Most Nokia-branded phones banned in Germany due to enforcement of patent injunction by Fortress-funded VoiceAge EVS

Nokia itself stopped making phones a while ago, but a company named HMD has a trademark license allowing it to sell Nokia-branded phones (running Android, not Symbian). In August I reported on a patent injunction secured by VoiceAge EVS, an audio codec patent licensing firm funded by Fortress Investment, in Mannheim against HMD. Today I learned that VoiceAge EVS went ahead and enforced the injunction, which requires some security (bond or deposit) during an appeal, and apparently moved for contempt-of-court sanctions against HMD. As a result, HMD had to stop selling most of its phones in Germany.

Heise online, Germany's leading information & communications technology new site, spoke with HMD, which blamed the removal of the vast majority of its products from its German online shop on a defeat in an enforcement proceeding. HMD appealed the decision (which may be an order of contempt sanctions). It sounds like the Mannheim Regional Court sided with VoiceAge EVS over an enforcement-related question, and HMD then appealed that order to the Karlsruhe Higher Regional Court.

EVS (Enhanced Voice Services) is a 3GPP audio codec standard (Wikipedia). Apparently HMD removed support for EVS from the products it most recently launched in Germany (Nokia G21 and G11; the latter is presently sold out). Some resellers such as Amazon and the MediaMarkt consumer electronics retail chain still have some older Nokia products on stock. VoiceAge EVS would have to sue those resellers as the injunction obtained against HMD does not apply to them.

While consumers generally don't know about EVS and the benefits it offers, there's a significant quality degradation (for the quality of voice communications) when phones don't support that standard any longer.

What VoiceAge EVS v. HMD shows is that German patent injunctions can be commercially impactful. Three years ago, Apple was unable to sell some older iPhone models in Germany because of an injunction Qualcomm had won in Munich. Shortly thereafter, the parties settled, but just because Apple needed Qualcomm's 5G chips. At that stage, Apple had resumed its German sales of certain older iPhone models by incorporating Qualcomm 4G chips into them. And last summer Apple settled with Fortress, which also resulted in the voluntary dismissal of all VoiceAge EVS lawsuits against Apple. Otherwise Apple would likely have been enjoined as well.

While we're on the subject of patent enforcement in Germany, there's a huge two-day trial taking place in Munich over the next couple of days in IP Bridge v. Ford (case no. 7 O 9572/21), IP Bridge v. Apple (case nos. 7 O 2395/21 and 7 O 2963/21), and IP Bridge v. OPPO (case no. 7 O 8133/21). All these cases will be decided by the Munich I Regional Court's Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann).

The patent-in-suit (EP2294737 on "control channel signalling for triggering the independent transmission of a channel quality indicator") was originally obtained by Japanese electronics maker Panasonic, which declared it essential to 4G/LTE and later assigned it to Japan's national patent licensing firm IP Bridge. The patent was previously asserted against others, and an attempt to invalidate it went all the way up to the Federal Court of Justice, which upheld the patent.

Daimler would have had to defend itself against the same patent this week, but took an Avanci license late last year.

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After more than 12 years, HTC and Fortress's IPCom settle standard-essential patent dispute over former Bosch and Hitachi patents

I'm still waiting for an official confirmation of IPCom's recent "eight-figure US$ settlement deal" that IAM mentioned on Twitter, citing to "reports out of China." While I was on the lookout for that, I just spotted the following terse statement on IPCom's website that according to the timestamp went live yesterday afternoon:

"We are pleased to announce that HTC and IPCom have settled their long-running dispute by entering into a license agreement covering all of IPCom's assets."

What an understatement. In the standard-essential patent (SEP) space, any dispute that last more than two years is already "long-running" by my definition--and I doubt anyone watching that space would dispute that a four- or five-year patent spat is "long-running." This one here lasted more than a dozen years--an eternity that has finally come to an end.

Over the years I attended several IPCom v. HTC trials in Germany, mostly in Mannheim, where Deutsche Telekom recently sued for a refund to the tune of 270 million euros. HTC and Nokia were the first two smartphone makers IPCom sued after acquiring a 3G SEP portfolio from Bosch, a company that used to make phones but exited that business even earlier than the likes of Nokia and Ericsson. The fact that HTC and Nokia had to defend against many of the same patents turned those two competitors--otherwise rivals--into brothers-in-arms. In-house and outside counsel of both companies coordinated their defenses like they were one company. Even when Nokia sued HTC over non-SEPs in 2012 (and ultimately got HTC to pay some additional royalties), their friendship survived. They were seen drinking beer on high-speed trains from Mannheim to the Cologne-Dusseldorf region just hours after fighting hard in court.

While I occasionally disagreed with him and disapproved of a couple of remarks he made at the Nokia-HTC settlement party (after inviting me as a surprise keynote speaker), I do wish to give credit to the late Martin Chakraborty, a Hogan Lovells partner and HTC's outside counsel against IPCom and Nokia at the time.

Nokia once claimed that IPCom was seeking a royalty payment of 12 billion euros, which IPCom disputed. The IPCom v. Nokia dispute lost relevance as Nokia's smartphone sales were dwindling, and ultimately Microsoft took over Nokia's handset business. Microsoft told investors that "[i]n November 2014, Microsoft and IPCom entered into a standstill agreement staying all of the pending litigation against Microsoft to permit the parties to pursue settlement discussions," and somehow those talks eventually came to fruition.

Unlike Nokia, HTC even faced contempt proceedings when IPCom was enforcing an injunction. What IPCom demonstrated (and many other litigants don't even seem to know) is that it's far harder to actually enforce a SEP injunction in Germany than to obtain one. In the merits proceeding, you can base your infringement theory on the specification of the standard. At the enforcement stage, you have to prove an actual infringement. HTC had guts.

For IPCom's relatively new management, it's meaningful progress to put some cases behind that it inherited from its predecessors led by Munich-based patent litigator Bernhard "Bernie" Frohwitter. IPCom still has Fortress Investment as its key backer, but it's been noticeable for a couple of years that IPCom's new leadership has taken steps to position the organization--which by the way has its own researchers on staff who keep applying for new patents--as a constructive and solution-oriented licensing firm. They even emphasize corporate social responsibility in such contexts as diversity. The message is like "we're still a non-practicing entity, but don't call us a troll."

