Intel, VLSI War Over Multibillion-Dollar Chip Patent on Appeal

Intel Corp. and VLSI Technology LLC continued to battle out a multibillion-dollar patent infringement case at the Federal Circuit on Friday in a case concerning the validity of VLSI’s computer chip patent.

A three-judge panel at the US Court of Appeals for the Federal Circuit poked holes in both Intel and VLSI’s arguments on whether the Patent Trial and Appeal Board erred in upholding some claims of VLSI’s US Patent No. 8,081,026. The patent is one of several that VLSI sued Intel over in 2018 in Delaware, seeking billions in damages, though the district court case has stalled pending the result of the appeals of some of the board’s decisions.

This appeal centers on a different patent than the ones at issue in separate disputes in Texas between the companies, one of which led to a blockbuster $2.18 billion infringement verdict and a subsequent administrative review that recently triggered sanctions from the US Patent and Trademark Office’s director.

The Federal Circuit judges seemed skeptical that two previous inventions should be combined to show that several claims of VLSI’s patent are invalid as obvious. Judge William C. Bryson told Intel that the argument gave him “pause.” The board just focused on the information Intel gave at the validity proceeding, Bryson said.

Intel’s attorney Dominic E. Massa of Wilmer Cutler Pickering Hale and Dorr LLP said the board “misapprehended” Intel’s argument.

“The board was looking for evidence and they didn’t find any because it set up this straw man argument,” Massa said.

Judges Todd M. Hughes and Raymond T. Chen pressed VLSI’s attorney Hong Annita Zhong of Irell & Manella LLP on whether her arguments matched up with the PTAB’s decision. Zhong argued that the previous inventions don’t render the claims of VLSI’s patent invalid.

The board had held under the Federal Circuit case Arendi SARL v. Apple Inc. that Intel couldn’t rely on one of the prior art references to show that the patent’s claims were obvious. Intel argued that the PTAB improperly relied on Arendi because Intel had never suggested that the board look to “common sense” or general knowledge in its decision, as Arendi limits how much the board can rely on common sense in an obviousness analysis.

For Chen, the board seemed to misuse Arendi because common sense wasn’t at issue in Intel’s argument, and Zhong was asking the judges to “read into” what the board said.

“The board didn’t say everything you just said,” Chen said. “That makes me a little concerned that the board was invoking Arendi in an incorrect way.”

Hughes echoed Chen’s concern, saying he didn’t see where the board made some of the arguments that Zhong was trying to make on appeal.

“I’m not going to make up arguments for the board that’s not what’s in their opinion just because you had different arguments in your brief,” Hughes said.

The case is Intel Corp. v. VLSI Technology LLC, Fed. Cir., No. 21-1762, argued 10/7/22.