By Richard Acello
Small Times Contributing Editor
Jan. 3, 2007 — In what may become an increasingly familiar byproduct of nanotech commercialization, a joint venture involving chemical giant DuPont has sued a supplier of a nanotech product used in semiconductor manufacture over a patent license.
On Dec. 8, attorneys for DuPont Air Products Nanomaterials (“DA NanoMaterials”) filed a complaint in Arizona federal court against Cabot Microelectronics Corp., seeking a judicial declaration that DA NanoMaterials is not infringing on Cabot’s intellectual property. On Dec. 12, Cabot issued a release saying that it planned to pursue legal action against DA Nano.
DA NanoMaterials, based in Tempe, Ariz., is a joint venture of chemical giant DuPont (NYSE: DD), which has annual revenue north of $26 billion and 60,000 employees in 70 countries, and Lehigh Valley, Pa.-based Air Products (NYSE: APD), which registered sales of $8.8 billion in 2006.
Cabot, based in Aurora, Ill., is a provider of sophisticated polishing compounds and polishing pads used in the manufacture of semiconductor chips that go into products ranging from personal computers to cell phones to servers. In October, Cabot (NASDAQ: CCMP) reported revenue of $320.8 million for its fiscal year ending Sept. 30 — a 19 percent increase over the prior year. Cabot has 750 employees in the U.S. and eight other countries.
At issue is the process used in the manufacture and sale of the slurry polishing compound and pad products needed in chemical mechanical planarization (CMP), which flattens silicon wafers to near-perfect smoothness. CMP enables multiple layers of intricate circuitry to be built upon the wafer surface.
DA NanoMaterials’ suit comes as Cabot asserts its rights to what it says is proprietary technology in the manufacture of the chip polishing products. In its complaint, DA NanoMaterials says it has received letters from Cabot alleging infringement of two of Cabot’s patents, and that in follow-up discussions Cabot asked DA NanoMaterials to cease its infringing activities or face legal action.
According to Cabot’s general counsel, the suit results from Cabot’s refusal to grant DA NanoMaterials a license to the technology in dispute.
“Some of the patents at issue are our foundational or core patents,” said H. Carol Bernstein, vice president and general counsel for Cabot. “Most businesses will not license their core technology, because it is their differentiator, it’s the way they bring value to the marketplace. We spend $45 million a year on research and development and have built up a fairly substantial patent portfolio that supports our technology leadership.”
Bernstein says Cabot learned through competitive intelligence that DA NanoMaterials’ polishing compounds were “copying our technology and infringing on our patents.”
About Cabot’s refusal to grant DA NanoMaterials a license to the disputed technology, Bernstein said, “We don’t think it’s appropriate to ask or demand that they be given a license.”
In June, Cabot “successfully concluded” a patent action before the U.S. International Trade Commission (ITC) against Korea-based Cheil Industries involving some of the same technology at issue in the DA NanoMaterials case, Bernstein added.
DA NanoMaterials attorney Michael Farrell of the Phoenix firm of Jennings, Strouss and Salmon, who filed the suit, did not return calls seeking comment. A spokesman for DA NanoMaterials says it’s the company’s policy not to comment on ongoing litigation, but added, “DA NanoMaterials believes it has viable products to serve this market, which are covered under their own patented technology and are not infringing the Cabot patents at issue. DA NanoMaterials is asserting its right to participate in the market with its current slate of CMP products without infringing the Cabot patents.”
On the other hand, Cabot’s Bernstein says she believes the case illustrates the importance of the patent system to technology companies such as Cabot.
“We really believe in the patent system and that it helps to fuel investments, inventions and development of the economy,” she explained. “It’s a fundamental part of why we’ve been able to grow in the U.S., especially in the Midwest, while others have been laying people off and moving overseas; it’s a fundamental part of who we are. We think it’s important to protect our R&D investment. Valid claims should be brought when someone is infringing.”