VLSI-PQA Saga Continues in Virginia County/ Federal Courts

After VLSI Technology filed a complaint against Patent Quality Assurance (PQA) and its representative, Joseph Uradnik, in the Circuit Court of the City of Alexandria in late January this year, Uradnik recently filed a Notice of Removal with the U.S. District Court for the District of Alexandria, Alexandria Division, arguing the case should be tried there instead. VLSI’s complaint alleged abuse of the inter partes review (IPR) system and is seeking approximately $3.2 million in legal fees from Uradnik, according to the March Notice of Removal.

VLSI and PQA were famously the subjects of a U.S. Patent and Trademark Office (USPTO) sua sponte Director Review proceeding in which USPTO Director Kathi Vidal ultimately issued an order to show cause on August 3, 2023, for sanctionable conduct, followed in December 2023 by “a strong admonishment to PQA for its conduct, and a warning not to repeat this conduct in the future.”

Vidal intervened in both Patent Quality Assurance, LLC v. VLSI Technology LLC, IPR2021-01229 and OpenSky Industries, LLC v. VLSI Technology LLC, IPR2021-01064 in June 2022, following scrutiny by members of Congress and patent practitioners. PQA and OpenSky were incorporated after Intel was found to have infringed VLSI’s patents in district court (and VLSI was awarded $2.175 billion) and had no discernable business operations beyond challenging VLSI’s patent claims. The two entities’ petitions were also nearly identical to inter partes review (IPR) petitions previously filed by Intel that had been rejected by the USPTO. OpenSky was ultimately ordered to pay attorney’s fees but PQA was not.

In the January complaint, VLSI claimed that PQA’s “true purpose was extortion” and that, since Vidal “expressly found that she was not deciding whether VLSI suffered compensable injury from Defendants’ abuse of process,” that question should be decided by the Alexandria county court.

The complaint went on to explain that PQA was formed on or about June 14, 2021, in South Dakota, approximately three months after the jury verdict for VLSI, and that South Dakota law does not require LLCs to identify their members. A “Morgan Noble” was identified as the company’s organizer, but the complaint alleged that this is a fictitious identity used by the company that provided registered agent services, Northwest Registered Agent, when forming entities for its clients. “Northwest Registered Agent promotes itself as offering services that help mask the identities of those behind newly formed companies,” said the complaint.

Northwest Registered Agent used Morgan Noble to register a number of other companies, including a West Virginia entity called Center for Hope and Change LLC, a Delaware entity called Shao Partners LLC, a Massachusetts entity called Summit Statistics Solutions LLC, a Nevada entity called FLU LLC, and a Virginia entity called The PartyLady LLC. Many of these and other companies registered by Northwest Registered Agent “have been found to engage in wrongdoing, and/or do not operate as a legitimate company would,” according to the complaint, which cited several examples, including that Hope and Change LLC had its business license revoked in December 2021 for failing to file an annual report with the West Virginia Secretary of State and another company engaged in a scam involving exotic animals.

VLSI charged that PQA, Uradnik, individually, “and others combined, associated, agreed, mutually undertook, or concerted together for the purpose of willfully and maliciously injuring VLSI in its reputation, trade, business or profession.” It further alleged Uradnik “stonewalled” in answering deposition questions in the IPR “about the nature and purpose of PQA and its membership,” and therefore “willfully violated the rules governing depositions and the PTAB’s discovery process and procedures.”

But the Notice of Removal said that VLSI is “a foreign-owned patent assertion entity whose sole business is to sue American companies for patent infringement based on the alleged inventions of others” and referred to the Commonwealth of Virginia complaint as “baseless”. It asked the district court to remove the case to its jurisdiction in part because “[a] finding of personal jurisdiction would create a national super court over individuals interacting with federal agencies located in Virginia.”

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Author: zsirosistvan
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