VLSI Claims Deemed Unpatentable | Jones Day
[co-author: Adam Cook]*
On May 12, 2023, the Intel v. VLSI chronicle continued as the PTAB issued a final written decision holding that all of the challenged claims of VLSI’s U.S. Patent No. 7,725,759 (“the ’759 patent”) were unpatentable as obvious. See OpenSky Indus., LLC v. VLSI Tech. LLC, IPR2021-01064, Paper 135 (May 12, 2023). This decision potentially vacates $675 million of VLSI’s $2.175 billion trial court infringement award.
This decision was the most recent development in the dispute that began in 2019. In April of that year, VLSI sued Intel in the Western District of Texas for infringement of two of its patents, one of which was the ’759 patent. Intel petitioned for inter partes review (“IPR”) in November 2019, but the PTAB discretionarily denied institution citing the advanced parallel infringement proceedings in the district court. See Intel Corp. v. VLSI Tech. LLC, IPR2020-00158, Paper 16 (May 20, 2020). VLSI prevailed on its infringement claims, and a jury awarded VLSI $2.175 billion in damages. See VLSI Tech. LLC v. Intel Corp., No. 6:21-CV-57-ADA, 2022 U.S. Dist. LEXIS 83985, at *12 (W.D. Tex. May 10, 2022). Of the total damages, $675 million were attributable to Intel’s infringement of the ’759 patent. See id.
Shortly after the district court verdict, a newly formed entity, OpenSky Industries, LLC filed an IPR petition attacking the ’759 patent’s validity. See IPR2021-01064, Paper 2 (June 7, 2021). OpenSky’s patentability arguments mirrored the arguments brought in Intel’s previously-denied IPR. The PTAB instituted OpenSky’s IPR and later granted Intel’s motion for joinder into the IPR proceeding. See IPR2021-01064, Paper 17 (December 23, 2021); IPR2021-01064, Paper 43 (June 8, 2022).
However, in June 2022 Director Vidal initiated a sua sponte Director review of the PTAB’s institution decision. Director Vidal found OpenSky abused the IPR process by ignoring her mandatory discovery requests and filing the IPR petition with the improper motivation of extracting payments from VLSI or Intel. See IPR2021-01064, Paper 102 (October 4, 2022). As a result, Director Vidal elevated Intel to an active party in the IPR, relegated OpenSky to an understudy role, and instructed the PTAB to reconsider its institution decision in light of her findings. See id.
On remand the PTAB affirmed its earlier institution decision under a heightened “compelling merits” standard. See IPR2021-01064, Paper 107 (October 14, 2022). Again, Director Vidal commenced a sua sponte Director review of the PTAB’s institution decision. See IPR2021-01064, Paper 108 (October 17, 2022). In her order for Director review, Director Vidal clarified that Intel was not time-barred from IPR participation since the one-year time bar does not apply to requests for joinder. See id.
Director Vidal later confirmed that the PTAB’s second institution decision contained no error, and went on to dismiss OpenSky from the proceeding citing her earlier findings of misconduct. See IPR2021-01064, Paper 121 (December 22, 2022). That decision left Intel as the sole IPR petitioner and meant the IPR was able to proceed on the merits. See id. Around two months later, Director Vidal restored OpenSky as a party but simultaneously assessed sanctions against OpenSky for its prior misconduct. See IPR2021-01064, Paper 127 (February 3, 2023).
In its most recent May 12, 2023 decision, the PTAB panel issued a final written decision that agreed with Intel and OpenSky that the ’759 patent was obvious in light of several pieces of prior art. See IPR2021-01064, Paper 135 (May 12, 2023). The petitioners raised four principle arguments challenging the validity of seven of the ’759 patent’s claims, including the trial-court-asserted claims. See id. at 6.
VLSI argued that objective indicia of nonobviousness, namely the commercial success of the patent, demonstrated that the ’759 claims were patentably nonobvious. See id. at 23. However, the PTAB was unconvinced when VLSI’s only evidence to prove commercial success was its large jury verdict. See id. at 26. According to the PTAB, VLSI failed to provide any relevant “financial information” to support its secondary considerations arguments. Id.
In its final written decision, the PTAB held that the petitioners had shown by a preponderance of the evidence that the challenged claims were unpatentable as obvious in light of the prior art on two separate ground. See id. at 43-44. In an ongoing parallel IPR proceeding for VLSI’s second infringed patent (which undergirds the remainder of VLSI’s $2.175 billion award) Intel is similarly pushing for the invalidation of VLSI’s patent on obviousness grounds. See Patent Quality Assurance, LLC v. VLSI Tech. LLC, IPR2021-01229, Paper 1 (July, 7, 2021). If Intel prevails in that case, it will be one step closer to nullifying VLSI’s historic infringement award, ostensibly the very outcome Intel originally pursued in 2019 when its IPRs were discretionarily denied.
*Summer Associate
