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A Santa Clara County Superior Court jury in San Jose, Calif., Tuesday rejected a $240 million class action securities fraud claim by shareholders who alleged National Semiconductor Corp. lied to them about the stock’s value. The class was comprised of 25,000 shareholders who had originally held stock in Cyrix, a producer of microprocessors. In November 1997, Santa Clara-based National Semiconductor purchased Texas-based Cyrix to utilize its embedded microprocessor technology. Cyrix shareholders exchanged their stock for National stock as a result of their merger. The stock price dropped and within a month, the shareholders filed suit. In Jason Forge v. National Semiconductor, CV770082, plaintiffs argued National Semiconductor violated sections 11 and 12 of the Federal Securities Act of 1993 by including misleading information about National in the stock prospectus. They also alleged National lied about its available fabricating capacity to make Cyrix processors. The plaintiffs also said the company’s claim that its wafer fabricating facility was state of the art was false. But in a special jury form, jurors rejected the plaintiffs’ allegations. They spent 3 1/2 hours in deliberations before rendering their verdict. The case was unusual in that most securities fraud class action suits are settled out of court, said National attorney Benjamin Riley on Wednesday. “National and its directors firmly believed that there was no basis for plaintiffs’ claims, and we weren’t going to give in to their demands,” said Riley, a Cooley Godward partner in San Francisco. Paul Vizcarrondo, a partner at New York’s Wachtell, Lipton, Rosen & Katz, served as Riley’s co-counsel. The plaintiffs were represented by Matthew Zevin, an associate at Los Angeles’ Weiss & Yourman, and Guy Mailly, an associate at Los Angeles’ Stull, Stull & Brody. Neither could be reached for comment Wednesday afternoon. The technically difficult trial, presided over by Superior Court Judge Frank Cliff, spanned over six weeks including motions and jury selection. Between 30 to 40 witnesses were called to testify, Riley said. Riley said he was grateful the case was heard before a Santa Clara County jury with some technology experience. Several of the jurors were engineers familiar with the technology and the other jurors had rudimentary knowledge about the subject, he said. “Santa Clara County is probably the best place to present an IP case,” Riley said.

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