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Intel hit with $948.8 million VLSI infringement verdict

Cascade Lake and Skylake prove even more expensive than expected

VLSI Technology, a patent holding company affiliated with Softbank's Fortress Investment Group, has been awarded $948.8 million in a patent infringement claim against Intel Corporation.

On Tuesday, a federal jury in the Western District of Texas, a popular venue for patent claims, found that Intel's Cascade Lake and Skylake processors violated a VLSI data processing patent.

Intel in a statement emailed to The Register said it intends to appeal the decision.

"This case is just one example of many that shows the US patent system is in urgent need of reform," a company spokesperson said. "VLSI is a 'patent troll' created by Fortress, a hedge fund that is bankrolled by large investment groups for the sole purpose of filing lawsuits to extract billions from American innovators like Intel."

"This is the third time that Intel has been forced to defend itself against meritless patent infringement claims made by VLSI. Intel strongly disagrees with the jury’s verdict and the excessive damages awarded. We intend to appeal and are confident in the strength of our case."

An attorney representing VLSI did not immediately respond to request for comment.

The Register asked Fortress Investment Group to comment but we've not heard back.

The jury decision delivered Tuesday covers US Patent No. 7,606,983, "Sequential ordering of transactions in digital systems with multiple requestors."

Intel in March 2021 was directed to pay $2.18 billion for violating two VLSI chip patents – US Patents 7,523,373, and 7,725,759. The company sought a new trial in that case but was denied. Nonetheless, it may not have to pay: Last month, the US Patent and Trademark Office agreed to review the VLSI patents for validity.

Just this week, the US Court of Appeals for the Federal Circuit revived a previously rejected VLSI patent claim that will now need to be reconsidered.

In April 2021, Intel prevailed in a different patent case involving VLSI.

In October 2019, Intel and Apple filed a joint antitrust lawsuit against Fortress Investment Group and several patent assertion entities (PAEs, also known as non-practicing entities, or NPEs) including VLSI. The companies sought to prevent alleged anti-competitive conduct but the case was dismissed. Intel in 2021 appealed to the US Ninth Circuit and last week the appellate court found Intel's allegations lacking.

"Intel has not, in other words, pleaded sufficient facts to show that any alleged price increases are attributable to patent aggregation," the appeals court said in its November 8th affirmation of the lower court's dismissal of the antitrust claim. "A mere 'possibility' that Fortress has acted unlawfully is not sufficient."

Big legal business to be had

A 2014 academic paper, "The Direct Costs from NPE Disputes," [PDF] found that in 2011, "the estimated direct, accrued costs of NPE patent assertions totaled $29 billion."

Large technology companies – many of which have amassed large patent portfolios, which they often justify as defensive weapons – have complained for years about patent trolls/patent assertion entities/NPEs, which are companies that exist to file infringement claims.

Legal changes, like the US Supreme Court's Alice Corp. v. CLS Bank International decision, which made software patents more difficult to obtain, have reduced patent trials – more claims are being dismissed. But Intel in its antitrust argument against Fortress has suggested that patent assertion entities are adapting to the new legal landscape.

"In the face of these challenges, PAEs have evolved," the company said. "PAEs have increasingly been partnering with investment firms to fuel their litigation."

According to Unified Patents, a membership-based patent defense group, "over 71 percent of all district court litigation in [the first half of] 2022 was related to the high-tech sector." Ninety-five percent of NPE litigation targets were high-tech companies during this period.

The Open Innovation Network, a group of companies that have joined together with a commitment of patent non-aggression, was formed in 2005 by Red Hat, IBM, Novell, Philips, and Sony. It has since expanded to encompass 3,700 members with more than 2.7 million patents and patent applications between them. ®

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