VLSI Scores Reversal of Noninfringement Rulings Against Intel at CAFC

The U.S. Court of Appeals for the Federal Circuit (CAFC) today issued a precedential decision authored by Chief Judge Moore delivering a partial win for patent owner VLSI Technology against Intel Corporation.

The U.S. District Court for the Northern District of California granted Intel’s motion for summary judgment of noninfringement of VLSI’s U.S. Patent No. 8,566,836, titled “Multi-core System on Chip,” and also struck the damages theories of one of VLSI’s expert’s. With respect to the noninfringement ruling, the district court found “there was no genuine dispute that the claims’ measurement-related limitations were infringed only outside the United States.”

But VLSI said that conclusion contradicted a pre-trial stipulation the parties agreed to that said, in part, “[o]f the total, global number of Intel products and associated activities (without regard to geographic considerations) to meet the technical requirements of any asserted VLSI patent claim not proven invalid by Intel, as well as any actual or projected revenues or profits associated therewith seventy percent (70%) thereof will be deemed to have a United States nexus as required by each subsection of 35 U.S.C. § 271 and for determining any patent infringement damages in this case. . .”

The CAFC agreed that this language was “plain and unambiguous” and that the district court therefore erred in reasoning otherwise. Intel argued that the stipulation “merely provided ‘an agreed-upon accounting mechanism to simplify the calculation of damages’ without addressing the U.S. nexus requirement for infringement,” but the CAFC said that the stipulation, “on its face,” included language about damages and therefore the only “reasonable interpretation” was that “it addresses U.S. nexus for infringement purposes as well as for damages calculations.”

Intel further argued that the CAFC’s interpretation was “absurd” because it contradicts the stipulation’s subsequent language, which says that “[b]y entering into this agreement, neither party makes any admission about patent infringement or noninfringement, validity or invalidity, or damages.” But the CAFC disagreed:

“…[S]tipulating to a fact relevant to infringement, such as U.S. nexus, is not tantamount to an admission about infringement itself. To prove infringement, VLSI still had to show Intel’s accused products and activities met the claims’ non-geographic, technical requirements. We see no absurdity in such an attempt to simplify litigation given the stipulation was entered into early in the case when there were eight patents at issue and scores (if not hundreds) of accused products with varying levels of U.S. nexus… Even if this strategic choice proved unwise in retrospect, we decline to look past the clear language of the stipulation to ‘rescue’ Intel from its decision to ‘freely enter[]’ an agreement ‘which it later finds to be imprudently made.’”

The CAFC thus reversed the district court’s grant of summary judgment of noninfringement on the ground of extraterritoriality with respect to the asserted method claims.

Turning to the apparatus claims, VLSI argued the district court erred in agreeing that the accused Intel devices “are reasonably capable of performing the claimed measuring” but  objecting on the ground that the measuring did not take place in the United States. Intel denied that the district court was concerned only with where the measurements took place and said the court also found the products were not capable of performing the claims because “the only evidence that VLSI presented concerned the alleged capabilities of the accused products when combined with an external testing device called an ‘ATE tester’ in Intel’s overseas manufacturing facilities.”

The CAFC again sided with VLSI, however, finding that Intel’s motion for summary judgment focused primarily on where the measuring limitations were practiced. and even under Intel’s assessment of the order, “there is a genuine dispute of material fact as to whether the accused products are ‘reasonably capable of performing the claimed functions without significant alterations,’” wrote the CAFC. VLSI presented evidence that raised a genuine dispute as to whether the ATE tester is necessary to perform the “measuring” function, and this alone is enough to preclude summary judgment of noninfringement, said the opinion.

The district court also independently granted summary judgment that Intel does not infringe under VLSI’s doctrine of equivalents (DOE) theory. VLSI challenged this only as to claim 10 of the patent and its dependent claims, arguing that “the district court incorrectly invoked prosecution disclaimer to construe claim 10 as requiring the claimed ‘selecting a core’ to be performed ‘upon identifying’ a single-core task…” Claim 10 does not include an “upon identifying” limitation, but the district court imported it “because it concluded the patent applicants’ statements during prosecution amounted to ‘clear and unmistakable disavowal of a broader interpretation[.]” However, the CAFC did not agree that the relevant statements amounted to a clear and unmistakable disclaimer that claim 10 includes this limitation and therefore failed to meet the “high burden for prosecution disclaimer.” the CAFC therefore reversed the summary judgment grant that Intel does not infringe claim 10 and its dependent claims under VLSI’s DOE theory as well.

Finally, the district court also struck VLSI’s damages expert, Dr. Sullivan’s, damages theories due to a failure by VLSI to follow local patent rules by adequately disclosing them. A magistrate judge had struck certain of Dr. Sullivan’s damages theories “because he concluded Dr. Sullivan’s expert report exceeded what was disclosed in VLSI’s damages contentions” in violation of several of the Patent Local Rules. A district judge then denied VLSI’s motion to reverse the order. The CAFC found no abuse of discretion in the magistrate or district judges’ findings and thus affirmed the district court’s order. The opinion noted, however, that the damages theories of VLSI’s other expert, Mr. Chandler, remain untouched and that VLSI is free to rely on those on remand.

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Author: almoond