A Waco jury on Wednesday ruled that Intel Corp. did not infringe on two of VLSI’s patents, sending the Fortress Investments-owned company home with nothing when it had asked for billions during a seven-day trial.
But in a victory for VLSI, the jury also declined to invalidate VLSI’s ’187 and ’522 patents, which both relate to microprocessor technology.
Wednesday’s verdict marks an even-set split between VLSI and Intel in what will become a three-trial legal battle. An earlier jury rendered a historical $2.175 billion verdict in favor of VLSI last month.
They will face off for their tiebreaker — a third trial — at a later date.
The verdict also gives defense wins a 3-1 lead against plaintiff wins for the four patent infringement jury trials that U.S. District Judge Alan Albright has presided over since taking the bench in the Western District of Texas, currently the hottest venue in the country for patent suits.
The other two defense verdicts were in favor of streaming device company Roku, which scored its latest win in Judge Albright’s court earlier this month.
Morgan Chu from Irell & Manella led the legal team for VLSI and William Lee of WilmerHale represented Intel. Neither Chu nor Fortress Investments immediately returned requests for comment.
In a written statement, an Intel spokesperson said Intel is “pleased that the jury rejected VLSI’s meritless claims that Intel’s cutting-edge processors infringe on expired patents of MP3 player technology.
“VLSI is a shell company created by Fortress, a Softbank-owned hedge fund, for the sole purpose of extracting billions from innovators like Intel,” the statement continued. “Intel is an American innovator and manufacturer with more than 50,000 employees in the U.S. and factories in Oregon, Arizona and New Mexico. Further U.S. patent system reform is urgently needed to prevent such ‘litigation investors’ and their shell companies from using low-quality purchased patents to extract exorbitant damages from productive American businesses, a process that stifles innovation, threatens manufacturing jobs, and harms the American economy, consumers and national security.”
During his closing argument late Tuesday morning, Lee was highly critical of the damages model used by VLSI’s expert, Dr. Ryan Sullivan, to generate a $3 billion claim against Intel. Lee said that the hedonic regression analysis used by Sullivan, who was also VLSI’s expert at the first trial, is one that “no one else has ever used.”
“Does that sound like a reasonable way to calculate patent damages? It does not,” Lee said to the jury. “Instead, it is a way to come up with a really huge number that is objectively unreasonable. And as Dr. Sullivan said: Objectively unreasonable damages harm the economy, they harm the country and are a tax on innovation.”
Chu, on the other hand, tried to appeal to jurors about the United States’ history as being “the leader in the world of technology” and said that a verdict that was even “a couple million dollars” would just be a slap on the wrist for a “large, multinational corporation” like Intel.
“It will send the signal throughout the world to companies outside the U.S. who want to take U.S. technology that you can come and take it, put it into your product and the worst that will happen is they’ll catch up to you later.”
The jury spent about a full workday deliberating over the course of two days — a much longer deliberation than the three-and-a-half hours last month’s jury spent deliberating before returning its verdict.
How Intel Won: Legal Experts Weigh In
Charles Baker, an IP partner in Locke Lord’s Houston and Austin offices who tuned into opening statements and closing arguments, said longer deliberation times often translate to a defense patent verdict both in WDTX as well as in the Eastern District of Texas.
In those openings and closings, Baker said Intel seemed to be more “aggressive in presenting their side of the argument” this time around, including “spending more time attacking infringement and less time belittling VLSI.
“And this time round Intel spent less time talking about the credibility of the witnesses and focused more on common sense,” he said.
Like the first trial, both Intel and VLSI — particularly VLSI — spent time talking about the credibility of the witnesses during closing arguments. But this time, it took a different tone.
After Chu had dissected what his side believed to be inconsistencies with Intel’s witnesses, Lee spent part of his closing argument accusing VLSI of calling Intel a liar.
“I promised I’d never call someone a liar,” Lee said to the jury. “We don’t need to call someone a liar to win. We can take every witness as straightforward, honest folks. But if you’re going to call someone a liar, you ought to come and stand behind your accusation.”
Winston & Strawn partner Danielle Williams, who followed the trial every day via Zoom, said the jury’s verdict suggests that they found Intel’s position persuasive.
“Intel [focused] on the importance of the circumstances of trial and the reasonable likelihood every witness honored their oath to tell the truth,” she said. “Intel also pointed out that to conclude every Intel witness was biased because they testified for Intel would also mean the inventors were biased because they testified for VLSI. The verdict suggests the jury did not believe the Intel witnesses were biased, inconsistent or lying.
“While we may have heard criticisms of Intel’s case, in particular, the cross-examination of VLSI’s first two witnesses by Texas lawyers and Intel’s non-infringement and invalidity expert on the ‘522 patent, the only woman witness at either side of the two trials,” Williams added, “the jury’s verdict suggests the cross-examination was not fatal and confirms Prof. [Alyssa] Apsel’s testimony on non-infringement was persuasive.”
Jackson Walker partner Wasif Qureshi, who led Roku’s latest defense win in Judge Albright’s court, said he followed the second VLSI-Intel trial closely via Zoom. He said he believes three factors contributed to Intel’s success this time around.
First: “Intel made sure that their technical expert’s testimony was not inconsistent with their engineers’, which was a problem for them in the first trial,” he said. Second: “I think Intel did a better job of crossing VLSI’s technical expert in a way that the jury understood.” Third: “Intel was more aggressive in trying to make sure that their large licensing settlement agreement numbers didn’t come out before the jury.”
Winston & Strawn partner Mike Tomasulo, who attended the trial in-person, agreed that Intel did a better job this time around with presenting its case in a more digestible manner while questioning the technical experts — more specifically, the non-infringement experts.
“For reach patent, Intel focused on one main claim limitation and then had just one back-up limitation that it said was also missing,” Tomasulo said. “The jury was able to listen to each expert, weigh credibility and evaluate the evidence. I think in all patent cases, it is important to honor the jury’s role by making your case as straightforward and streamlined as possible.”
Asked if he thought the 3:1 ratio of defense to plaintiff wins means that Waco is officially a defense-friendly verdict, Qureshi said it’s too soon to tell.
“I don’t think the verdict in the second Intel trial will necessarily slow down filings in Judge Albright’s court, but if another 10 trials happen and the defendants win a majority of those, then I think plaintiffs may want to think twice,” he said.
“I think the way Judge Albright sets up his rules and procedures is attractive to plaintiffs,” Qureshi added.
On the other hand: “I think what we learned in our trial and what we’ve seen from the other trials is that the jury pool is fairly technically knowledgable,” he said. “It’s a plus for defendants because the defendants can articulate non-infringement defenses and the jury understands them.”