VLSI Challenges Draw Sanctions From Patent Office Director

US Patent and Trademark Office Director Kathi Vidal issued sanctions against two petitioners in patent review proceedings against VLSI Technology LLC at an administrative tribunal on Thursday, removing both parties and leaving the door open to monetary penalties.

Exercising her director review authority, Vidal determined the petitioners in both cases, Patent Quality Assurance LLC and OpenSky Industries LLC, abused the Patent Trial and Appeal Board’s inter partes review process, attempting to leverage their patent challenges to extract money from other participants. Both companies filed challenges to VLSI patents underlying a $2 billion March 2021 patent infringement verdict against Intel Corp., just one part of a sprawling battle between Intel and VLSI.

Vidal directed both PQA and OpenSky to provide reason why they shouldn’t be ordered pay compensatory damages to VLSI.

The two IPR proceedings, however, will continue, with Intel as a sole petitioner in both, as Vidal found that the IPR petitions themselves presented “compelling, meritorious” challenges.

Vidal also highlighted wrongdoing on the part of VLSI in the OpenSky proceeding, admonishing “VLSI and its counsel for supporting their arguments with misleading statements of law and fact,” and ordering the company to provide reasons why it shouldn’t have to pay Intel reasonable attorneys’ fees.

If granted in either case, it would mark the first monetary sanctions levied by the PTO in an IPR proceeding.

In October, Vidal issued a landmark sanctions decision finding OpenSky abused the IPR process in an attempt to extract money from both VLSI and Intel. The Thursday decision affirmed that conclusion.

Later that month, she announced that she would be taking a closer look at the PTAB’s decision on remand to launch review of the patent’s validity when the board found that OpenSky Industries LLC presented “a compelling, meritorious challenge” to VLSI’s US Patent No. 7,725,759 even after Vidal had directed the board to revisit its initial decision to accept the review petition, analyzing it under a higher standard for institution.

The decisions come as the director reconsiders the structure and role of the director review process.

Attorneys for Patent Quality Assurance LLC, Intel, VLSI and OpenSky were not immediately available for comment.

PQA is represented by Slayden Grubert Beard PLLC. Wilmer Cutler Pickering Hale and Dorr LLP represents Intel. VLSI is represented by Irell & Manella LLP and Lowenstein & Weatherwax LLP. OpenSky is represented by Amin, Turocy & Watson LLP.