Best known for the chips it makes to power the Internet of Things, Semtech Corp. also is reaching into the burgeoning wireless charging market. Indeed, the Camarillo semiconductor manufacturer four years ago spent $45 million to buy a company in Texas to help it do just that. But Semtech has gotten zapped in the deal. It claims that key employees – including a former owner of the acquired company – started their own company in Texas. And they quickly rolled out a competing product. “Semtech was dismayed to see that it took Spark (the new competing company) only a matter of months to develop the same wireless charging solution that Semtech spent several years and significant effort and resources developing,” according to court documents filed by Semtech. The former employees claim they were terminated, and they have acted within their rights. Regardless, the entire matter – and possibly the fate of Semtech’s expensive initiative to make wireless chargers – is now before a U.S. District Judge in Texas. Semtech is a maker of semiconductors that go into high-end consumer products along with all manner of communications equipment, computers and the like. The company wanted to expand by making a wireless recharging system. It works when a device that needs new power is placed on a pad. The pad contains special electronics, and a corresponding receiver attached to a smartphone or other electronic item essentially allows electricity to flow into it. The system may work not only with smartphones but with other electronic goods, such as a drone that lands on the pad or other devices used in an office or factory that could rest on a pad when not being used. In 2015, Semtech acquired Triune Systems in Plano, Texas. Triune had been working on wireless charging technology for the industrial and automotive industries since about 2011. Semtech took over the technology and branded it as LinkCharge in early 2016. At the time of the acquisition, Semtech Chief Executive Mohan Maheswaran said Triune’s products were complementary to Semtech’s market focus. “Triune Systems has developed a number of innovative wireless charging platforms that address some exciting, emerging market segments,” Maheswaran said in a prepared statement. However, matters quickly went south. Semtech claims in court documents that one of the owners of Triune, Ken Moore, who made millions on the sale, soon created another company, which is named Spark Connected in Dallas. He hired two key people, Emanuel Stingu and Ruwanga Dassanayake from Semtech. Six months after Spark Connected was founded in September 2017 it demonstrated a wireless charging platform at the Applied Power Electronics Conference that was like Semtech’s, the Camarillo company claimed. ‘Market is available’ At stake is Semtech’s pursuit of a share of a market worth hundreds of millions if not billions of dollars as consumers gravitate toward wireless charging of their smart phones and other portable electronic devices. When Semtech bought the smaller company, wireless charging was still a new frontier and there was no one big player in the space, said Hamed Khorsand, an analyst with BWS Financial in Woodland Hills who follows Semtech. “Since then the climate has changed,” Khorsand said. “The market is available. It is about Semtech trying to get market share in a market dominated by a huge chip maker, Broadcom.” Broadcom, in Irvine, got into wireless charging a few years before Semtech. It demonstrated its technology at the Consumer Electronics Show in Las Vegas in 2014. The company is a big supplier to Apple Inc. and its iPhones for which it provides chips used for Wi-Fi/Bluetooth connectivity, wireless charging and radio frequency front end. Semtech demonstrated its wireless charging technology at CES in 2017 and again last year when it showed how the chargers could be used on a number of products, including a robotic vacuum cleaner, a drone and surveillance equipment. Market Research Future, a division of India-based WantStats Research and Media Pvt. Ltd., identified other key players in the space as being Texas Instruments Inc., Qualcomm Inc. and Samsung Electronics Co. Ltd. Khorsand said that the domestic market is only worth hundreds of millions of dollars. But “the market is in the billions of dollars globally,” Khorsand said. Interestingly, Semtech also makes the chips that go into the chargers. “However, I think that market data includes the chips (that enable) charging that go inside the phone.” Breach agreements? As tensions rose between Semtech and the former employees, the Spark trio took the unusual step of going to court first. They filed a federal lawsuit in October seeking a declaratory judgment that they did not breach any agreements or misappropriate trade secrets. Semtech responded the following month with a counterclaim, alleging they did. Semtech claims the three violated federal and state laws on disclosing trade secrets, and that each violated agreements that they would not compete with Semtech. “Semtech is informed and believes that, if (Moore, Stingu and Dassanayake) are not enjoined, they will continue to disclose and use Semtech’s confidential, proprietary, and trade secret information for their own benefit and to Semtech’s detriment,” the countersuit claimed. Representatives of Semtech did not want to be interviewed. A motion to dismiss Semtech’s counterclaim was filed Jan. 15. In the motion, Aaron Davidson, an attorney representing Spark and the three former employees, said the three were dismissed by Semtech at various times over the past two years, that Semtech was exiting the wireless power business, and that the three were within their rights. In an email to the Business Journal, Davidson wrote: “My clients filed this lawsuit because they want to move forward with Spark Connected, their new company, and put an end to Semtech’s threats and comments to their business partners and vendors. If my clients had actually done what Semtech is accusing them of doing, the last thing they would do is file a declaratory judgment lawsuit and agree to expedited discovery. “It’s puzzling that Semtech is continuing to go after them, since Semtech almost a year ago laid off most of its team that worked on wireless power and decided to focus on other technologies.” Jonathan Light, an employment law attorney in Camarillo with LightGabler, characterized as “aggressive” the move by the three Spark employees to go to court first seeking a declaratory judgment. That, basically, is a request that a judge rule that something is properly legal. The trio must have been afraid of getting sued and didn’t want to jeopardize their relationships with prospective customers, Light said. “They are (wanting) to get some declaratory relief to say, ‘Judge, please rule that it’s okay for us to do the things we want to do,’” he added. However, the case may be tricky one. An interesting thing about trade secret cases is that a judge will want to know what a company did to protect their information, Light said. “In order to be a trade secret it has to have value and not be known by other people,” Light said. “You have to protect it with passwords internally … Not everybody in the company has access to it.” In its counterclaim, Semtech did state that it took protective measures for its trade secrets, including limiting who had access to electronic records, computers and networks and assigning them unique login credentials. “Semtech also maintains other network protections to prevent unauthorized external access, including firewalls, encryption, and cyber security software,” the claim said.