Intel and OpenSky win appeal at PTAB to quash VLSI patent

Decision undermines an earlier jury verdict which delivered record damages of £2.2bn | Board finds all challenged claims on one of the patents at issue ‘unpatentable’ | Decision is ‘destabilising’, according to one lawyer.

Tech companies  Intel and OpenSky have succeeded in persuading the  Patent Trial and Appeal Board (PTAB) to invalidate a tech patent held by  VLSI Technology.

The final written decision, handed down on Friday, May 12, states that all seven challenged claims from the patent at issue are obvious and therefore unpatentable.

The PTAB also rejected VLSI’s motion to exclude two expert declarations filed by the petitioners.

The decision effectively undermines a  Texas jury verdict in March 2021, which found that Intel infringed two semiconductor patents belonging to VLSI.

According to VLSI, Intel relied on the patents-in-suit in order to make computer chips faster and with fewer energy requirements.

At the time, Intel was ordered to pay $2.18 billion to VLSI for infringement of two US patents—7,523,373 and 7,725, 759—representing one of the largest patent damages awarded in US history.

Some $675 million of those damages related to infringement of US patent number 7,725,759, which describes data-processing technology, and which has now been invalidated by the PTAB.

In their conclusion to the latest development in the case, Administrative Patent Judges Thomas Giannetti, Brian Mcnamara, and Jason Melvin wrote that the petitioners (both OpenSky and Intel) had “...demonstrated by a preponderance of evidence that the challenged claims are unpatentable.”

Such evidence, they said, proved that the patent at issue was obvious. “Having considered Patent Owner’s assertions regarding objective indicia of non-obviousness, we conclude the evidence of record does not persuasively show success of the infringing products with a nexus to the challenged claims or that the claims proceeded contrary to accepted wisdom.”

In a company statement, Intel said it "is pleased the Patent Office invalidated VLSI’s low-quality patent. VLSI is a shell company that abuses our patent system to extract billions of dollars from Intel, an American manufacturer and innovator.

"Today’s decision demonstrates VLSI’s patent claims against Intel are meritless and underscores the desirability of Patent Office review before expensive and wasteful courtroom trials."

The PTAB is yet to review the second patent at issue.

Controversy

The dispute is complex and controversial, not only for VLSI’s record £2.2 billion win against Intel, but also because of  US Patent and Trademark Office (USPTO) director Kathi Vidal’s unprecedented intervention last year.

In October 2022, Vidal  sanctioned OpenSky for alleged abuse of the inter partes review (IPR) process, insisting that the sanctions were "necessary to deter such conduct by OpenSky or others in the future".

This followed Vidal's announcement that she would  review an earlier PTAB decision to scrutinise the validity of a VLSI tech patent that led to the verdict against Intel. At the time this move marked the first time she had invoked her director’s authority to intervene in PTAB decisions, a power that was confirmed by the landmark ruling, Arthrex v US (2021).

Vidal found that OpenSky had filed an IPR in an attempt to extract payment from VLSI as well as from Intel, which was joined by the PTAB as a petitioner in June 2022.

Despite this, in a three-judge panel decision, the PTAB found in October 2022 that OpenSky’s petition “presents a compelling, meritorious challenge”.

Vidal subsequently agreed to consider the PTAB’s remand decision and  review the validity of one of the patents at issue.

A destructive decision

Nick Matich, principal at McKool Smith in Washington, DC, has followed the case closely and is critical of the decision to take another look at the patents at issue.

He told WIPR: “The whole situation puts an exclamation point on two fundamental flaws in the AIA [ America Invents Act]: the absence of any standing requirement and the potential for repeated challenges to the same patent.

“OpenSky never should have been allowed to file a petition, because it has no colourable interest in the patent-in-suit except to demand money from a victorious patent owner.”

“Intel already had two chances to challenge the patent—once in district court and once at the PTAB previously. It didn’t deserve a third.”

He added that the decision is “destabilising”.

“Leaving patent rights open to never-ending validity challenges is destabilising and destroys the incentives patent rights are meant to create,” he said.

WIPR has contacted legal counsel for OpenSky and VLSI, without immediate response.

This article was updated later on the day of publication to incorporate comment from Intel.