“Although much ink will doubtlessly be spilled about VLSI’s lack of products and patent monetization strategies, NXP’s stake in this case gives reason to believe that this verdict might not be about an NPE extracting a toll from an operating company, but rather a more complex battle between operating company rivals within the computer semiconductor sector.”
On Tuesday, March 2, a jury verdict entered into the Western District of Texas awarded $2.175 billion in damages to VLSI Technologies for patent infringement committed by multinational tech firm Intel. The verdict, which includes one of the largest damages amounts ever awarded for patent infringement in a U.S. district court, comes less than two years after VLSI began the lawsuit and arguably marks an important milestone in the effort to address corporate business models employing “efficient infringement” techniques to earn dominant market positions, not as innovators, but as tech implementers.
Western Texas Jury Finds Literal Infringement and Infringement Under Doctrine of Equivalents
Although three VLSI patents were asserted in the initial complaint filed by the patent owner in April 2019, the $2.175 billion verdict was awarded on the basis of two patents:
- U.S. Patent No. 7523373, Minimum Memory Operating Voltage Technique. It claims a method of operating an integrated circuit with a memory comprising determining a minimum voltage level for operating the memory and meeting the minimum voltage level by switching to an alternative power supply voltage to ensure that the minimum voltage is met.
- U.S. Patent No. 7725759, System and Method of Managing Clock Speed in an Electronic Device. It claims a method of controlling a clock frequency by monitoring a plurality of master devices coupled to a bus within a system, and receiving an input from one of the master devices that selectively increases the clock frequency of the bus.
According to the verdict form, the jury determined that Intel had literally infringed claims 1, 5, 6, 9 and 11 of the ‘373 patent. Although the jury did not find literal infringement of the ‘759 patent, it determined that Intel did infringe claims 14, 17, 18 and 24 under the doctrine of equivalents. Among other jury findings was that the asserted claims of the ‘759 patent were not invalid as anticipated by Intel’s Yonah processor, and that Intel did not commit willful infringement of either patent asserted in the suit. The jury awarded a total of $1.5 billion for infringement of the ‘373 patent and a total of $675 million for infringement of the ‘759 patent.
In VLSI’s April 2019 complaint, the patent owner alleged that the asserted claims of the ‘373 patent were infringed by Intel’s Ivy Bridge 22 nanometer (nm) third-generation Core processor, which Intel first released in 2012. VLSI’s complaint argued that Ivy Bridge processors store minimum operating voltages in non-volatile memory, accessible after reboots, and utilize power gates that are fully opened when a core voltage from a supplied power rail is above the memory’s minimum operating voltage; these gates close when the first core voltage is below the minimum operating level, enabling a second voltage to be provided to the memory array.
VLSI’s infringement allegations surrounding the ‘759 patent focused on Intel’s Skylake processors, which the tech giant discontinued by March 2020 after having introduced the 14 nm processor in 2015. VLSI argued that the Skylake processors utilize a Package Control Unit monitoring the operation of cores connected by a ring interconnect bus and receiving requests from processing cores for controlling a clock frequency of a bus.
Although VLSI did not win on its contentions that Intel had committed willful infringement, the original complaint against Intel highlights business practices that mimic those characterized by some as endemic to large tech corporations engaging in efficient infringement business models. According to VLSI, Intel’s “publicly-known corporate policy forbidding its employees from reading patents held by outside companies or individuals” should be considered willful blindness. VLSI also argued that while Intel’s policy was in place, the company was sued for infringement of patent claims previously assigned to NXP Semiconductors, which had assigned the ‘373 and ‘759 patents to VLSI in 2019. In the case of the ‘373 patent, Intel had previously been sued based on patent claims owned by NXP and listing three of the four inventors on the ‘373 patent, “[y]et despite this notice, Intel proceeded to infringe other patents on inventions developed in the same area by these named inventors.”
