The Lashify Playbook in Action: TSMC’s ITC Settlement and What It Means for Semiconductor Patent Risk
Author: Jamie J. Yang Partner, Innovatus Law, Christopher E. Hanba, Prince Lobel Tye LLP
On June 24, 2026, one day before the Administrative Law Judge was scheduled to issue an Initial Determination on violation in the U.S. International Trade Commission Investigation No. 337-TA-1443 (the “1443 Investigation”), Taiwan Semiconductor Manufacturing Company (“TSMC”) and Complainants Longitude Licensing Ltd. and Marlin Semiconductor Limited filed a joint emergency motion stating that the parties had reached an “agreement in principle” on terms that would “completely resolve the disputes in this Investigation.”[1] A joint motion to terminate is expected by July 31 What brought TSMC to that point is a story about the intersection of legal doctrine, patent monetization strategy, and geopolitics, and it carries significant implications for any company in the advanced semiconductor supply chain.
Photo by Vishnu Mohanan on Unsplash
The Investigation
The 1443 Investigation targeted TSMC and its downstream customers, Apple, Broadcom, Qualcomm, Motorola, and Lenovo, over patents relating to foreign-fabricated semiconductor devices manufactured using advanced process nodes.[2] The complainants are Marlin Semiconductor Limited and its affiliate Longitude Licensing Ltd., both ultimately controlled by IPValue Management, Inc.
Marlin is not a chipmaker. It is a patent holding and licensing company incorporated in Dublin, Ireland. Its semiconductor patent portfolio covers logic, memory, manufacturing process, and packaging technologies and was acquired from United Microelectronics Corporation (“UMC”) in 2021. Since then, Marlin and Longitude have actively monetized the portfolio; in one notable transaction, Longitude granted a license to Samsung Electronics covering the entire portfolio. The ITC complaint against TSMC was the most aggressive enforcement action yet.[3]
Why Lashify Changed the Calculus
For Marlin to maintain a Section 337 complaint at the ITC, it needed to satisfy the domestic industry requirement, specifically the economic prong, which requires “significant employment of labor or capital” in the United States relating to articles protected by the asserted patents.
Under the ITC’s pre-2025 practice, a complainant in Marlin’s position would have faced a substantial hurdle.[4] The Commission had long treated sales, marketing, warehousing, distribution, and quality control as hallmarks of a “mere importer” insufficient on their own to establish domestic industry, particularly where the complainant had no domestic manufacturing. A Dublin-based patent licensor with no U.S. fabrication facilities would typically have struggled to clear this bar.
The Federal Circuit’s March 2025 ruling in Lashify, Inc. v. International Trade Commission fundamentally changed that analysis. The court held that the ITC’s longstanding “mere importer” exclusion was inconsistent with the plain language of Section 337(a)(3)(B), which requires only “significant employment of labor or capital.” Warehousing (holding a stock of accumulated goods), and sales and marketing (providing services in demand in the economy) both qualify under the statutory text. No domestic manufacturing is required.
For Marlin, this ruling was enabling. A patent holding company with U.S. licensing operations, legal personnel, and related commercial activity could now plausibly argue domestic industry on that basis alone. The timing is notable: Lashify was decided in March 2025; Marlin’s complaint in the 1443 Investigation followed.
The Political Variable — and Its Unintended Effect
The strategic importance of TSMC to the U.S. semiconductor supply chain injected an unusual political dimension into the proceedings. TSMC has committed approximately $165 billion in Arizona investments and supplies the advanced chips underpinning U.S. AI infrastructure. Roughly 75% of its revenue flows from North American customers.
That profile prompted four Republican legislators, from Montana, Kansas, and Ohio, to write to ITC Chair Amy Karpel on May 22, 2026, calling on the Commission to enforce U.S. patent rights without granting TSMC preferential treatment based on its geopolitical significance.[5]
The letter was likely intended to preempt any suggestion that the ITC might deprioritize enforcement as a matter of industrial policy. In practice, it may have had the opposite effect from TSMC’s perspective. By publicly removing any expectation of political immunity, the senators eliminated one of TSMC’s strongest non-legal argument, that an exclusion order would be too damaging to U.S. (and global) interests for the Commission to grant. With that argument foreclosed, the expected value of litigating through to a determination shifted toward settlement.
This is the structural dynamic worth noting: when political intervention signals that an agency will not extend strategic deference, it may increase the leverage of the patent holder.
The Public Interest Battleground: Supply Chain Protection vs. Patent Enforcement
While the letter from the four out-of-state Republican legislators injected an aggressive narrative into the proceedings, it functioned as a direct strategic counterweight to a heavy, localized political push from Arizona Democrats. Senators Mark Kelly and Ruben Gallego, alongside Representative Greg Stanton, had previously urged the ITC to show restraint, warning that an exclusion order targeting TSMC’s 7nm and smaller nodes could paralyze domestic AI accelerator deployment, halt smartphone and PC supply chains, and disrupt vital national defense systems.
This political tug-of-war directly weaponized the ITC’s statutory mandate to evaluate Public Interest Factors. Under Section 337, even if a violation of patent rights is proven, the Commission is still legally required to weigh whether a limited exclusion order harms the broader domestic landscape across four distinct pillars:
- Public health and welfare: The downstream impact on critical infrastructure and healthcare technologies.