IPCom's agreements with HTC and (I'll take IAM's word for it) Apple show that the new IPCom is putting some old problems behind it and focusing on its future in the patent licensing industry. I'll be watching IPCom's activities with interest. There is an interesting parallel: Sisvel, which like IPCom is headquartered in Europe (though it has been around for much longer, and is also a pool administrator) and a "key account customer" of the Mannheim court, also appears to have a new leadership style versus where they were a decade ago. Sisvel announced some interesting settlements last year, most importantly with Xiaomi. Actions speak louder than words. Both IPCom and Sisvel have now demonstrated over the course of several years that their current leaders have nothing to do with exceedingly aggressive--or "trollish" if you will--tactics employed by their predecessors. They still enforce patents if they have to--but with a more constructive attitude.

I believe EU policy-makers have an interest in both Sisvel and IPCom doing well. They are the most prominent European patent licensing firms, and IP licensing is a very high priority when the EU defines its economic policies and strategies. At the same time, the EU also has to take the interests of major SEP implementers into account, of course.

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Fortress-funded VoiceAge EVS recently won German patent injunction against HMD and apparently settled with Apple

This here is a follow-up to both yesterday's post on VLSI Technology inching closer to a final (though appealable) judgment against Intel and earlier reports on VoiceAge EVS v. Apple. Both VLSI Technology and VoiceAge EVS are funded by Fortress Investment.

The Mannheim Regional Court confirmed to me today that VoiceAge EVS won a case against HMD (which makes phones and has a license to the Nokia trademark for that purpose) on July 23 over EP2707687 on a "transform-domain codeblock in a CELP coder and decoder" (case no. 7 O 116/19; the Presiding Judge of the Seventh Civil Chamber in Mannheim is Judge Dr. Peter Tochtermann).

There are no more VoiceAge EVS v. Apple cases in Germany anymore. Since Apple's withdrawal (in June) from its joint antitrust action against Fortress and multiple Fortress-funded entities, various patent infringement cases brought by Fortress-funded companies against Apple have become known to have been withdrawn, suggesting that a global settlement was reached.

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Intel points Judge Albright to developments in Delaware: does the chipmaker have a license defense to the $2.2B patent damages verdict?

VLSI Technologies won a patent infringement trial against Intel in the Western District of Texas in March, and lost (because it failed to establish infringement) another one in April. A third VLSI v. Intel trial has been pushed back from the summer to December.

Judge Alan Albright has not yet entered a final judgment further to the March and April jury verdicts. In the first case (the one with the $2.2B record verdict), Intel is fighting hard and has raised a number of issues in its post-trial motions, demonstrating to the trial court that it can easily be reversed on appeal if it doesn't order a retrial or make similarly impactful decisions now. In the second case, VLSI would like another chance to prevail.

In both cases, Intel filed a "notice of subsequent developments" on Monday (this post continues below the document):

21-08-02 Intel Notice of Su... by Florian Mueller

Intel's legal position is that final judgment cannot enter while a motion to amend its answers and defenses is pending. The critical part appears to be a license defense.

As Intel's notice says, the Silicon Valley company "filed a Complaint in the Delaware Court of Chancery against VLSI Technology LLC ('VLSI'), among others, for equitable and other relief relating to its license rights." That happened in January. VLSI brought a motion to dismiss in March, which was heard in May, with no decision having been entered yet by the Delaware state court.

But there is also some VLSI v. Intel patent infringement litigation pending in Delaware--in the District of Delaware, as patent law is federal law. Like in Texas, Intel also filed a motion to amend its answer and defenses in the Delaware patent infringement case. A United States Magistrate Judge held a motion hearing on July 6, 2021, and what Intel wanted to show to Judge Albright is that the Delaware judge "found that Intel's license defense is not futile."

Here's the relevant excerpt from the hearing transcript (this post continues below the document):

21-08-02 Intel Exh1 Hearing... by Florian Mueller

This here is the key passage from what Magistrate Judge Hall said:

"VLSI argues that Intel should not be granted leave to amend under Rule 15 because Intel's license defense is futile and because VLSI would be prejudiced if Intel is allowed to amend.

"Let's talk about futility first. If a proposed amendment is frivolous or advances a claim or defense that is legally insufficient on its face, the Court may deny a leave to amend.

"VLSI makes two arguments about futility. VLSI's first argument has multiple parts, but essentially it argues that Intel could not possibly have obtained a license to the asserted patents under the Finjan settlement.

"At its core of its argument VLSI points to a number of facts that according to VLSI demonstrate that the agreement did not grant Intel a license.

"However, at this stage and without the benefit of a full factual record, I'm not prepared to say as a matter of law that there was no way that Intel could have obtained a license to VLSI's patents pursuant to that agreement.

"VLSI is free to reraise its challenge to Intel's license defense at the summary judgment stage.

"Turning to VLSI's second argument about futility, it argues that Intel's license defense is futile because Intel has conceded that this Court lacks subject-matter jurisdiction over the license defense.

"I don't see a concession. Intel has maintained that it wants to litigate the license issue in the Court of Chancery, but I don't read that as a concession that this Court lacks subject-matter jurisdiction over Intel's license defense.

"In sum, VLSI has not shown that Intel's defense is frivolous or otherwise legally insufficient on its face. I therefore find that it is not futile at this stage."

If Judge Albright ordered a retrial, the license defense might be adjudicated in Delaware in the meantime. If he decides to enter final judgment, however, he will have to somehow rule on Intel's motion to amend its answer and defenses.

Since Apple's $1B trial win in 2012, which even went up to the Supreme Court (disgorgement of profits for design patent infringement), I can't remember a damages verdict having been challenged like Intel is fighting to get VLSI's $2.2B win vacated. Intel leaves no stone unturned. Meanwhile, the busiest patent court in the world (which gets about 20% of all U.S. patent infringement cases) barely finds the time to enter final judgment.

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Fortress Investment once again urges district court to dismiss Intel's antitrust case over patent aggregation by non-practicing entities

In mid-June, both Apple and Intel opposed Fortress Investment's motion to dismiss their second amended antitrust complaint in the Northern District of California. A week later, Apple withdrew from the case, allowing Apple to take a purely defensive perspective on antitrust law (case in point, Apple just lost an appeal to Epic Games in Australia).

Last night, Fortress filed its reply brief in support of its motion to dismiss (this post continues below the document):

21-07-08 Fortress Reply ISO... by Florian Mueller

My impression was that some of the arguments in favor of dismissal are more like summary judgment than motion-to-dismiss arguments. I will give this more thought, and if there are any other observations worth sharing, I may do a follow-up post. What I found most interesting at first sight is that Fortress argues that, after Apple's withdrawal, "five out of the nine alleged 'markets' now contain no Defendants or patents that have ever been involved in a lawsuit against Intel." According to Fortress, the complaint failed to properly allege antitrust injury even while Apple was a party to the case, but Fortress believes it is now in an even stronger position.

