(Bloomberg) – Intel Corp. was ordered by a federal jury in Texas to pay $ 2.18 billion after losing a patent infringement trial over chips-related technology, one of the largest patent damages awards in U.S. history. Intel has promised to appeal. Intel holds two patents owned by VLSI Technology LLC, infringing on the jury in Waco, Texas. The jury found $ 1.5 billion for infringement of one patent and $ 675 million for infringement of the second patent. The jury rejected the denial of Intel’s infringement of one of the patents and the argument that one patent was invalid because it claimed it covered work of Intel engineers. The patents were owned by the Dutch disc maker NXP Semiconductors Inc. damages award, Intel attorney William Lee of WilmerHale told the judges. VLSI, which was founded four years ago, has no products and the only potential revenue is this lawsuit, he said. VLSI ‘took two patents off the shelf that had not been used for ten years and said,’ We want $ 2 billion, ‘Lee told the jury. The ‘outrageous’ claim of VLSI ‘would tax the real innovators.’
He argued that VLSI was not entitled to more than $ 2.2 million.
“Intel does not fully agree with the verdict of today’s jury,” the company said in a statement. “We intend to appeal and are confident that we will prevail.”
One of the patents was originally granted in 2012 to Freescale Semiconductor Inc. issued and the other in 2010 to SigmaTel Inc. Freescale bought SigmaTel and was in turn bought by NXP in 2015. The two patents were transferred in 2019 according to VLSI. to data compiled by Bloomberg Law.
VLSI lawyer Morgan Chu of Irell & Minella said the patents cover inventions that increase the power and speed of processors, an important issue for competition.
‘Intentional blindness’
Under federal law, someone must know that a patent infringes it, and Intel deliberately did not look to see if he was using someone else’s inventions, he said. He accused the company in Santa Clara, California, of ‘intentional blindness’.
The jury said there was no intentional offense. A finding otherwise would have enabled Judge Alan Albright in the district court to further increase the award, to three times the amount determined by the jury.
Chu and officials with NXP could not be immediately reached for comment. The damage claim is not as large as the billions of chips Intel sells, considering Chu said. Intel paid MicroUnity Systems Engineering Corp $ 300 million in 2005 and Nvidia Corp $ 1.5 billion in 2011, although a settlement in that case involved a cross-licensing of technology, he said.
“Business ventures will be disrupted by not only the scope of the award but also the damages theory,” said Michael Tomasulo, a Winston Strawn attorney who attended the trial. “It looks like they bought the whole VLSI case.”
The damage award is about half of Intel’s profit in the fourth quarter. The company has dominated the $ 400 billion disk industry for most of the past 30 years, although it is struggling to maintain its position.
The ruling is smaller than the $ 2.5 billion ruling that Merck & Co. about a hepatitis C treatment. It was later thrown out. Last year, Cisco Systems Inc. told a federal judge in Virginia to pay $ 1.9 billion to a small cybersecurity company that accused it of making a copy to steal government contracts. Cisco has asked the judge for a new trial.
The case is one of the few personal patent hearings in recent months, with many courts under pressure in the coronavirus pandemic. It has been delayed by a week due to the winter storm that devastated large parts of Texas.
Intel tried to postpone the case due to the pandemic, but was rejected by Albright, a former patent attorney and magistrate who was sworn in as a federal judge in 2018 and quickly transformed his courtroom into one of the most popular among patent owners.
The case is VLSI Technology LLC v. Intel Corp., 21-57, U.S. District Court of Texas (Waco).
(Updates to Intel comment in sixth paragraph; other major patent judgments in 15th.)
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