- Competitive conditions: Whether removing a dominant supplier creates monopolistic or highly disruptive market conditions.
- U.S. production: The impact on domestic OEMs and companies relying on the imported components.
- U.S. consumers: General economic fallout, price hikes, or product shortages.
Historically, full public interest carve-outs or complete denials of exclusion orders are incredibly rare. However, TSMC’s defense leaned heavily on its unique position as the linchpin of the Western technological ecosystem, arguing that blocking its advanced node silicon would create an unprecedented economic emergency. By securing a counter-letter from Republican lawmakers arguing that giving TSMC a pass due to its geopolitical size creates a dangerous “too strategic to enforce” loophole, Marlin effectively neutralized TSMC’s public interest shield. This signaled to TSMC that the Commission would evaluate the case on pure legal merit rather than providing macroeconomic insulation, drastically compressing TSMC’s timeline and forcing them to settle.
The Parallel PTAB Track: The Asymmetric Reality of Patent Invalidation
In typical high-stakes patent litigation, a respondent’s primary counter-offensive is to launch a parallel campaign at the USPTO’s Patent Trial and Appeal Board (“PTAB”), filing Inter Partes Review (“IPR”) petitions to invalidate the asserted claims. TSMC and its downstream customer Apple attempted exactly this strategy, targeting several Marlin patents. However, procedural developments at the USPTO quickly neutralized the PTAB track, stripping it of its value as a defensive shield and highlighting the unstoppable leverage of a fast-track ITC investigation.
In a September 2025 decision, the USPTO Director systematically applied the board’s discretionary denial framework to dismiss the vast majority of the defensive filings. [6] The board issued an order flatly denying institution across four separate petitions, establishing a clear barrier for respondents in the ITC.
The Director explicitly noted that because final written decisions would not materialize until late 2026, which was long after the ITC trial concluded in February 2026, that instituting the parallel reviews would result in a redundant duplication of effort and an inappropriate waste of Board resources.[7] While a single petition involving U.S. Patent No. 7,745,847 (IPR2025-00847) survived discretionary denial due to a demonstrated material error by the patent office during original examination, its strategic utility as an umbrella defense was likely minimal. Indeed, just weeks before TSMC’s comprehensive settlement, co-petitioner Apple and Marlin filed a joint motion to terminate the IPR proceeding with respect to Apple following an independent settlement agreement, which likely signaled a broad settlement of the entire 1443 Investigation.[8]
Reading the Settlement
Settlement at this stage, after full evidentiary proceedings and one day before a merits ruling, typically reflects one or both of two things: the respondent assessed the likely outcome unfavorably, or the cost and disruption of an adverse determination outweighed the economic cost of licensing.
For TSMC, both likely applied. An exclusion order, even one subject to the 60-day Presidential review period, would have created supply chain disruption risk at a scale difficult to absorb. Apple, Broadcom, Qualcomm, and Lenovo, as customers whose products incorporate chips fabricated on TSMC’s advanced nodes, had aligned incentives to see the case resolved without an adverse ruling on process node patents.
The settlement also likely validates Marlin’s litigation model. An NPE that acquired a portfolio from a legacy foundry, leveraged a favorable doctrinal shift to establish ITC standing, and forced a settlement from the world’s most strategically significant semiconductor manufacturer while political pressure inadvertently reinforced rather than weakened its position will be studied as a template.
Implications for Practice
ITC standing for NPEs is now established at the highest level. The Marlin case tested Lashify not in a mid-market commercial dispute but against a respondent whose counsel had every incentive to challenge domestic industry vigorously. The settlement forecloses a definitive published ruling on the merits, but the fact that TSMC did not prevail on any threshold dismissal for lack of domestic industry suggests the Lashify standard is durable and will be invoked by the next wave of NPE complainants.
Advanced node exposure is the new ITC risk category. The complaint targeted the process nodes used by the most commercially significant chips in production today. Any fabless company or OEM whose products incorporate chips manufactured on advanced nodes carries potential exposure to NPE portfolios that include process technology claims. The UMC-to-Marlin transaction is not unique; patent portfolios from legacy foundries, IDMs, and research institutions continue to change hands at scale.
Strategic importance does not equal legal immunity. The senators’ letter made this point explicitly; the settlement outcome illustrates it operationally. Counsel advising companies that believe their geopolitical or supply-chain significance will moderate IP enforcement risk should revisit that assumption. The ITC’s domestic industry doctrine exists independently of industrial policy, and a complainant who satisfies Lashify will proceed on the merits regardless of the respondent’s profile.
Pre-complaint portfolio monitoring matters. Marlin’s portfolio was acquired in 2021 and weaponized four years later. Companies operating at advanced nodes may be advised to maintain ongoing freedom-to-operate analysis that accounts for NPE portfolio activity, including acquisitions from foundries and legacy manufacturers, and not just incumbent competitor filings.
Conclusion
The termination motion is expected by July 31. The terms of the settlement, whether a license, cross-license, or some other resolution, have not been disclosed. What is clear is that the combination of Lashify, a disciplined NPE enforcement strategy, and an unusual political dynamic produced a settlement that closes one case while establishing a blueprint for the next.