Fortress makes a similar argument in connection with supracompetitive royalties (which are key to the complaint's theory of harm):

"[...] Intel does not dispute there is no allegation that it has ever paid any royalties to any Defendant ('supracompetitive' or otherwise). Intel states that 'Plaintiffs have 'engaged in licensing negotiations' with Defendants,' [...], but the only 'negotiations' alleged in the [Second Amended Complaint] occurred between Inventergy, INVT, and Apple, who is no longer a plaintiff in this case. [...] There are no allegations that Intel has been involved in any licensing negotiations with any Defendant, let alone any that would be likely to result in a deal."

The Fortress-funded companies mentioned in that passage--Inventergy and INVT--also made a separate filing (Scribd, PDF) arguing that there is no patent aggregation issue with respect to the standard-essential patents those entities hold.

Fortress also replied to amicus curiae briefs filed in support of Intel (and, at the time, Apple) by ACT | The App Association and Unified Patents (this post continues below the document):

21-07-08 Fortress Reply to ... by Florian Mueller

Fortress disputes that ACT | The App Association's members have actually experienced any problems with patent assertions by Fortress-funded NPEs:

"Notably, the App Association does not name a single 'small company' out of its 5,000 members that has supposedly been 'abused' by any of the Defendants. Thus, whatever the merits of the App Association's arguments about supposed abusive patent assertions against small companies, they are simply irrelevant here."

The motion-to-dismiss hearing will be held in San Francisco in a couple of months.

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Apple withdraws from antitrust action against Fortress Investment and multiple Fortress-funded companies--now Intel is the sole remaining plaintiff

After reporting last week on Apple and Intel's response to Fortress Investment's motion to dismiss their second amended antitrust complaint in the Northern District of California, I noted on Twitter that "[t]his is that (nowadays quite rare) case in which Apple is an antitrust plaintiff, not defendant." Since then, Apple has had another antitrust investigation to add to the list of cases in which it's being investigated: the German Bundeskartellamt (Federal Cartel Office) is looking into the App Store's gatekeeper position.

At this point, Apple is exclusively an antitrust defendant. On Monday, Apple filed the following notice of dismissal with the United States District Court for the Northern District of California (this post continues below the document):

21-06-21 Apple Notice of Di... by Florian Mueller

The actual notice is so short--just two paragraphs--that I'll also provide it here:

"Plaintiff Apple Inc., pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i), hereby gives notice that it (1) dismisses from this action with prejudice its claims against defendants Fortress Investment Group LLC; Fortress Credit Co. LLC; Uniloc 2017 LLC; Uniloc USA, Inc.; Uniloc Luxembourg S.A.R.L.; INVT SPE LLC; Inventergy Global, Inc.; and IXI IP, LLC, and (2) dismisses from this action without prejudice its claims against defendant VLSI Technology LLC.

"None of the defendants have filed an answer to the Second Amended Complaint (or as to any prior complaint) or for summary judgment as to these claims. Dismissal under Rule 41(a)(1)(i) is therefore appropriate."

The fact that only the claims against VLSI are dismissed without prejudice, but all others with prejudice, makes it a possibility that some infringement disputes have been settled. It could also be that Apple determined it simply had no antitrust claims against those other entities, but is not so sure about VLSI.

One important Fortress-funded company is presumably still suing Apple in Munich: VoiceAge EVS. But VoiceAge wasn't a party to the California antitrust case anyway.

For Apple, the key benefit from this strategic retreat is that it's now consistently an antitrust defendant that argues intellectual property right holders should not be restricted in how they exploit their assets. That's what we heard from Apple's lead counsel toward the end of the recent Epic Games v. Apple closing arguments. In that case, Apple attempts to draw an analogy to FTC v. Qualcomm, as does Fortress in the case from which Apple is now dropping out.

Intel was prepared to take on Fortress all by itself: it sued in October 2019. Then Intel withdrew that complaint only to refile a joint complaint with Apple the following month. Now Intel is the sole plaintiff again, more than a year and a half later.

Apple's withdrawal from the Fortress case is just the latest example of partnerships between Apple and Intel coming to an end. The two companies were the key U.S. complainants over Qualcomm's business model until Apple felt it couldn't rely on Intel's ability to deliver competitive 5G baseband chips in time. Intel still filed an amicus brief in FTC v. Qualcomm at a time when Apple had settled. Apple then bought Intel's baseband chipset division and many related patents. In late 2020, "Apple began the transition from Intel processors to Apple silicon in Mac computers."

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Apple, Intel reject Fortress Investment's criticism that their second amended antitrust complaint lacks plausibility, want to proceed to trial at long last

Intel and Apple demonstrate what perseverance can mean in litigation. They've been trying since 2019 to strike back against Fortress Investment's patent assertion business (which is just one of various fields in which Fortress invests) with an antitrust action in the Northern District of California. Had they not done this, the dispute would have been a one-way street, with Apple and Intel always being on the receiving end of litigation campaign after litigation campaign. Sometimes a good offense is the best defense. So Intel, which was joined by Apple early on, alleged that Fortress and the multitude of patent assertion entities it has funded engaged in anticompetitive conduct.

Fast forward to 2021, and the case is still at the motion-to-dismiss stage. It's already the second amemded complaint. All in all, that it makes it the third version of the joint Apple-Intel complaint, and the fourth version if one includes the original filing Intel made alone. The case got narrower and narrower, and the legal theory at its heart is now "the unlawful mass aggregation of patents, including substitutes, thereby eliminating competitive constraints that existed before the aggregations," as last night's response by Apple and Intel to Fortress's renewed motion to dismiss says (this post continues below the document):

21-06-14 Apple Intel Respon... by Florian Mueller

Let's take a bird's-eye view here. Assuming for the sake of the argument (not in the sense of a prediction) that the court finally lets this version of the complaint go to trial (and on the way there, a lot of work would still have to be done), would this offense be the best defense?

It could make a useful contribution to Intel's and Apple's defensive efforts, and it could serve as a warning to litigation-funding or other companies engaging in patent aggregation. However, the best defense is still to be cleared of infringement. Intel achieved that in April. That was the second of three patent infringement cases by Fortress-funded VLSI Technology against Intel. And in the first case, where a record damages verdict ($2.175 billion) came down in the Western District of Texas, Intel is raising a host of issues with the decision and the way it was reached. There are reasons to believe that Intel will get that verdict vacated or adjusted massively--well before anything could come out of the NorCal antitrust case even in the most optimistic scenario for Intel and Apple.

