November 14, 2006 – Tegal Corp. and subsidiary Sputtered Films Inc. (SFI) have agreed to a net $13 million settlement in a lawsuit regarding alleged theft of trade secrets involving physical vapor deposition (PVD) technology. The settlement also calls for the transfer of assets related to PVD technology from Advanced Modular Sputtering (AMS) to SFI, and the dissolution of AMS as of March 1, 2007.

The original complaint, launched in June 2004 against former SFI employee Sergey Mishin and AMS, as well as parent company Agilent Technologies Inc., concerned misappropriated trade secrets embodied in SFI’s Endeavor sputtering system, and used them to build their own sputtering systems. Avago Technologies US Inc. was attached as a defendant, inheriting the litigation when it bought Agilent’s semiconductor business last December.

Earlier this month a judge denied defense motions for summary judgments, paving the way for a trial to begin in a few days, in which SFI was prepared to ask for $100 million or more in damages. Still, the $13 million is more than twice the revenues Tegal posted in its most recent quarter, and represents half of the company’s total assets.