• February 12, 2015

Silicon Wafer2(Update February 12, 2015): Camtek, the Israeli maker of silicon wafer inspection tools, has been battling without much success in Minnesota for several years now and the fight continues.

(Have you ever tried inspecting your own silicon wafers? Very difficult with the naked eye. I have found that detecting slip lines inside a wafer’s crystalline structure with a vertical sensitivity of 2 nm as well as performing front-side, back-side and edge inspection gives me a splitting headache in no time. But I digress.)

The Camtek case has been forced march of crippling attorneys’ fees and defeats for Camtek. The general downward trajectory continues, as described below, the contempt order against Camtek has now been overturned. U.S. District Court Judge John R. Tunheim (D. Minn.) reasoned that recent Federal Circuit case law establishes that “sales to Malaysia and China are not infringing sales” and it was such sales that triggered the Judge Boylan and Judge Davis’ contempt findings against Camtek. So the finding of contempt is vacated.

The next question is whether Camtek will finally cry uncle? Or will it, again, appeal to the U.S. Court of Appeals for the Federal Circuit as it has already done once with some slight measure of success (at least in the short term)? Maybe the Plaintiff, August Technology, now a part of Rudolph Technologies, would welcome another appeal since it comes with on-going interest, which has already nearly doubled the amount that Camtek is held to owe Rudolph (to $14.5 million). (Congratulations to Plaintiff, by the way, and its victorious lawyers from Merchant & Gould!)

(Update August 24, 2012)(under subject line: Claim of Ignorance Can’t Save Party from Sanctions for Contempt): As previously predicted by Minnesota Litigator, Camtek challenged the order for $1.2 million in sanctions. On Camtek’s motion for relief from judgment under Fed. R. Civ. Pro. 60(b), U.S. District Court Judge John Tunheim (D. Minn.), the newly assigned judge in the case (U.S. District Chief Judge Michael Davis (D. Minn.), recused himself ), gave Camtek a massive sanctions-reducing haircut.

As a refresher, back in March, Chief Judge Davis held that Camtek had flagrantly flouted court orders and ordered it to pay $645,946 for contempt of court.  To discourage future similar misconduct and “as a stern warning to a party which has shown a clear lack of respect” to the court, the judge awarded double damages and increased the sanctions to over $1.2 million. Thereafter, Camtek sought relief from the imposition of sanctions and the holding that it was in contempt.

Judge Tunheim reduced the sanctions because double damages were not imposed to compensate August Technology and, because Chief Judge Davis doubled damages to validate the court’s authority, the punitive nature of the sanctions required stepped up due process protections. According to International Union, United Mine Workers of America v. Bagwell, contempt sanctions are considered criminal if they are punitive or to “to vindicate the authority of the court.”  As such, criminal sanctions are afforded “the protections that the Constitution requires of criminal proceedings.

Because the Court found that Camtek did not receive the adequate due process required for criminal sanctions, it reduced the sanctions by one-half.  Even though this is a significant savings for Camtek, it is unclear whether this latest “victory” will put an end to this almost seven-year-old dispute.

(Update 4/17/2012):  William Mohrman of Mohrman & Kaardal, P.A. to the rescue for Camtek, which has been hammered for civil contempt?  His partner, Erick Kaardal, did not have much luck trying to spare his client, Mr. William Butler, the U.S. District Court’s wrath but maybe Mr. Mohrman will fare better for Camtek?

(Update 4/11/12): After ordering Camtek to pay $1.2 million in sanctions, U.S. District Court Chief Judge Michael J. Davis (D. Minn.) has recused himself because he “believes he can no longer be fair and impartial.” 

(Original Post 4/2/12): Camtek, an Israeli company, that makes sophisticated machinery used in the inspection and packaging of semiconductors, is a world-wide operation but Minneapolis, Minnesota must occupy a special place in the company’s heart because it has spent a lot of time and money in and around 4th Street and 3rd Avenue in downtown Minneapolis.

Camtek has been fighting various battles in a Minneapolis courtroom since 2005.  In 2009, Camtek lost a patent infringement lawsuit brought by August Technology (now part of Rudolph Technologies).

Camtek is also being sued for its attorneys’ fees in connection with the unsuccessful defense in that case.

Now Camtek has a $1.2 million “double damages” contempt penalty to deal with.

After a party defines the meaning and impact of a term in a permanent injunction, it can be a very costly decision to argue that it is unclear afterwards. Faced with that situation, U.S. District Court Judge Michael Davis recently ordered Camtek, Ltd. to pay over $1.2 million in sanctions for its bad faith violation of an “unambiguous injunction.”

In 2005, August Technology Corp. sued Camtek for infringing on several of August Tech.’s patents used the vital, lucrative, if somewhat obscure industry of automated silicon wafer inspection systems.  (Here is a link to Camtek’s press release on a recent deal on its “Falcon system.“)  In February 2010, after significant and involved litigation, the Court granted August Tech a permanent injunction. A key provision enjoined Camtek from doing the following:

communicating with third parties (in person, via phone, via email, or by any other means) located in the United States for the purposes of offering to sell Falcon machines or machines that are colorable imitations thereof, notwithstanding where the third party intends to use the machines[.] (emphasis added)

After that order issued, Camtek violated the injunction and August Tech brought a motion for contempt.

In adopting the recommendations of Chief U.S. Magistrate Judge Arthur J. Boylan (D. Minn.), Judge Davis gave no credence to Camtek’s argument that it did not know it was violating the injunction.

Caught violating this provision, Defendant now feigns ignorance as to the meaning of the clause beginning with the word “notwithstanding” (the “notwithstanding clause”). Any such ignorance is newfound.

Judge Davis continued by pointing to Camtek’s previous submission to the court that “helpfully explained the meaning and impact” of the notwithstanding clause showing that it knew full well what it meant with respect to the injunction. Judge Davis then adopted Magistrate Judge Boylan’s recommendation of double damages sanctions for Camtek’s flagrant violations.

It should come as no surprise that arguing out of both sides of your mouth is frowned upon and can be dealt with severely. It will be interesting to see if Camtek appeals the contempt citation or tries to have it reduced (and when it will finally tire of litigation in the land of 10,000 lakes).

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