancaleoni lawsuit is
presently in the discovery stage. On January 18, 2001, the court amended its
scheduling order and set June 15, 2001 for completion of discovery, October 25,
2001 for a final pretrial conference, and February, 2002 for the commencement of
trial.
In the Roberts lawsuit, the only product that Rodel to date has alleged
infringes the Roberts patent is our W2000 slurry, which is used to polish
tungsten and which currently accounts for a significant portion of our total
revenue. In the Brancaleoni lawsuit, Rodel and Rodel Holdings have not alleged
that any specific product infringes the Brancaleoni patents; instead, Rodel and
Rodel Holdings allege that our United States Patent No. 5,858,813 (entitled
"Chemical Mechanical Polishing Slurry for Metal Layers and Films" and which
relates to a CMP polishing slurry for metal surfaces including, among other
things, aluminum and copper) is evidence that Cabot Corporation is infringing
the Brancaleoni patents through the manufacture and sales of unspecified
products. At this stage, we cannot predict whether or to what extent Rodel
and/or Rodel Holdings will make specific infringement claims with respect to any
of our products other than W2000 in these or any future proceedings. It is
possible that Rodel and/or Rodel Holdings will claim that many of our products
infringe its patents.
Although Cabot Corporation is the only named defendant in these lawsuits,
the defense of which we have assumed and now are controlling, we have agreed to
indemnify Cabot Corporation for any and all losses and expenses arising out of
this litigation as well as any other litigation arising out of our business.
While we believe there are meritorious defenses to the pending actions and
intend to defend them vigorously, these defenses may not be successful. If Rodel
(and/or Rodel Holdings) prevails in either of these cases, we may have to pay
damages and, in the future, may be prohibited from producing any products found
to infringe or required to pay Rodel (and/or Rodel Holdings) royalty and
licensing fees with respect to sales of those products. It is not possible to
estimate the amount of a probable loss, if any, that might result from this
matter. Accordingly, no provision has been made in our financial statements. |
