Arbitration Panel Finds Amkor Owes Tessera Royalties on Four Foreign, Three U.S. Patents

Tessera said Monday it will seek more than $125 million in royalties from Amkor following an interim award by an arbitration court of the International Chamber of Commerce in favor of Tessera in its license dispute with Amkor Technology. Tessera filed a complaint in U.S. District Court in Wilmington, Del., Friday for injunctive relief and damages. “We continue to seek royalties for use of the Tessera, Inc. patent portfolio, which has delivered over $1 billion in revenue during the past decade,” said Richard Chernicoff, president of Tessera Intellectual Property Corp.

The current arbitration marks the second time the two companies have gone to the ICC to resolve the amount of royalties owed under the now-terminated patent license agreement, which Tessera ended in February 2011, the companies said. The first arbitration lasted three years and in 2009 resulted in an award to Tessera, Inc. of $64 million. The tribunal will determine final awards specifying the amount of damages owed to Tessera.

In a press release Monday, Amkor noted that the panel found no royalties due to Tessera on seven of the 10 asserted U.S. patents and that the panel found royalties are due on four foreign patents related to U.S. patents that the panel previously found to be “royalty bearing.” Amkor estimates damages and interest could total $30 million with respect to the foreign patents. The factors affecting the calculation of damages and interest regarding the U.S. patents are “more complex and require further analysis” before the company can make an estimate, Amkor said. Regarding the complaint Tessera filed for injunctive relief and damages regarding Amkor’s alleged infringement of one of the U.S. patents that the arbitration panel found to be royalty-bearing, Amkor said it “strongly disputes Tessera’s claims and intends to vigorously defend against them."

"Although we are disappointed that the panel did not rule in our favor on all of the claims, we prevailed on the patents for which Tessera made the largest claims for royalties and we expect that the amount of the award will be well below the more than $400 million claimed by Tessera in the arbitration,” said Amkor CEO Ken Joyce. Amkor doesn’t expect the final award to have a “material impact on our liquidity,” he said, “and we do not believe the ruling will interfere in any significant way with our ability to use our technology, conduct our business or service our customers.”