Intel Told to Pay $2.18 Billion After Losing Texas Patent Trial

Susan Decker and Matthew Bultman (Bloomberg) -- Intel Corp. was told to pay $2.18 billion after losing a patent-infringement trial over technology related to chip-making.

Intel infringed two patents owned by closely held VLSI Technology LLC, a federal jury in Waco, Texas, said. The jury found $1.5 billion for infringement of one patent and $675 million for infringement of the second. Intel, the world’s largest chipmaker, denied infringing either of the patents and said one was invalid because it claimed to cover work done by Intel engineers, but the jury rejected those arguments.

The patents had been owned by Dutch chipmaker NXP Semiconductors Inc., which would get a cut of any damage award, Intel lawyer William Lee of WilmerHale told jurors in closing arguments Monday. VLSI, founded four years ago, has no products and its only potential revenue is this lawsuit, he said.

VLSI “took two patents off the shelf that hadn’t been used for 10 years and said, ‘We’d like $2 billion,”’ Lee told the jury. The “outrageous” demand by VLSI “would tax the true innovators.”

One of the patents was originally issued in 2012 to Freescale Semiconductor Inc. and the other in 2010 to SigmaTel Inc. Freescale bought SigmaTel and was in turn bought by NXP in 2015. The two patents in this case were transferred to VLSI in 2019, according 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, a key issue for competition.

Federal law doesn’t require someone to know of a patent to be found to have infringed it, and Intel purposely didn’t look to see if it was using someone else’s inventions, he said. He accused the Santa Clara, California-based company of “willful blindness.”

The damage request isn’t so high when the billions of chips sold by Intel are taken into account, Chu said. Intel paid MicroUnity Systems Engineering Corp. $300 million 2005 and in 2011 paid Nvidia Corp. $1.5 billion even though a settlement in that case involved a cross license of technology, he said.

The trial is among the few in-person patent trials in recent months, with many courts pressing pause amid the coronavirus pandemic. It was delayed a week because of the winter storm that wreaked havoc across much of Texas.

Intel had sought to postpone the case because of the pandemic, but was rejected by District Court Judge Alan Albright, a former patent litigator and magistrate who was sworn in as a federal judge in 2018 and has quickly turned his courtroom into one of the most popular for patent owners to file suit.

The case is VLSI Technology LLC v. Intel Corp., 21-57, U.S. District Court for the Western District of Texas (Waco).