What about the other scenario, in which Judge Edward Chen would still find the pleadings, fundamentally lacking and wanting? In that case, Intel and Apple would have to take this up with the appeals court. FTC v. Qualcomm is controlling Ninth Circuit law. Apple itself points to it all the time in its App Store antitrust dispute with Epic, as does Fortress in defense against Apple and Intel's antitrust lawsuit. FTC v. Qualcomm is a patent-related antitrust case in which a three-judge panel essentially said, among other things, that if someone overcharges for patents and you can address the problem under patent law (such as by not taking a license and instead defending yourself against an infringement action, which gives you the chance to challenge the economic value of the patents in question), it's not an antitrust issue. However, patent law does not have scope for defenses against "the unlawful mass aggregation of patents, including substitutes, thereby eliminating competitive constraints that existed before the aggregations" (this is the passage I quoted further above). Patent law is not about reinstating competitive constraints. Antitrust law can do that.

The FTC's motion for rehearing en banc against the Qualcomm panel decision failed. That lends that decision more weight. But it doesn't mean that anything to do with patent licensing and assertion is beyond reach for antitrust law. Intel and Apple v. Fortress would be an opportunity for the appeals court to clarify that.

Apple and Intel argue that their case is now, finally, ripe for further proceedings in the trial court. They point to the low bar for a complaint to survive a motion to dismiss (and conversely high bar for such motion to succeed). When a complaint is as detailed as this one is by now, there comes a point at which the issues a defendant can raise are likely more about triable facts than about the pleading standard. Intel and Apple note that the factual allegations on which their theories are based merely have to be plausible, which is more than "possible"--but not a whole lot more. And they say that the complaint's own factual allegations matter, and if Fortress disagreed with those facts, it would have to present its own facts later--at the summary-judgment stage at the earliest.

Judge Chen wanted to see actual anticompetitive effects, but also wanted the two plaintiffs to plead facts according to which those effects are truly caused by the alleged patent aggregation. Apple and Intel point to patents that prior owners, even including litigious ones, did not assert in court. They highlight discrepancies between the valuation of certain patents or portfolios and what some Fortress-funded entities later demanded in damages. One could paraphrase Fortress's position on this as suggesting between the lines that they're simply damn good at what they're doing and identify gems that others fail to see--and/or that they're first-rate patent monetizers. It's not going to be easy for Intel and Apple to prove that aggregation--and not some other factors, such as the aforementioned ones--resulted in price increases. But where we are now, the question is whether Apple and Intel will get their day in court.

As for the agreements between Fortress and other entities, Apple and Intel note that "an anticompetitive agreement is illegal, even if only one party thereto intended an anticompetitive result." In this case, it's about whether Fortress entered into agreements with a certain agenda, not whether both parties did. The other party to any given agreement might have done so for whatever reason.

Technically, there's also a separate motion by one Fortress entity, INVT (Inventergy). Apple and Intel argue that it's based on the court's prior holding concerning standard-essential patents, but the complaint is about non-SEPs.

Before we see the next major development in this California case, I wouldn't be surprised to see some key post-trial decisions in the Western District of Texas (VLSI v. Intel).

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Intel reinforces four post-trial motions to do away with VLSI Technology's $2.2B jury verdict in Western District of Texas patent case

For the time being, the $2.175 patent damages verdict from the first VLSI Technology v. Intel patent trial in the Western District of Texas is still the record holder. But it would be unprecedented for a verdict like that to survive post-trial and appellate proceedings without the slightest adjustment--and even "slight" would be a lot in absolute terms here.

Intel was cleared of infringement in the second VLSI v. Intel trial, and the third one was originally slated for this month, but has been pushed back to December. So the first case is still where the action is.

Last month I commented on Intel's post-trial motions and VLSI's responses. Intel brought four different motions, one of which would do away with about a third of the amount while the other three would either resulted in the verdict being tossed or a new trial being held.

I want to be perfectly honest: I didn't follow the March trial, and I can't claim to have studied the publicly-accessible documents in full detail. So if I express an opinion now on what I believe may happen, it's just the gut feeling of someone who's been watching U.S. patent cases for more than a decade. I'm talking about what instinctively looks to me like it might tip the scales. It might not--or other arguments might be better. But at the end of the second trial I had a hunch that Intel's non-infringement arguments might sway the jury, and they did. Also, we're getting ever close to the appeal now.

Having said that, I really can't imagine the $2.175B verdict would stand. Verdicts have been vacated or substantially adjusted on lesser grounds than some of the arguments Intel makes here. The short-term question is, however, what Judge Alan Albright of the United States District Court for the Western District of Texas decides. He could uphold the verdict, but would then be highly likely to be reversed; he could order a new trial and avoid at least some of the issues; or he could make adjustments as a matter of law. It's not a foregone conclusion that the verdict will be turned into the district court's judgment.

The parties are fighting very hard--what else would anyone expect them to do with so much money at stake?

A good example is this dispute (PDF) over whether the parties should attach proposed findings of fact and conclusions of law only to their initial post-trial motions and the responsive filings--or whether Intel legitimately attached such material to its reply brief (PDF) in support of its motion to hold the '759 patent not to be infringed under the Doctrine of Equivalents. Intel said this was just the same as a rebuttal in a bench trial; VLSI says it should be allowed a sur-reply, or otherwise Intel's reply shouldn't count either.

Right now, I feel the argument most likely (just relatively speaking) to persuade Judge Albright is that the jury relied on non-comparable license agreements the court shouldn't have admitted (and didn't admit in the second trial between the same parties). If the judge agreed with that, he'd merely be consistent, and a new trial would give him the opportunity to fine-tune some other things. Here's Intel's reply brief in support of its Rule 59 motion for a retrial (this post continues below the document):

21-05-28 Intel Riso Rule 59... by Florian Mueller

Fortress-funded VLSI argued in its response to the original Rule 59 motion that it pointed to those other Intel licenses (which apparently were settlements, at least in part) only to rebut what an Intel expert had told the jury about other license deals Intel had struck. Intel now argues that the licenses its expert relied upon were comparable while the others were not. That is something I can't verify, but if I were the judge, this here would really give me pause:

"[T]he Court ruled those agreements were admissible before Mr. Huston [Intel's aforementioned expert] testified." (emphasis in original)

Intel makes other arguments for a retrial, some of which appear to overlap with its argument for reducing the damages award to zero, claiming that VLSI had not presented any damages theory the jury could rely on--that's aggressive and ambitious.