The NXP and Fintiv Factors
Originally a designer and manufacturer of custom integrated circuits, VLSI was purchased by Philips Electronics in May 1999 in a deal worth about $1 billion. Reports indicate that Philips spun off the former components of VLSI into NXP Semiconductors, one of the world’s largest semiconductor manufacturers. News reports following the verdict also indicate that despite VLSI’s ownership of the patent claims, NXP retains some right to the damages earned by VLSI at trial, so although much ink will doubtlessly be spilled about VLSI’s lack of products and patent monetization strategies—talking points parroted by those seeking to advance views of efficient infringers—NXP’s stake in this case gives reason to believe that this verdict might not be about a non-practicing entity (NPE) extracting a toll from an operating company, but rather a more complex battle between operating company rivals within the computer semiconductor sector.
The recent verdict also underscores the reason that Intel and other members of Big Tech have joined forces to file suit against the U.S. Patent and Trademark Office (USPTO) for that agency’s development of discretionary denial factors at the Patent Trial and Appeal Board (PTAB) under the NHK-Fintiv framework. Intel had petitioned for inter partes review (IPR) proceedings challenging both the ‘373 and ‘759 patents, each filed within the one-year statutory bar for such proceedings under 35 U.S.C. § 315(b). In denying all three IPRs filed by Intel, the PTAB noted that the merits of IPR proceedings raised by Intel in its petitions were outweighed by several Fintiv factors, including the advanced stage of the litigation in Western Texas, the scheduled trial date for the district court infringement proceedings that would take place about seven months prior to the deadline for a final written decision, and the overlap of issues between the IPR petitions and the district court litigation.
On to the CAFC
Although VLSI has been successful through this stage of its patent enforcement campaign, news reports indicate that Intel “strongly disagrees” with the jury verdict and is confident it will prevail on appeal to the U.S. Court of Appeals for the Federal Circuit. That court has a penchant for overturning large patent infringement damages awarded by district court, including its 2019 decision to wipe out $2.54 billion in damages, the largest patent infringement award ever handed out by a U.S. district court, to Merck subsidiary Idenix Pharmaceuticals by invalidating the underlying patent claims.
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Join the Discussion
5 comments so far.
AnonMarch 7, 2021 07:33 pm
To arrive at that (mythical) place of “simply negotiate,” one would need a massive expectation shift and the evisceration of the current Efficient Infringer model that predominates the ‘real world.’
That ‘simply’ is a LOT of hard work away.
Bruce BermanMarch 7, 2021 09:01 am
Thank you for the excellent article. A $250M settlement would be roughly 1/10 of the VLSI jury award. One wonders if multi-billion dollar verdicts will need to become the norm in order to effect a patent license between two parties. Seems like a lot of time and expense spent achieving what could have been more simply negotiated.
Pro SayMarch 6, 2021 05:01 pm
Prediction: Case settlement in the $250M range.
And a +1 to PTO-Indentured. Keep up the good work.
PTO-IndenturedMarch 5, 2021 12:29 pm
On to the CAFC:
…Intel “strongly disagrees” with the jury verdict and is confident it will prevail on appeal to the CAFC … That court has a penchant for ‘overturning’ large patent infringement damages … by invalidating … patent claims.
INVALIDATE — BECAUSE IT’S BIG / IT’S VALUABLE IP
If such should occur, essentially as a matter of course — what an elegant flowchart that returns to, and further perpetuates (enables), Efficient Infringement, via rule 1:
1. Instruct all employees to: NEVER look at (or up) any patent — so we can all use it for FREE.
Akin to ‘A Tree Falls in the Forest …’?
How much can prior art patents really exist if you can’t even see them?
It will be interesting to see if a responsibility for due diligence in prior art searching, assessment and accountability will be given any weight at all, versus an outcome more akin to “Ignorance of the law (patents) is a great excuse”.
NOTE: In the VSLI vs. Intel case a lead attorney for VSLI (Morgan Chu) stated outright: “Intel purposely didn’t look to see if it was using someone else’s inventions” and accused the Santa Clara, California-based company of “willful blindness.”
Will an appeal’s constraints merely side-step this?
PTO-IndenturedMarch 5, 2021 10:59 am
1. Instruct all employees to NEVER look at (or up) a patent — so we can all use it for FREE!
(U.S. corporate rule-book priority 1 — circa 2012)
Intel: Wait! We thought this was surely a bullet-proof IP strategy.