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Breach of contract case between Tessera and Sony is settled

When parties settle complex business or contract litigation, there is often a provision in the settlement agreement that prohibits the parties from making the settlement terms public. Often times this confidentiality provision is demanded by the party that is paying consideration over to the other and wants the amount kept private. In the United States District Court for the Northern District of California a settlement was announced in the breach of contract action by Tessera Technologies, Inc. against Sony Corporation.

The court said that the terms of the settlement of the contract disputes were confidential. Tessera said it would announce further details once an actual settlement agreement is signed, subject to the terms of the agreement. The lawsuit filed by Tessera in 2011 claimed that the Japanese giant violated a patent license with Tessera covering semiconductor technology between the two.

Tessera claimed that Sony breached its agreement to pay royalties on the patent license with Tessera and that it owed $92.6 million in royalties. The settlement was announced by the companies on the eve trial. Attorneys for Tessera declined to comment further on the settlement.

The company issued a "safe harbor" statement warning that the actual results of the settlement could differ significantly from those projected. The statement cautions potential investors to not place undue reliance on the forward-looking statements regarding a settlement. The statement is a safety mechanism and general disclaimer in the securities industry under the Private Securities Litigation Reform Act of 1995.

It helps to protect companies in California and nationwide from receiving frivolous lawsuits not based on substantial evidence and to allow "forward-looking statements" without them being perceived as assurances of some outcome. The breach of contract settlement is only one potential kind of announcement for which a company will seek "safe harbor" protection. The final agreement in this case will likely go back to the federal district court for approval and integration into the final court order entering a judgment.

Source: Fort Mill Times, Tessera and Sony Settle Litigation, No author, Oct. 28, 2013

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