As for Intel's JMOL argument (according to which the court should overrule the jury), its reply brief also makes some interesting points. My feeling is that even if some of them convinced the judge, he might just order a retrial. But I could be wrong. The JMOL arguments will definitely be worth looking at in greater detail if and when this case goes up to the Federal Circuit.

If the judge agreed with Intel's JMOL motion on the patent accounting for two thirds of the damages verdict, that would have a huge impact--and the other patent could be found non-infringed under the Doctrine of Equivalents. The DoE argument that I found pretty good is the first one: the original claim referred to "at least one master device" or "at least one of the plurality of master devices"--but that passage was changed into "a master device." VLSI denies that this was meant to narrow the claim scope. But Intel's contextual arguments seem reasonably strong. The Federal Circuit has pronounced a strong presumption against claim changes at the application stage being just editorial and not having a substantive effect. Intel's reply brief cites to Laitram v. NEC ("difficult to conceive of many situations in which the scope of a rejected claim that became allowable when amended is not substantively changed by the amendment").

The part I can't form an opinion on is Intel's unclean hands argument. The reply brief is so heavily redacted that I really can't figure out where the discussion stands. Based on the previous filings, I had the feeling that some parts of the other post-trial motions were more likely to succeed. Again, I could be off base. But I've often speculated, and my hit rate is not too bad.

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Fortress-funded VLSI Technology fighting to defend $2.175 billion jury verdict over semiconductor patents: post-trial motions

The two VLSI Technology v. Intel patent infringement cases that have been put before juries in the Western District of Texas this year have had two extreme outcomes: after a record verdict over $2.175 billion in March that shocked the technology industry, two other VLSI patents were found not to be infringed in April. A third trial between the two entities is coming up soon.

In either case, the losing party has the right to appeal. Many observers have noted that exorbitant jury verdicts are rarely upheld: they're typically adjusted or overturned. But there is no guarantee, and Intel leaves no stone unturned to attack VLSI's March 2021 win. On April 22, almost simultaneously with the jury verdict in the second case, Intel brought a total of four post-trial motions.

One of the four motions is specific to the '759 patent, for the infringement of which the jury awarded $675 million (a little less than third of the total amount). I've uploaded Intel's related Rule 52 motion and VLSI's opposition to Scribd.

Any single one of the other three motions could singlehandedly reduce Intel's near-term liability vis-à-vis VLSI to zero:

• A comprehensive motion for judgment as a matter of law (JMOL) argues that no reasonable jury could find the two patents-in-suit infringed, or the '759 patent valid, and even if any patent had been both valid and infringed, the damages amount would be zero, arguing that VLSI failed to present a damages theory that would support the jury verdict and waived the right to damages based on any other theory. VLSI obviously opposes this JMOL motion.

• A Rule 52 motion by Intel is based on an unclean-hands theory. That document is heavily redacted, but it appears the arguments are largely structural, describing VLSI financier "Fortress's enforcement strategy [as] itself inequitable" and alleging "unconscionable tactics to enhance VLSI's ability to enforce the patents-in-suit." Those allegations aim not only at Fortress/VLSI but also at NXP, which used to own those patents for some time. VLSI opposes this motion saying that it dod not engage in any particularly "egregious misconduct."

  Intel is not alone to criticize Fortress over its patent monetization strategies: first alone, and then together with Apple, Intel brought an antitrust action in the Northern District of California. Currently, Fortress is seeking the dismissal of the (substantially narrowed) second amended complaint.

  In one of its filings, VLSI argues that Intel's licensing strategies can be accurately described as "hold-out" (though VLSI denies it even said so during the trial). So there are accusations flying both ways.

• With a particular focus on (in)admissible evidence relating to VLSI's damages claims, Intel is also asking Judge Alan Albright to vacate the verdict and order a new trial. VLSI is pretty willing to go to court against Intel again, above all in the Western District of Texas, but wants to do so only over other patents, and obviously opposes a retrial in the $2.175 billion case.

  While post-trial motions of this kind are generally more of an effort to preserve the record for an appeal (and that appeal is going to become one of the most interesting ones in patent litigation history), the part about admissible evidence is interesting even before the trial court has rendered a final (though appealable) judgment. That's because Judge Albright didn't admit "evidence of big payouts Intel has made to settle other litigation" last time (April trial), as Law.com's Scott Graham reported. Law.com also noted that "Intel said it had been careful not to open the door to such evidence this time around." VLSI's opposition brief to this motion for a retrial indeed argues that Intel itself, by talking about what was usually paid for semiconductor patent licenses, justified VLSI's reference (in a rebuttal and not in its initial presentation) to settlements of other cases.

  Even if Intel might have been more careful at the second trial to keep the door closed to such evidence, I could still easily imagine the Federal Circuit setting aside the verdict in the first case simply because those other licenses weren't relevant, meaning that they might have confused the jury to an extent that outweighted any probative value.

  If Judge Albright granted a new trial, just like one of his colleagues in the Eastern District recently did, he would eliminate the risk of being overturned. He, too, will know that the $2.175 billion amount is unlikely to stand anyway.

  VLSI argues that the jury was free to pick any amount between the two parties' positions, and that no one knows whether jurors really had those other (unrelated) license agreements in mind when they decided on the amount. But that likely won't be the standard that the Federal Circuit is going to apply.

This case is still worth watching, and may remain for some time.

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Fortress Investment and subsidiaries seek dismissal of Apple and Intel's second amended antitrust complaint over patent aggregation

Not every long story is neverending: this summer we're finally going to know whether Apple and Intel's antitrust complaint against Fortress Investment in the Norther District of California over abusive patent aggregation will be taken to trial--or whether the plaintiffs have to appeal a dismissal with prejudice. Last night, Fortress and various non-practicing entities (NPEs) it funded brought their motion to dismiss and strike the Second Amended Complaint (a 161-page "book" that is technically already the fourth complaint, as Intel originally brought one, which it withdrew in order to refile with Apple).

Just last week, Intel defended itself against Fortress-funded VLSI Technology's second patent infringement complaint in the Western District of Texas, as a jury held neither of the patents-in-suit to be infringed. VLSI had won a $2.175 billion verdict in the first case in early March. More recently, I found out about a bunch of VoiceAge v. Apple cases pending in Munich, though the trial dates in those have been vacated due to the pandemic. VoiceAge EVS is another Fortress-funded NPE.

