VLSI Technology LLC v. Intel Corporation DC CAFC

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.

An Eastern District of Texas jury has returned an infringement verdict in litigation filed by Acorn Semi, LLC against Samsung (2:19-cv-00347). On May 19, the jury found that the Samsung had infringed four semiconductor patents through the provision of wafers and processors manufactured using its 14 nm FinFET process technology as well as devices incorporating them, though it concluded that the company’s infringement had not been willful. The verdict also included a $25M damages award.

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.

Finjan Holdings, Inc. has seen a new setback in its Southern District of California lawsuit against ESET (3:17-cv-00183), roughly a year after the first wave of the COVID-19 pandemic ended a trial in the case three days in. On March 23, District Judge Cathy Ann Bencivengo invalidated five of the six anti-malware patents-in-suit, ruling that “convenient” yet unsupported testimony from the plaintiff’s expert on the meaning of the term “downloadable” failed to overcome the defendant’s argument that the patents’ claims are indefinite. That ruling follows another notable decision against Finjan in January, when Northern District of California Judge William Alsup largely granted Juniper Networks’s request for attorney fees due to the NPE’s litigation conduct in a case that he deemed a “fiasco”.

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”.

Finjan, Inc. has just seen another setback in its Northern District of California litigation against Juniper Networks (3:17-cv-05659). On January 9, District Judge William Alsup ruled that much of the NPE’s case against Juniper had been “exceptional” under Octane, due in part to Finjan’s attempt to switch out its infringement theory on the eve of trial—a misstep that led Judge Alsup to throw out its entire damages case. That decision sets the stage for an award of attorney fees against Finjan for its litigation conduct, which Judge Alsup repeatedly decried as having “wasted a great deal of everyone’s time and energy”.

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 COVID-19 pandemic has led most of the nation’s top patent venues to push scheduled jury trials back due to public health risks, with the notable exception of Texas. While District Judge Rodney Gilstrap of the state’s Eastern District recently halted jury trials after resuming them in August, District Judge Alan D. Albright of the Western District has not done so—even moving a scheduled trial from Austin, where the courthouse remains closed, to Waco, in an attempt to proceed with a scheduled January trial between VLSI Technology LLC and Intel. However, the Federal Circuit ruled on December 23 that Judge Albright moved the trial without proper authority and that doing so would require a complete convenience analysis to determine whether the entire case could be transferred to Waco. On December 31, Judge Albright granted plaintiff VLSI’s emergency motion for such a transfer, also announcing that he would push the trial back to mid-February to give Intel time to appeal.

As the COVID-19 pandemic forces California into a second lockdown, courts in two of the state’s federal districts have pushed back scheduled patent trials. On December 14, District Judge James V. Selna of the Central District of California vacated a jury trial previously scheduled for April in litigation between TCL and Ericsson over a standard essential patent (SEP) licensing dispute. Two days later, District Judge Beth Labson Freeman postponed a Northern District of California trial from January to June in litigation filed by NPE Finjan Holdings, Inc. against Cisco following a series of prior continuances entered due to the pandemic. These delays come as other top patent venues contend with the impact of the novel coronavirus: while Chief District Judge Rodney Gilstrap of the Eastern District of Texas recently halted all jury trials before him after an outbreak in a nearby division, District Judge Alan D. Albright of the Western District of Texas has indicated that he may still continue to hold trials.

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.