VLSI Technology LLC v. Intel Corporation DC

On Monday, April 25, a jury was empaneled in the third West Texas trial between VLSI Technology LLC and Intel. However, that trial was soon knocked off course for a familiar reason. The following morning, District Judge Alan D. Albright indicated in a docket entry that he had been notified of positive COVID-19 tests among “multiple” attorneys—as a result, ending the trial, discharging the jury, and stating that a new trial would be “set for a later date”.

A third trial begins today in the Western District of Texas in the ever-widening set of disputes between VLSI Technology LLC and Intel. In the first half of 2021, a pair of Waco juries went in opposite directions, the first awarding VLSI $2.2B but the second turning away VLSI’s $3B damages ask. Since then, those dockets have seen furious storms of posttrial motions and orders from the court, most of them sealed. However, this past week District Judge Alan D. Albright made public a denial of Intel’s motion to amend its answer in the first case to assert a license defense based on the 2020 purchase of Finjan, Inc. by Fortress Investment Group LLC. Intel has contended, in multiple courts, that that acquisition gave rise to a license to all of Fortress’s patent holdings. In denying Intel’s motion, Judge Albright ruled, among other things, that the “proposed amendment would be futile because VLSI is not a party to the agreement”—but Judge Albright’s is unlikely to be the last word on this subject.

Two NPEs controlled by Fortress Investment Group LLC have seen unfavorable rulings in recent weeks. In late July, Finjan Holdings, Inc.—acquired by Fortress last summer—was hit with $5.9M in attorney fees due to “improper” conduct in its case against Juniper Networks. Meanwhile, a related dispute is proceeding in Delaware in the campaign waged by Fortress subsidiary VLSI Technology LLC, over arguments by Intel that its existing license with Finjan that covers Finjan “affiliates” now encompasses VLSI, as VLSI allegedly became such an affiliate when Fortress purchased Finjan. In January, Intel asserted those claims in a still-active lawsuit filed in the Delaware Court of Chancery. That same issue will now be litigated in VLSI’s Delaware District Court suit against Intel as well, following the court’s July decision to allow Intel to amend its answer to include a license defense.

The second West Texas trial between VLSI Technology LLC and Intel has ended in a verdict of noninfringement for the chipmaker, capping off a closely watched proceeding before District Judge Alan D. Albright in which the plaintiff—a Fortress Investment Group LLC subsidiary—had sought damages totaling over $3B. That April 21 verdict comes just under two months after a second jury reached the opposite conclusion for another set of patents in a second case between the same parties, finding infringement and awarding $2B in damages.

Weeks after a Western District of Texas jury returned a $2.2B verdict for Fortress Investment Group LLC subsidiary VLSI Technology LLC against Intel, District Judge Alan D. Albright has transferred a second case between those two parties (6:19-cv-00255) from Austin back to his home division of Waco. Judge Albright’s March 28 decision to transfer that second case on convenience grounds closely mirrors his rationale for doing so in the first action as well and came after the Federal Circuit rejected his attempt to move that earlier trial but not the entire proceeding. Meanwhile, another disagreement with the Federal Circuit appears to have prompted Judge Albright to reassess the timing of his transfer decisions: after the appellate court issued a series of rulings faulting him for delaying transfer rulings despite proceeding with claim construction, he has now announced that he will rule on interdistrict transfer motions before holding a Markman hearing.

On March 2, a Western District of Texas jury returned an infringement verdict in litigation between Fortress Investment Group LLC subsidiary VLSI Technology LLC and Intel (6:21-cv-00057). The jury found that Intel infringed two semiconductor patents through the provision of certain processors, awarding a combined $2.2B in damages but also determining that the company’s infringement had not been willful. The in-person trial had previously been delayed several times as a result of COVID-19, with District Judge Alan D. Albright opting to move the trial to another division in order to work around a pandemic-related courthouse closure—a decision that resulted in two trips to the Federal Circuit.