At this stage, the case is about patent aggregation: Apple and Intel allege Fortress made targeted purchases for the purpose of amassing a portfolio outside of which one can't find alternative technologies. The complaint has come a long way from a diversity of partly very broad and general assertions to its current degree of specificity. But, guess what, Fortress is basically telling Apple and Intel that their best isn't good enough. Allegedly the Second Amended Complaint "repeats the same errors" as the two prior vesions.

This is the motion to dismiss and strike (this post continues below the document):

21-04-26 Fortress VLSI Moti... by Florian Mueller

INVT and Inventergy filed a supplemental memorandum (this post continues below the document):

21-04-26 INVT Supplemental ... by Florian Mueller

As always in antitrust litigation, market definition is key. Fortress says Apple and Intel's new definitions aren't better: the patents are the same, and it's still about "technical fields" (not "specific functions"). Fortress furthermore argues some of the patents "do not fit [Apple and Intel's] new market definitions."

The next step is to establish market power in a given market. Here, Fortress criticizes that the complaint "does not identify a single price—much less a 'supracompetitive' one—that anyone has ever paid to license any of Defendants’ patents" (just damages demands). Fortress furthermore says the complaint doesn't plead aggregation in the sense of having acquired "all or even most of the 'substitutes' in the alleged markets, or that Defendants have aggregated the most important substitutes—i.e., the 'crown jewels'—in any of the markets." And Fortress argues that makret power alone wouldn't suffice: reduced output is allegedly an indispensable additional requirement in the Ninth Circuit.

With respect to antitrust injury, Fortress notes that Apple and Intel "still do not allege that they ever paid for a single license" to the patents at issue.

A conspiracy across those entities (Sherman Act Section 1) is denied because "every allegedly improper transaction is only between Fortress or Fortress Credit and a single other Defendant" but not among the group of companies as a whole.

In the headline of my report on the Second Amended Complaint, I mentioned the alleged Generating Alerts Based on Blood Oxygen Level Market. The motion to dismiss argues that some of the patents Apple and Intel listed in that context "have nothing to do with measuring blood oxygen." At first sight, a couple of examples Fortress provides may indeed be unrelated, such as U.S. Patent No. 7,690,556 on a "step counter accounting for incline": in the patent document, I couldn't find the word "oxygen" once, and the sole occurrence of "blood" relates to other eHealth functionality than the one covered by the patent. While I did get the impression that the Second Amended Complaint defined reasonably narrow markets, it may very well be that a few patents have been miscategorized.

Fortress's arguments get more technical with respect whether certain patents are in the same market. If they were, Fortress argues, a pice change for one would have to cause a change in demand for another. I guess Apple and Intel will argue that the aggregation of a set of patents may simply mean there are no substitutes left, which Fortress obviously denies.

Maybe you wondered why it's a "motion to dismiss and strike": Fortress asks the court to strike an Unfair Competition Law claim under California's anti-SLAPP statute, as this would entitled Fortress to a fee award.

Some of the points Fortress makes in its motion may not serve as a basis for dismissal, but go to the merits. I guess that's what Apple and Intel are going to argue in their opposition brief on June 14.

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Intel doesn't infringe VLSI patents-in-suit: jury verdict in second VLSI v. Intel case (Western District of Texas)

Reuters reports--as do other media--that a jury in Waco (Western District of Texas) has found for Intel. According to the verdict, which I haven't found on the electronic docket yet, the semiconductor company infringes neither of the two patents asserted by VLSI Technology, a non-practicing entity funded by Fortress Investment.

In early March, Intel had lost a trial over two other VLSI patents, and the damages award amounted to $2.175 billion.

There'll be a third VLSI v. Intel trial in June, and should jurors or their friends or relatives inform themselves on the Internet of the wider dispute, the picture will be more favorable to Intel than last time.

This outcome is in line with my observations. I noted the burden of proof on infringement and that there were reasons that might very lead a jury to doubt the infringement allegations. I wrote: "I think Intel may avoid an infringement finding, but even if it happened, I can't imagine it would be another billion-dollar amount."

Just like Intel is appealing the March verdict, VLSI may appeal the April decision.

Law.com's Scott Graham reported on an interesting change regarding damages-related evidence. While this jury never reached the point of a damages determination, we may see somewhat more rational damages awards in Waco going forward. That's of the utmost importance not only to Intel but also to numerous other technology companies with a presence in that district.

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Waco jury in VLSI v. Intel starts deliberation: Intel vehemently denies infringement and attacks $3 billion damages claim

In my previous post on the VLSI v. Intel patent trial in the Western District of Texas, I asked the question of whether the jury will be persuaded that, should it find an infringement, Intel would have paid a $3 billion royalty on two patents that are part of a portfolio that was at some point valued at $7 million. The answer is just a question of days, if not hours: counsel for both parties--Irell & Manella's Morgan Chu and WilmerHale's Bill Lee--just delivered closing argument.

A week ago, Intel's opening argument emphasized the semiconductor company's independent research and development. VLSI's lawyer told the jury that this is irrelevant under patent law: you can infringe whether or not you know the patent. Mr. Chu called this argument "a red herring" and "a signpost in the desert"--but the strict-liability nature of patent law is separate from whether jurors will feel that Intel has committed a wrongdoing it needs to be penalized for, or whether there is, at best, an accidential infringement at issue.

The "signpost in the desert" was not only the "post" metaphor: Mr. Lee compared VLSI's efforts to allege an infringement despite a patent having been narrowed on reexamination as "moving the fencepost" in order to develop an infringement theory regardless.

Most of the argument was very technical, and counsel for both parties tried to put testimony, particularly expert testimony, into a particular context. For example, a point that Mr. Lee made and which might resonate with the jury was that VLSI got an Intel witness to confirm that a page from a document was consistent with one of VSLI's arguments, but the headline of the document showed that it was just some general technical description and not specific to the accused products. What I consider even more likely to bear weight with jurors is an Intel position on claim construction: Mr. Lee said that this morning he "walked from [his] hotel to the court": "'from' means 'from', 'to' means 'to'." Those kinds of non-infringement arguments appeal to common sense. By comparison, VLSI's lawyer's explanations of the meaning of "when" were much more technical--that was necessary in the context, but it just wasn't as easy to understand as Intel's interpretation of "from" and "to." VLSI's explanation of "determinism" was funny: if you boil an egg for 10 minutes, then you always know what the result is going to be like.

