Intel Nixes Second VLSI Patent Underlying $2 Billion Verdict

Intel Corp. and Patent Quality Assurance LLC convinced an administrative tribunal to cancel the second of two patents behind one of the nation’s largest ever patent infringement verdicts.

The US Patent and Trademark Office’s Patent Trial and Appeal Board ruled Tuesday that all 16 claims from VLSI Technology LLC’s US Patent No. 7,523,373 were obvious in light of previously granted patents and patent application publications.

Jurors in Waco, Texas, found that Intel infringed it and another semiconductor patent belonging to VLSI at the end of a March 2021 trial. The jury concluded that Intel owed VLSI $2.18 billion, with $1.5 billion of the damages tied to infringement of five claims in the ‘373 patent.

The other $675 million in damages were tied to another asserted patent, which the PTAB invalidated in relevant part in May.

Tuesday’s PTAB decision closes a chapter in the long-running and hard fought patent dispute.

VLSI landed the first blow, with the eye-popping verdict in 2021 and, after a number of twists and turns and the intervention of PTO Director Kathi Vidal, Intel has counter-punched with two wins at the tribunal.

In a statement, the company said it was “pleased” with the ruling but also sounded frustration that its initial petitions challenging the two patents were denied on a discretionary basis under a PTAB rule, called Fintiv, that allowed the board to dispatch the challenges based on factors like the expected trial date in parallel district court cases.

Because the multi-factor Fintiv framework emphasized the speed of parallel litigation, companies that were sued in Waco, such as Intel, found it particularly tough to get PTAB review. Judge Alan D. Albright, who presided over three trials involving VLSI and Intel—including one where jurors sided with Intel and one where they awarded VLSI $948 million—is known for keeping a fast docket and for his reluctance to pause cases for parallel PTAB proceedings.

“We are glad VLSI’s patents have been invalidated,” Intel said in a statement, “but there remain a handful of patents being asserted in abusive patent litigation where the Patent Office issued similar ‘discretionary denials’ without even considering petitioners’ invalidity submissions.”

Intel’s challenge got a second wind when then-unknown Patent Quality Assurance and OpenSky Industries LLC filed copy-cat versions of Intel’s previously denied petitions challenging the two patents.

Vidal determined that the petitions presented “compelling, meritorious” challenges worthy of PTAB review. She also found that PQA and OpenSky had each abused the PTAB’s review process in an attempt to extract money from both VLSI and Intel.

Vidal removed OpenSky and PQA from the proceedings, and the board ultimately allowed Intel to join the two cases and stand in for OpenSky, over strenuous objections from VLSI. OpenSky and PQA were later allowed to rejoin their petitions.

VLSI’s attorneys didn’t immediately respond to a request for comment.

Next Steps

The board’s decision isn’t the end of the patent war between Intel and VLSI, which was founded by New York-based private equity giant Fortress investment Group.

Lawyers have predicted the PTAB’s decisions in both patent challenges will be appealed to the US Court of Appeals for the Federal Circuit, which has jurisdiction over patent appeals.

Intel is represented by Wilmer Cutler Pickering Hale and Dorr LLP. Irell & Manella and Lowenstein & Weatherwax LLP represent VLSI.

The case is Intel Corp. v. VLSI Tech. LLC, P.T.A.B., IPR2021-01229, final written decision 6/13/23.