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Espionage, exploding capacitors and fraud

Delayed responses to impending financial disasters can send shockwaves through investor and shareholder communities, and can create cracks in the pillars of corporate ethics and fiduciary responsibility. Here we explore how one high-profile company waited too long to respond to faulty vendor parts on computer motherboards, which led to compounded market share loss, accounting irregularities, customer lawsuits and an SEC investigation.

In the high-tech world, claims of intellectual property theft, corporate espionage and patent infringement are costly but aren’t uncommon. In 2015, the courts ordered Apple to pay $523 million in a patent dispute with SmartFlash over iTunes software.

In 2013, Nintendo paid a $30 million fine for allegedly stealing crucial pieces of its 3D technology from Tomita Technologies.

In 2016, a federal appeals court awarded Carnegie Mellon University a $750 million settlement with Marvell Semiconductor in a patent infringement case that was the second-highest monetary award ever handed down by the courts. This decision — along with some questionable accounting and internal control practices discovered by Deloitte & Touche in 2015 — forced the board of directors to remove Marvell’s husband and wife co-founding team from executive positions in 2016.

And then there are the “patent trolls” — companies that file frivolous lawsuits against large technology companies in the hopes that the companies will opt for quick, hefty settlements rather than pursue lengthy and more expensive trials. Fortunately, the U.S. Supreme Court has consistently ruled against these scourges of the high-tech industry.


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