Intel settles to escape $4b patent suit with VLSI

Turns out patent trolls don't like being outed by their lawyers

Intel and SoftBank-backed VLSI Technology have agreed to end a $4 billion patent dispute, according to documents filed in Delaware District Court this week.

The decision marks a victory for Intel, which has already lost $3 billion in failed patent disputes to VLSI over the past few years.

The case in question [PDF] dates back to 2018 and alleged that Intel had infringed on five VLSI-owned patents governing things like secure communications, power optimization and delivery, and flip-chip interconnects.

If VLSI sounds familiar, that's because the company has been lurking around the semiconductor industry in one shape or form since the late '70s. The company originally made ASICs before it was acquired by Philips Electronics and later spun off under NXP. But despite any early successes in chipmaking, VLSI is now owned by SoftBank's Fortress Investment Group, and appears to exist solely to sue chipmakers it believes have violated its intellectual property — in other words, it's a patent troll.

The decision to call it quits comes after nearly five years of litigation. Tuesday, Intel and VLSI released a joint filing [PDF] in which Intel and VLSI mutually agreed to dismiss the case and resolve all disputes over Intel's use of the aforementioned patents. Critically, VLSI has done so with prejudice. As we understand it, this means the company can't refile the case.

VLSI also agreed to a covenant not to sue. So, in addition to not being able to refile the case, it's agreed not to sue Intel's partners over these specific patents. And, at least according to the court documents, Intel hasn't settled here. "Neither party is paying any amount of money to the other party," the filing reads.

It appears the case was headed toward dismissal anyway. In April, Chief Judge Colm Connolly issued a standing order to disclose the names of VLSI's owners, members, and partners to the court. However, as noted in an August memorandum [PDF], VLSI's disclosures were found to be lacking, leading Connolly to question whether the case should be dismissed.

While VLSI was ultimately unsuccessful in litigating this case. The company has found great success in extracting large sums of cash from Intel's coffers. To date, VLSI has extracted nearly $3 billion in damages from Intel over the course of two patent infringement cases litigated in Texas. The most recent ruling came this fall when Intel was ordered to pay $948.8 million after a jury found the x86 giant's Cascade Lake and Skylake processors violated a data processing patent owned by VLSI.

Attempts to disarm VLSI have been met with mixed results. Intel has filed lawsuits against VLSI on at least two occasions, including once in 2019 in cooperation with Apple. In both cases, the courts found the allegations unconvincing.

With that said, VLSI's behavior recently caught the attention of the US Patent and Trademark Office, which in October said it would investigate the validity of the company's patents. The review has the potential to overturn a previous $2.18 billion verdict against Intel. ®