Yet another point that jurors can easily understand was that the companies who previously owned these patents had lots of lawyers, lots of licensing executives, and lots of engineers, but didn't decide to sue Intel.

Throughout the trial, from opening to closing, Mr. Chu sounded like someone who was really tired of hearing Intel's non-infringement and damages-related arguments. Mr. Lee's role was that of a voice of reason. What he said and the way he said it described this case as one in which a company that had just been created to acquire those patents and sue Intel was looking for a payout orders of magnitude greater than the purchasing price of the patents.

Intel's lawyer may also have managed to persuade jurors that Intel's licensing expert, who worked on microprocessor patent licensing for decades while at IBM, had a stronger background than VSLI's royalties expert.

Mr. Lee pointed to testimony according to which Intel would have generated the relevant sales anyway, with or without the alleged patent infringement.

Interestingly, VSLI's lawyer changed his tone a bit during the initial part of his rebuttal today. Mr. Chu sounded concerned that some of Intel's defensive arguments could really get traction. He started his rebuttal saying that Intel made it sound like VSLI accused Intel's witnesses of being liars ("liar is a schoolyard term"), but tried to put this into perspective. As he went on, he sought to show his frustration (over Intel's arguments allegedly not making sense) to the jury.

Mr. Chu criticized Intel's invalidity contentions by saying Intel came with one prior art reference, then added another, and yet another. As a patent litigation watcher I've seen countless attacks on the validity of a patent that argue a patent is invalid ofter a single reference, but if one disagreed, the combination of two--or maybe also three or more--references would do the job. There are also many cases in which defendants will start with a combination of two or three references. This is case-specific. I don't disagree with Mr. Chu that a combination of seven references is a lot, but there's no formal legal limit on the number of elements of a prior art combination. Mr. Chu also stressed that those prior art combinations involve patents from major corporations, and argues this weighs against obviousness.

Juries rarely invalidate patents, even though most patents aren't valid as granted. In this jury trial, the emphasis was also clearly more on (non-)infringement and on the hypothetical damages.

In his closing argument, Mr. Chu reminded jurors of NXP receiving a share of what VLSI may be awarded. That is a double-edged sword: on the one hand, it addresses Intel's "VSLI doesn't invent or make products" argument, but it may also reduce the witness of any testimony from NXP, and jurors may indeed ask themselves why NXP didn't bring an action against Intel itself while it owned those patents.

Toward the end, Mr. Chu did his best to deliver a passionate, patriotic argument about the United States having been the leaders in technology for more than 200 years "in every facet of life." And he thanked the jury for paying attention to both sides: "You've been fabulous." That was an emotional closing, but the question for the jury to decide is not who was most grateful for their attention. Now the jury will have to weigh what it heard, after getting a late lunch, and it will have to take into consideration that VLSI bears the burden of proof on infringement. I think Intel may avoid an infringement finding, but even if it happened, I can't imagine it would be another billion-dollar amount. The history of those patents, their age, their prior owners, their past valuation--that's a combination of arguments, any single one of which has the potential dissuade a jury from rendering a ginormous damages verdict.

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VLSI Technology v. Intel: patents from a portfolio valued at $7 million allegedly created $3 billion in value--will the jury buy that?

Another post, another dispute involving a non-practicing entity (NPE) financed by Fortress Investment. The previous post was about a couple of additional VoiceAge EVS v. Apple cases I just learned about. While Munich is the world's #1 patent injunction venue, at least for the tech sector, the Western District of Texas is where parties go to seek Texas-size damage awards, such as in the second VLSI Technology v. Intel trial in Waco before Judge Alan Albright. That trial will continue on Monday.

It seems to me that many technology industry and patent professionals have sympathy for Intel because it already suffered so much last month when the first VLSI trial ended in a $2.2 billion damages award. At the same time, hardly anyone expects that first VLSI award to be upheld, simply because appeals courts typically reverse such decisions (sometimes reducing damages to zero by finding no infringement or holding the asserted patents invalid). For example, just yesterday Apple--Intel's ally against Fortress Investment--convinced a Texas judge (Eastern District in that case) to order a retrial, setting aside a $506 million jury verdict. The only thing that is unusual about that decision in Optis Wireless v. Apple is that a judge from a plaintiff-friendly federal district in Texas did so. Most of the time, those decisions are made by the United States Court of Appeals for the Federal Circuit.

On Monday, the parties' lawyers delivered their opening arguments. In the meantime I have occasionally dialed in to listen to the proceedings. What I found very helpful and informative is a series of podcasts by Winston & Strawn's WacoWatch blog.

I learned from the podcast that VLSI and Intel both act similarly to their previous courtroom clash, but obviously a number of facts are specific to this case. Different patents, different issues, and an even larger damages claim: $3 billion.

Jury trials are extremely hard to predict. A lot depends on whom (whose lawyers, whose witnesses) jurors trust. Patent cases are tough for juries though they are fun for some judges. Judge Albright is so eager to attract patent cases to Waco that he makes it very hard for companies like Intel to defend themselves. On Twitter, Mike Masnick (who also comments on tech law) pointed out that Judge Albright brags about the many patent cases he gets to preside over:

He now *brags* in his bio that more than 20% of all patent cases in the country go to him. pic.twitter.com/qMewsRLIpr

— Mike Masnick (@mmasnick) April 13, 2021

Mike Masnick doesn#t mince words. On Tuesday, he published an article about Judge Albright with the following title: Patent Loving Judge Keeps Pissing Off Patent Appeals Court, But Doesn't Seem To Care Very Much (I'm just quoting--not endorsing--that language)

Jury duty is anything but rewarding, and jurors are really out of luck when they are selected for a patent case. Every time Judge Albright has fun, jurors lose precious time, for which they get paid so little it's not even worth mentioning. A waste of time for jurors, whether or not their verdicts get overturned, but Judge Albright thoroughly enjoys those trials...

Intel has non-infringement as well as invalidity arguments, and VLSI can't even count on the inventors of the patents-in-suit. The fact that the claimed inventions were originally made for an entirely different purpose may make jurors skeptical of the allegation that Intel started infringing those patents a decade later.

Not because I would predict it to happen, but because it might, the jury may have to think about the damages figure should it find one or both of these patents to be valid and infringed. VLSI's damages expert arrived at a $3 billion amount. He basically concluded that the infringing products generated $4 billion, and then apportioned less than a quarter of that total value to Intel's own work. Intel has tried--and will continue to try on Monday--to convince the jury that its own engineers created the products in question. If I were on the jury, I definitely wouldn't conclude that almost 80% of the value is in those patents. Intel pointed out that one of the temporary owners of those patents valued that entire Freescale portfolio (which includes the two patents VLSI is asserting now, but also many others) at $7 million.

