As I reported on Saturday, Waco-based Judge Alan Albright of the United States District Court for the Western District of Texas denied an Intel motion to transfer or postpone the second VLSI v. Intel patent trial. Intel understandably expressed concern over the possibility of jurors having learned in the local media about the very recent $2.175 billion verdict in another case involving the same parties but unrelated patents. That verdict would be the first of that magnitude to be upheld by the appeals court. Normally, those damages awards don't stand. The final damages award is zero if the patent turns out on appeal never to have been infringed, or to be invalid; and even if the decision on the merits stands, the amount very often turns out to be excessive. But jurors may take that earlier verdict at face value--and may not fully understand that the outcome of one case over different patents doesn't mean anything for the case before them, just like the outcome of a hockey game between a team from New York and one from L.A. doesn't predetermine the result of a football game between teams from the same two cities.
Today I was one of more than 60 people to dial in and listen to opening arguments. In an order, Judge Albright had stated an incorrect meeting code, but friendly court staff provided the correct one when I contacted them about it. I missed VLSI's opening statement for that reason, but was just about in time for Intel's response.
The patents-in-suit are U.S. Patent No. 6,633,318 on a "method and apparatus for enabling a stand[-]alone inegrated circuit" and U.S. Patent No. 6,366,522 on a "method and apparatus for controlling power consumption of an integrated circuit." Those patents were originally filed in 2000 by a company named SigmaTel and ultimately acquired by VLSI, a non-practicing entity (NPE) set up specifically for the purpose of buying those patents as Intel noted. One of them has already expired, and the other will expire next month.
VLSI is again seeking a billion-dollar verdict. Rather than go into full detail on technical arguments as to why those patents are neither infringed nor valid, Intel's attorney placed the emphasis on Intel being a true innovator that has been making successful products for more than 50 years, setting his client apart from the current patent holder, who never built or sold a product.
Here are some examples of what Intel's lawyer said:
"These Intel engineers operated indepenently, did their work independently."
They "spent years developing [the accused products] without ever having known these patents."
Intel agrees with VLSI's counsel that intellectual property matters, but "does not infringe the other side's patents."
Prior owners included companies like NXP, who do enforce their patents when they have to, but none of them accused Intel of infringement until VSLI bought these patents a few years ago.
"Intel has not used--not today, not before--either patent."
"Ideas developed in 2000 don't make sense for the modern microprocessor." He got back to this point later and said: "Each of you, you know how much life has changed over 20 years."
Intel's products are "the result of engineers working together, had work, team work."
"Our microprocessor industry in America is one of the greatest industries in our country." It's "a critical part of our economy, critical for our national security."
Intel was started in 1986 by two engineeers. Intel's lawyer then explained Moore's Law and said it "still drives the computer industry today."
Intel is "headquartered in America" and its "research and development is centered here."
"Intel microprocessors power laptops, desktops, servers, [and other products]." In this context he also specificially mentioned military applications and again referenced national security.
Intel's lawyer was very respectful. He stressed that he was "not criticizing VLSI" and sharing his perspective "just to give you a sense, you're drawing your own conclusion." But "they don't make any products, VLSI doesn't sell any products, doesn't conduct any research, doesn't conduct any development." It has never filed for a patent itself.
"VLSI purchased those patents nearly 13 years after they had issued along with hundreds of other patents," then filed this lawsuit though prior owners never sued Intel.
According to the lawyer, "VLSI never called Intel or sent a letter or email before filing this lawsuit--nothing--filed a lawsuit with no notice at all."
None of what Intel says VLSI did is illegal. Patents are tradable assets. The acquirer can sue. There's no formal requirement to notify an alleged infringer prior to filing suit. And there's obviously no requirement to practice one's patents by making products that incorporate those claimed inventions. But Intel's lawyer encouraged the jury to "bring [their] collective wisdom and common sense." A lot will depend on whether the jury gets Intel's message about the difference between a company that makes products and one that doesn't; between a company that employs large numbers of engineers and one that doesn't.
For VLSI, this trial is a second bite at the apple. It also has a third trial coming up in the summer. With another billion-dollar win, it would shock the technology industry at large. Many companies might have to think hard about whether they want to have a presence in the Austin area at all as it exposes them to patent infringement litigation in a court that makes it easier for patent holders to prevail than almost any other in the United States.
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