VLSI’s Fortress Ties to Take Center Stage in Intel Patent Trial

Fortress Investment Group’s connection to patent monetizer VLSI Technology LLC will be at the heart of a three-day trial starting Tuesday that could upend infringement verdicts against Intel Corp. totaling more than $3 billion.

An Austin, Texas, jury is set to decide whether plaintiff VLSI and Finjan Inc. are both under Fortress’ control. Intel argues a 2012 licensing agreement with Finjan, which also covers patents owned by “affiliates,” blocks the chipmaker from infringement liability.

It’s the latest step in the marathon litigation that’s crisscrossed federal district courts, an appeals court, an administrative tribunal, and the US Patent and Trademark Office director over much of the last decade. Two Texas juries separately found Intel infringed VLSI patents and owed the eye-popping sum. The US Court of Appeals for the Federal Circuit threw that total in doubt, ruling Intel should be allowed to present its patent-license defense to a jury in a related $2.2 billion dispute.

That prompted Judge Alan Albright to set this week’s trial in the US District Court for the Western District of Texas, where a jury in November 2022 awarded VLSI $949 million. If Intel convinces the jury that Finjan and VLSI are both controlled by Fortress, Albright could find Intel’s license defense requires him to throw out that verdict—flashing warning lights for the other, larger one.

Patent-license defenses rarely go before jurors, said Jackson Walker LLP partner Wasif Qureshi, who isn’t involved in the dispute.

“When you have a license defense typically you get out pretty quickly,” Qureshi said. “I don’t think there’s a lot of cases where a plaintiff has taken to trial the issue whether there is a patent license.”

Fortress

The New York-based asset management firm has about $6.6 billion committed to legal assets and $2.9 billion committed to intellectual property, making it one of the largest institutional investors in patents.

Eran Zur, Fortress’ IP lead, previously told Bloomberg Law the firm is a pioneer in the patent-lending business and doesn’t consider itself a litigation funder.

“We do not invest passively as opposed to litigation funders. It’s private equity. We sit on the board, we advise,” Zur said.

“Because you have more control of the entities, it doesn’t mean you’re not a funder, you’re a super funder,” he said. “You’re funding the case and you’re a client.”

Fortress created VLSI in 2016, according to court records. The patent owner argued Fortress provides VLSI with capital funding and serves as an asset manager for “several investment funds that own VLSI’s parent company,” funds that “indirectly own VLSI.” Despite this relationship, “VLSI is independently run” and “legally distinct from Fortress,” the company said in its February motion for summary judgment.

Fortress acquired Finjan in 2020, according to court records. Joe Mueller of Wilmer Cutler Pickering Hale and Dorr LLP, counsel for Intel, told Albright during an April hearing Fortress was aware of Finjan’s agreements, including the one with Intel, at the time of the acquisition.

License Focus

Intel has argued the licensing agreement with Finjan allows it to use patents owned by Finjan affiliates, which the chipmaker said the contract defines to include entities created after the deal.

Because both Finjan and VLSI are controlled by Fortress, Intel argued, its use of VLSI patents is covered by the license.

Alan Heinrich of Irell & Manella LLP, counsel for VLSI, told Albright during the April hearing that the Finjan deal can’t bind the patent owner under Delaware law because it wasn’t a party to the contract.

Patent licensees often bargain for that sort of broad language to ensure they’re protected from infringement litigation, Troutman Pepper Locke LLP partner Charles Baker said.

“The language ‘affiliate’ is what you typically see as some type of definition,” Baker said, noting it could mean a certain percentage of ownership and include a future entity.

Judges typically don’t like breaking up a case into separate disputes and having multiple trials, according to Baker. But pushing for an issue to be resolved separately can be beneficial and prevent the need to submit an additional jury question if all issues are presented together, the Texas-based attorney said.

With $1 billion at stake this week, the companies’ lawyers must be cognizant of how the dispute’s checkered history might sway jurors, Qureshi said.

“I’m sure both sides are going to have their strategy on what to try to get into the jury’s minds and the other side is going to be very observant on ‘when doors have been opened’ to allow rebuttal type evidence in,” he said.

VLSI and Fortress declined to comment. Intel and its attorneys didn’t respond to repeated requests for comment.

Mann, Tindel & Thompson also represents VLSI. Gillam & Smith LLP also represents Intel.

The case is VLSI Technology LLC v. Intel Corporation, W.D. Tex., 1:19-cv-00977, trial set for 5/27/25.