IN BRIEF

  • GlobalFoundries first sued TMSC on August 26
  • TSMC countersued GlobalFoundries on September 30
  • The dismissal of all litigation and a broad cross-licensing agreement was announced on October 29

The Situation

On October 29, 2019, TSMC and GlobalFoundries announced that all litigation between the two companies, as well as those cases that involved any of their customers, had been dismissed.

This brought to an end what some had dubbed the “foundry war,” which began on August 26, when GlobalFoundries fired the first shot by suing TSMC for patent infringement in the USA and Germany.

TSMC warned that it would “vigorously defend” itself, and sure enough, on September 30, it retaliated by filing multiple lawsuits against GlobalFoundries in the USA, Germany, and Singapore.

The Agreement

According to a press release issued by both TSMC and GlobalFoundries, the agreement involves:

 a broad life-of-patents cross-license to each other’s worldwide existing semiconductor patents as well as those patents that will be filed during the next ten years.

The agreement “guarantees” both companies the freedom to operate and “ensures” that their customers will be able to use each company’s technologies and services.

The Outcome

From the beginning, some experts had suggested that just such an agreement would be the likely outcome of this dispute.

And by coming to an agreement, both sides were able to avoid a costly protracted legal battle that could have dragged on for years, allowing both sides to save on the time, effort, and resources that would have been needed for all of these lawsuits.

In the press release, both sides were positive about the agreement, with the CEO of GlobalFoundries, Thomas Caulfield, calling the agreement a “win for the entire semiconductor industry,” and Sylvia Fang, General Counsel of TSMC saying “the resolution is a positive development” that will enable the company to “focus on advancing the needs of our customers for technologies that will continue to bring innovation to life, enabling the entire semiconductor industry to thrive and prosper.”

Our Analysis

Perhaps we could call this a “win-win-win” situation.

The licensing agreement is certainly a win for GlobalFoundries, since it gives them access to a host of new technologies and freedom to operate for at least the next ten years.

The agreement is also a win for TSMC since it enables the company to avoid being bogged down in legal battles over the next few years, at a time when the company is looking to grow its business in new areas of semiconductor technology.

At the same time, the case was an opportunity for TSMC to flex some of its patent “muscle” and showcase the strength and quality of just a small part of its large and formidable 37,000-strong patent portfolio.

But the biggest winner may be the semiconductor industry itself, since this agreement will enable two of its most important players to cooperate instead of duke it out in a series of ongoing legal battles. As both GlobalFoundries and TSMC noted, the agreement is a very positive step in keeping this industry healthy and robust. 

And further downstream, the customers of TSMC and GlobalFoundries, like Apple, Google, Nvidia, and many others, must be heaving a sigh of relief, since the agreement will ensure a continued steady supply of semiconductors for their products.

In fact, the real winner just may be consumers, since this agreement will enable them to continue, without any interruption, to buy the products and use the services that rely on the semiconductors that both TSMC and GlobalFoundries manufacture.

Check out the other articles in the series. In them, we show how to use Patentcloud, our cloud-based IP intelligence platform, to prepare for litigation.