12 October 2003 The flotation of Edinburgh-based semiconductor maker Wolfson Microelectronics — one of the biggest technology stock offerings in the UK for three years — has been hit by an eleventh-hour lawsuit launched by one its main rivals.
Austin, Texas-based Cirrus Logic claims that Wolfson’s technology infringes two of its patents. The claims, made in a letter to the company late last week, could scupper Wolfson’s £150 million flotation, which had been planned for Tuesday.
“The suit relates specifically to certain digital-to-analog converters designed by Wolfson… The complaint seeks damages and requests a permanent injunction against Wolfson from making, using, offering to sell or selling in the United States or importing into the United States any infringing products,” said Cirrus in a statement.
Wolfson, a spin-off from Edinburgh University and hotly tipped by Infoconomy, specialises in mixed-signal technology, microchips which convert analogue signals to digital, and vice versa. Manufacture of the products is outsourced to third parties in Europe, the US and Asia.
It makes signal conversion chips for DVD players, Microsoft Xbox games consoles and Dell handheld computers. Wolfson has been winning business from Cirrus and its backers suggest that the American company’s actions are motivated by a desire to stop the flotation.
The normal course of action when one company suspects another of patent infringement is for them to send a solicitor’s letter outlining their legal claims and for them to negotiate a satisfactory settlement. In this case, Cirrus had been given no prior indication of dissatisfaction.
“At no stage has Cirrus had any contact with Wolfson directly on this subject and the board is surprised by this unexpected disclosure,” said Wolfson in a statement.
The company will be issuing a statement on Monday morning to update investors on whether the flotation will go ahead, as planned, or be postponed until the validity of Cirrus’s claims are clearer.