The US Court of Appeals has made a decision that will significantly change the landscape of patent wars in the technology industry. On Monday, the court reversed the decision to recover $2.18 billion in compensation from Intel in favor of VLSI. The decision overturns one of the largest penalties in the history of American patent law and highlights the complexities associated with assessing and protecting intellectual property in today’s technological world.
A major development was the overturning of a 2021 jury verdict that Intel had infringed one of VLSI’s patents. At the same time, the court remanded the case to a new trial in Texas to determine the amount of damages caused by the infringement of another patent. The decision opens a new chapter in the ongoing legal dispute between the two companies. The court decision also affects the interests of key players in the investment and technology sectors. VLSI, the owner of the patents, is controlled by investment funds managed by Fortress Investment Group. Abu Dhabi-based Mubadala Investment Co. took control of the company this year, signaling strong international interest in intellectual property.
As expected, Intel’s reaction to the court decision was positive. The company representative expressed satisfaction and explained that he wanted to prove that the VLSI patent being challenged in Texas was of negligible value. This commentary reflects Intel’s strategy in the upcoming new litigation and highlights the importance of properly evaluating patents in the technology industry.
Previous litigation between Intel and VLSI illustrates the complexity and scope of patent disputes. VLSI previously accused Intel of infringing a number of patents on semiconductor technologies. A Texas court upheld the plaintiff’s position and awarded VLSI $2.18 billion in damages for its use of a technology patented by Dutch chipmaker NXP Semiconductors.
However, a federal court in Washington concluded that the evidence presented against Intel on one of the patents was insufficient. The claims arising from this patent accounted for $675 million of the total amount. The second patent was found to be infringed, but errors in calculating damages required a new trial. This ruling caused Intel shares to fall by more than 4%. Similar declines were seen at other major chipmakers.
In another lawsuit in Texas in 2021, Intel managed to avoid paying more than $3 billion in damages. A jury in Austin concluded that Intel must pay VLSI nearly $949 million for infringing on a third patent. Additionally, both companies agreed to withdraw from another potentially multi-billion dollar case in Delaware. The next trial is scheduled for 2024 in Northern California.
The appeal court’s decision affects not only the two parties to the dispute, but the entire technology industry. It raises questions about the adequacy of the current patent system and sparks debate about how it can be improved to protect innovation and fairly regulate the market.