Free Memorandum and Order - District Court of Delaware - Delaware

Case 1:04-cv-01371-JJF Document 331 Filed 08/22/2006 Page 1 014
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
POWER INTEGRATIONS, INC., a :
Delaware corporation, :
Plaintiff, i
v. i C.A. No. 04—l37l—JJF
FAIRCHILD SEMICONDUCTOR Z
INTERNATIONAL, INC., a Delaware :
corporation, and FAIRCHILD :
SEMICONDUCTOR CORPORATION, a :
Delaware corporation, :
Defendants. E
MEMORANDUM ORDER
Pending before the Court is a Motion To Compel Damages
Discovery And To Continue Damages Trial Date (D.I. 303) filed by
Defendants, Fairchild Semiconductor International, Inc. and
Fairchild Semiconductor Corporation (collectively, “Fairchild”).
Fairchild contends that Plaintiff, Power Integrations, Inc.
(“Power Integrations” or “PI”) has repeatedly failed to produce
the restatement of its financial reports that the Court ordered
produced at the May 31 pretrial conference. Fairchild contends
that the damages experts from both sides have relied on Power
Integrations’ annual reports and that Power Integrations delay in
production has prejudiced Fairchild’s ability to prepare its
damages case. In addition, Fairchild requests the Court to order
Power Integrations to produce the following additional documents:
l. All drafts of PI’s final restated financial
reports which have been prepared to date, and the final
restated financial reports when they are available.

Case 1 :04-cv-01371-JJF Document 331 Filed 08/22/2006 Page 2 of 4
2. All documents related to PI’s internal
investigation of financial irregularities that have
been provided to Nasdaq.
3. All documents produced by PI in response to
subpoenas from the SEC or DOJ.
4. Copies of all recent briefs regarding remedy
submitted by PI to the International Trade Commission
in the action brought there by PI against System
General (Investigation No. 337—TA—541).
(D.I. 303 at 2-3). Fairchild contends that these documents are
necessary to allow Fairchild to investigate the accuracy of Power
Integrations financial data and to prepare its damages case.
With regard to the System General investigation in particular,
Fairchild contends that PI recently submitted sealed supplemental
briefing on remedy and that “PI's discussion of market issues and
the harm caused by System General in that briefing are likely to
bear on and be inconsistent with PI’s allegations that Fairchild
is the purported sole cause of harm to PI’s market share and
pricing." (D.I. 303 at 3). Fairchild also contends that Power
Integrations must make its CEO Ealu Balakrishnan available for
deposition with respect to its restatement of its financial
reports as ordered by the Court during the pretrial conference.
In response, Power Integrations contends that Fairchild’s
motion relies on “pretense and micharacterizations” in order to
avoid proceeding with the damages trial scheduled for October 2,
2006. Power Integrations contends that the intended restatement
of its financial reports is related to the accounting of stock
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Case 1 :04-cv-01371-JJF Document 331 Filed 08/22/2006 Page 3 of 4
option grants, and not any product sales information or financial
data relied upon by the damages experts in this case. Power
Integrations also contends that Fairchild has been unable to
explain how the restated financial reports dealing with stock
options or the other requested discovery will impact the damages
calculations or testimony already prepared in this case, and
therefore, Power Integrations contends that the additional
discovery requested by Fairchild is irrelevant.
At the pretrial conference, the Court ordered and Power
Integrations agreed to produce revised financial statements to
Fairchild when they are available. Power Integrations must
comply with this order, and the Court will allow further damages
discovery if it is determined, at that time of production, that
further discovery is warranted in light of the revised financial
statements. At this juncture, Power Integrations continues to
represent that its revised statements pertains to stock options,
and Fairchild has not demonstrated how revised reports pertaining
to stock options will impact its damages case. In addition,
Fairchild has not demonstrated the relevance of the additional
discovery it seeks. As Power Integrations points out, this case
is a patent infringement case and not an SEC investigation or a
securities case. Accordingly, the Court will order Power
Integrations to supply Fairchild with the revised statements
immediately upon their filing with the SEC; however, the Court
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Case 1 :04-cv-01371-JJF Document 331 Filed 08/22/2006 Page 4 of 4
will deny the remainder of Fairchild's Motion, including its
request to continue the damages trial in this case.
NOW THEREFORE, IT IS HEREBY ORDERED that Fairchild’s Motion
To Compel Damages Discovery And To Continue Damages Trial Date
(D.I. 303) is DENIED, except that Power Integrations is ordered
to immediately provide Fairchild with its restated financial
reports as soon as those reports are filed with the SEC.
August 2006 p c
Date QT D ST TE DISTRICT J GE
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