Cortus Sues Electronics Patent Infringement, Alleging Breach of License

On Tuesday in the District of Delaware, plaintiff Cortus S.A.S., a “leading semiconductor, embedded systems and Internet of Things (IoT) solutions company,” filed a complaint against defendant Microchip Technology Incorporated, a “provider of microcontroller, mixed-signal, analog and flash-IP solutions,” and unknown individuals for copyright infringement for their purported use of Cortus’s code in products beyond their original licensing agreement.

Cortus stated that it “provides a full range of integrated circuit (‘IC’) design services.” According to the complaint, the defendants “sell, offer to sell, and/or use products and services throughout the United States…and introduce unlicensed and infringing products and services into the stream of commerce.” Furthermore, Cortus asserted that it licenses its intellectual property, including its proprietary and copyrighted microprocessor designs and its prototyping and verification software—to certain application-specific integrated circuit (‘ASIC’) developers who, in turn, embed Cortus’s proprietary and copyrighted microprocessor designs into ASICs used for, e.g., SIM cards, bank cards, ePassports, automotive sensors, image processors…secure microcontrollers… and Internet of Things (“IoT”) devices.” Cortus claimed that at issue is its APS3 microprocessor and its APS3S variant (collectively referred to as the APS3 microprocessor or APS3 core). Additionally, Cortus claimed that it owns APS3 core code. Although Cortus licenses it, the licensing terms “prohibit public disclosure of the code.”

Cortus alleged that in May 2011, it entered into a Software License Agreement (SLA) with Newport Media Inc., (NMI) “a fabless semiconductor company that had been developing and selling ‘system-on-a-chip (‘SOC’) ASIC products.” Pursuant to SLA purchase orders, for a limited period of time, Cortus granted NMI “the right to use the Cortus APS3 microprocessor code to develop two ASIC products that incorporate the Cortus APS3 microprocessor design, and to manufacture, and sell these two products.” Cortus claimed that the fees were discounted and royalties were waived. However, the SLA with NMI included a non-assignment provision and the code was “restricted to NMI design groups.” Accordingly, Cortus stated that NMI incorporated the Cortus APS3 microprocessor into at least two of its ASIC products.

Cortus proffered that in July 2014, Atmel Corp., a microcontroller company, “acquired a 100% equity interest in privately-held NMI for $143 million.” According to Cortus, “all NMI products were withdrawn from the market shortly after its acquisition by Atmel in July 2014” and “in late 2014 and early 2015, Atmel introduced new products containing one or more copies of the Cortus APS3 microprocessor.” Furthermore, Atwel allegedly introduced more products with the Cortus APS3 microprocessor.

In April 2016, Microchip purportedly acquired Atmel for $3.47 billion. Consequently, Cortus averred that the defendants “continued to manufacture, distribute and sell products” in the infringing Atmel product family lines, such as ATWILC1000B, ATWINC1500B, ATWILC3000, and ATWINC3400. Consequently, Cortus claimed that Microchip knows that these products infringe because they use, but do not license the Cortus APS3 microprocessor. Additionally, Cortus claimed that it has notified Microchip of its purported infringement, stating that its products were different from NMI’s and that it did not have the right to sell them. Microchip countered that it was not liable because of a release provision in a License, Settlement, and Release agreement between Microsemi Corp. – Analog Mixed Signal Group, Microchip, and Cortus S.A.S., which was effective in July 2019. However, Cortus disagrees, claiming that said provision is not relevant to this dispute. As a result, Cortus reiterated Microchip’s purported infringement of its copyrighted code, which it allegedly did not license.

The counts against the defendants are copyright infringement, unfair competition, conversion, unjust enrichment and disgorgement, and replevin. The plaintiff has sought an injunction, an award for damages, disgorgement, for Microchip to return all copies of Cortus’s APS3microprocessor code and other software originally licensed to NMI, and other relief.

Cortus is represented by Potter Anderson & Corroon LLP and Shearman & Sterling LLP.