The Federal Circuit has refused to order District Judge Alan D. Albright to vacate the recent retransfer, following a full convenience analysis, of a case brought by VLSI Technology LLC against Intel—from Austin, where courthouses remain closed in light of the COVID-19 pandemic, to Waco, where Judge Albright presides and where a scheduled February trial could theoretically still proceed (6:21-cv-00057). “Taking into account the relevant traditional transfer factors”, wrote the appeals court, Judge Albright concluded that “‘unanticipated post-transfer events frustrated the original purpose for transfer’ of the case from Waco to Austin originally”, and, “[w]hile we may have evaluated these factors and the parties’ arguments differently, we are unable to say that the district court’s conclusion amounts to a clear abuse of discretion”.

Intel has filed suit in Delaware’s Court of Chancery against Fortress Investment Group LLC, arguing that a 2012 license agreement with Finjan Holdings, Inc. precludes any “affiliate” of Finjan from suing Intel for patent infringement. When Fortress acquired Finjan this past summer, argues Intel, every Fortress-held entity became an “affiliate” under the prior agreement, including Fortress’s VLSI Technology LLC, which has been in litigation against Intel for years. Intel reportedly seeks a declaratory judgment that the 2012 agreement covers all patents that Fortress owns, either directly or through controlled subsidiaries, and pleads claims for breach of contract and tortious interference.

The battle between VLSI Technology LLC and Intel has heated up for a third time. In October 2017, VLSI Technology, an affiliate of Fortress Investment Group LLC, sued Intel in the Northern District of California (5:17-cv-05671) over eight patents, and in June 2018, the NPE opened up a second litigation front, suing Intel in the District of Delaware (1:18-cv-00966) over five more. Now, in the immediate wake of a mid-February order construing claims in California and an Intel motion to stay the California action in light of multiple instituted trials in inter partes review (IPR) proceedings—and after the Delaware court last year refused to transfer the case before it to California—VLSI Technology has hit Intel a second time in Delaware (1:19-cv-00426), this case asserting six more patents from the NPE’s sizable portfolio of assets originating principally with either Freescale, NXP, SigmaTel, or VLSI Technology, Inc. 

In June 2018, the Patent Trial and Appeal Board (PTAB) saw petitioners wage validity challenges against a variety of prominent NPEs. Among those hit by petitions for AIA review in June was Intellectual Ventures LLC (IV), which has not filed any new litigation in the US since October 2017, but continues to assert patents overseas; and NPEs affiliated with Fortress Investment Group LLC and Industrial Technology Research Institute. Also in June, the PTAB instituted trial for two IPRs against affiliates of top litigant IP Edge LLC, which remains the most prolific patent plaintiff of the past 18 years by the number of defendants added to US patent suits. In addition, the Board issued final decisions in IPRs against IV, the California Institute of Technology, inventor Daniel L. Flamm, and frequent litigants Realtime Data LLC and Uniloc Corporation Pty. Limited.

VLSI Technology LLC, an apparent affiliate of Fortress Investment Group LLC, has filed another case against Intel (1:18-cv-00966), this one in Delaware, asserting five more patents, of multiple subject matters and originating from either Freescale, NXP, SigmaTel, or VLSI Technology, Inc. The new suit follows an October 2017 complaint in the Northern District of California asserting eight patents against a large number of Intel microprocessors, including Core i3, i5, and i7; Xeon E3, E5, and E7; and Atom microprocessors, as well as Stratix 10 Field Programmable Gate Arrays (FPGAs) and other products that incorporate Embedded Multi-Die Interconnect Bridge (“EMIB”) technology. Now also accused of infringement are Intel products (1) containing Intel On-Chip System Fabric technology, (2) with a Power Control Unit (PCU) to compensate for Inverse Temperature Dependence “in an infringing manner”, (3) with metal dummy lines to reinforce regions under bond pads “in an infringing manner”, (4) that include an “infringing Management Engine” and a CPU that includes a memory controller, and (5) that supply an output supply voltage to a power gated circuit “in an infringing manner”.