Just like in the previous VLSI trial, the plaintiff's damages expert arrived at a huge claim based on what is called hedonic regression. Intel's lead counsel, WilmerHale's Bill Lee, asked VLSI's damages expert a number of questions relating to the Georgia-Pacific factors, a framework for reasonable royalty-type patent damages determinations that isn't absolutely mandatory, but it's the safest approach with a view to appeals. It's possible that the jury itself will attach importance to certain Georgia-Pacific factors. If not, the Federal Circuit might hold that Intel's Daubert motion had merit.

Having watched how some other U.S. district courts handle patent infringement cases, I have serious doubt that VLSI would have been cleared by a judge to present its $3 billion claim to a jury in, for example, the Northern District of California.

For Intel, failure is not an option. For VLSI, this here is a gamble where the cost of suing Intel is a tiny fraction of the potential reward. I don't mean to doubt that Fortress is very good at what it does, and my commentary here on VoiceAge EVS's cases shows that I don't generally discount anything Fortress does--one has to look at the issues dispute by dispute, case by case. But the prior owners of the VLSI v. Intel patents-in-suit were also very sophisticated organizations who were prepared to enforce their intellectual property rights through litigation. They didn't sue Intel, much less did they believe Intel owed them billions.

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Two more VoiceAge EVS v. Apple patent infringement cases pending in Munich

On Tuesday I listed a number of standard-essential patent (SEP) infringement cases brought by VoiceAge EVS against Apple, Lenovo, Motorola Mobility, and Nokia trademark licensee HMD in Munich. Two of the patents-in-suit have been asserted against all those parties, but there are also three cases against Apple over different patents. Those three cases will all be decided by the 21st Civil Chamber (Presiding Judge: Tobias Pichlmaier).

I had already mentioned that a first hearing in case no. 21 O 13503/20 would take place on April 28 unless the COVID pandemic necessitates a postponement. I've meanwhile learned from the court that the patent-in-suit in that case is EP2707687 on a "transform-domain codeblock in a CELP coder and decoder." CELP stands for code-excited linear prediction, a linear predictive speech coding algorithm.

Case no. 21 O 13505/20 had an even earlier first-hearing date: April 21. This one may already have been pushed back, but I will try to find out again next week. In that case, VoiceAge EVS is asserting EP2162880 on a "method and device for estimating the tonality of a sound signal."

The fifth patent over which VoiceAge EVS is suing Apple in Munich is EP1509903 on a "method and device for efficient frame erasure concealment in predictive based speech codecs." The case no. is 21 O 13504/20, and the court scheduled a hearing for May 12.

VoiceAge EVS is also enforcing patents in the United States, such as against Xiaomi. According to an RPX Insight report, VoiceAge faces challenges to its standing in its U.S. cases. That's just a non-issue in Munich.

VoiceAge EVS generally appears better and stronger than Uniloc, which is the most infamous patent licensing firm funded by Fortress Investment because it countless complaints.

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Fortress-funded VoiceAge suing Apple, Lenovo, Motorola Mobility, HMD in Munich over standard-essential patents: next hearing scheduled for April 28 (Apple)

Intel is currently defending itself against another case brought by a Fortress-funded non-practicing entity (NPE) in the Western District of Texas, and last month the chipset maker filed a second amended antitrust complaint against Fortress in the Northern District of California. There's one particular Fortress entity that brought (literally) dozens of patent infringement complaints against Apple: Uniloc, whose former CEO is now running WSOU (doing business as Brazos), an entity that brought about 200 patent lawsuits last year in the U.S. alone (plus an unknown but likely staggering number in other jurisdictions). Whatever policy positions I've expressed on the NPE business model doesn't prevent me from recognizing that Fortress Investment has financed a number of different NPEs, and they aren't all like Uniloc.

I've done some research on NPE activity in Germany, and found out that VoiceAge EVS--which has offices in Newport Beach as well as Ratingen (near Dusseldorf)--is a big fan of the Munich I Regional Court (Landgericht München I). Munich has become the best forum choice for patent plaintiffs seeking injunctions.

The patents VoiceAge is asserting in Munich are

• EP2102619 on a "method and device for coding transition frames in speech signals" and

• EP3132443 on "methods, encoder and decoder for predictive encoding and decoding of sound signals upon transition between frames having different sampling rates."

Both have been declared essential to 3GPP TS (technical specification) 26.445, Codec for Enhanced Voice Services (EVS) (thus the "EVS" at the end of VoiceAge's company name).

Last June, the Munich court held an early first hearing in two cases (case nos. 7 O 14091/19 and 7 O 15350/19) against HMD, a company that makes phones with a Nokia trademark license (but is otherwise independent from Nokia). Rumor in the German patent litigation community has it that it went pretty well for VoiceAge. The second hearing--the actual trial--will be held on June 24. HMD has raised a FRAND defense.

On the same day, the court's 7th Civil Chamber (Presiding Judge: Dr. Matthias Zigann) will also hear VoiceAge's cases over the same patents against Apple, Lenovo, and Motorola Mobility (which Lenovo acquired from Google). The case numbers are 7 O 8369/20, 7 O 11111/20, 7 O 7366/20, 7 O 8367/20, 7 O 10318/20, and 7 O 8368/20).

The court's 21st Civil Chamber (Presiding Judge: Tobias Pichlmaier) scheduled an early first hearing in a VoiceAge v. Apple case (case no. 21 O 13503/20). It remains to be seen whether that hearing can be held. The Munich court postponed at least one other case scheduled for the week before that VoiceAge hearing (as you might have guessed, due to the pandemic). Whether it is responsible to go forward with patent hearings and trials depends on a number of factors. I'm far more concerned about automotive patent cases like Nokia v. Daimler, as they typically involve numerous suppliers and really have the potential to become superspreader events. If the room is large enough, ventilation is ensured, and people have to wear N95 masks, a hearing like VoiceAge EVS v. Apple might be possible.

Wildanger represents VoiceAge in Germany (see Juve Patent). I heard that Freshfields Bruckhaus Deringer represents Apple (Freshfields is Apple's go-to patent litigation firm in Germany).

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Intel emphasizes its independent research and development in second VLSI Technology v. Intel patent trial in Western District of Texas

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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