Wednesday, March 3, 2021

Wac(k)o record verdict: jury in Western District of Texas says Intel owes Softbank-owned patent troll $2.175 billion over two patents

Texas has a reputation for being big and going big. With respect to patents, it's unfortunately also notorious for going off the deep end at times--not all parts of the Lone Star State, but two of its federal districts. For a long time, the Eastern District was synonymous with patent troll-friendly pretrial rulings and juries. More recently, the Western District's Waco division has put into evidence that nothing is ever so bad it couldn't get worse.

What happened in Waco yesterday is shocking for most of us while it's precisely what patent trolls' political friends like Senators Thom Tillis (R-N.C.) and Chris Coons (D-Del.) would like to see on a monthly if not weekly basis: the potential of money being sucked out of companies that make innovative products by those in the business of patent assertion. VLSI, which used to make products decades ago, went out of business, and whose empty shell formed the basis for a patent troll belonging to the Softbank-owned Fortress Investment group, has won a jury verdict worth (unless overturned or adjusted) $2.175 billion against Intel (click on the image to enlarge):

As the above screenshot shows, this is the sum of a $1.5B damages award for U.S. Patent No. 7,523,373 on a "minimum memory operating voltage technique" and $675 million for U.S. Patent No. 7,7254,759 on a "system and method of managing clock speed in an electronic device."

Intel will obviously appeal. Theoretically, District Judge Albright could set aside or adjust this verdict, but that would be a huge surprise. So it will all depend on the Federal Circuit. In this case, there won't be damages enhancements (up to "treble damages") either, as the jury did not find Intel's infringement to be willful. It's astonishing that a jury practically agrees with a patent troll's damages theory all the way over an incidental infringement (while Intel argued that even if it was found to infringe, the amount should be on the order of a couple million). Intel is a large and deep-pocketed company, but it's not an Apple or Google. If one extrapolates the outcome of this jury trial to a hypothetical case in which similar claims would have succeeded against Apple, you could add another zero on the right side of the damages figure...

The '373 patent was found to be literally infringed; for the '759 patent, the jury found an infringement under the doctrine of equivalents, and rejected Intel's invalidity contentions.

The judge was so eager to hold this trial that he conducted an in-person patent trial despite the COVID-19 pandemic.

The verdict is the highest one ever in an information technology patent case. Only one patent damages verdict in U.S. history was larger; it was about a pharmaceutical patent and, as Professor Mark Lemley (Stanford) notes on Twitter, was "erased on appeal."

The verdict comes just a week before Intel and Apple will file their second amended complaint (i.e., "version 3.0" in total) in their antitrust action against Fortress in the Northern District of California. Last year they already amended the complaint once, but the case has to be narrowed further.

This week's Texas verdict makes next week's filing in California even more significant. The same law firms (Irell & Manella for Fortress/VLSI, and Wilmer Hale for Intel and, in California, also for Apple) are working on the infringement cases as well as the antitrust action.

Here's the complete verdict form:

21-03-02 VLSI v. Intel Jury... by Florian Mueller

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