Andrew Thompson, Partner, EIPVLSI Technology LLC has agreed to dismiss all claims against Intel Corporation in a patent case before the Delaware District Court in the US. The two companies made a joint filing on 27 December outlining their intentions to abandon the action. As well as agreeing to dismiss all claims, VLSI has submitted to a covenant not to sue Intel, its suppliers or its customers in relation to the patents included in the action. The parties will not exchange any money and will bear their own costs.

The decision to quit the case comes in the wake of the Delaware Court’s chief judge, Colm Connolly, having issued controversial standing orders requiring litigants to reveal the identity of their ultimate owners, and the involvement of litigation funders. VLSI is backed by an investment company and has previously told Judge Connolly that being restricted by confidentiality agreements, it would not be possible to reveal its ultimate owners.

Connolly took over the position of Chief Judge from Leonard Stark, who was elevated to the Federal Circuit in March 2022. Judge Stark had one of the busiest patent dockets in the US. It has been speculated that the standing orders were, in part at least, to reduce the court’s workload. Delaware is home to many corporations, including so called Non-Practising Entities (NPEs) such as VLSI. NPEs often have ownership structures in which the identities of the ultimate owners are protected by confidentiality agreements. It seems likely that many NPEs will wish to avoid Judge Connolly’s courtroom to avoid being the subject of these standing orders.

In two other actions in Delaware involving other parties, patent owners have filed petitions with the Federal Circuit requesting that Judge Connolly’s standing orders shouldn’t be allowed. In the VLSI case Connolly had postponed a hearing to hear the owner-identification issue, originally set for December, pending the outcome of the Federal Circuit petitions.

Most other courts in the US do not have strict requirements to declare ownership and funding arrangements. For example, in June 2022, Judge Gilstrap from the Eastern District of Texas denied a motion relating to discovery of litigation funding arrangements. He indicated that the issues weren’t relevant to that case.

These issues can cut both ways.  In a recent decision, the head of the USPTO, Kathi Vidal, sanctioned OpenSky Industries LLC for trying to extract cash from VLSI and Intel as part of a Patent Trial and Appeal Board (PTAB) review of the VLSI patents. Vidal took OpenSky to task for its failure to respond to her requests for details of OpenSky’s backers.

This places increased focus on choice of venue and the use of declaratory judgment (DJ) actions in the US. This is especially relevant for NPEs who may not be able to disclose their ultimate owners. While it may be possible for NPEs to assert their patents in other jurisdictions, patent owners might consider their patents to be at threat of being challenged by venue transfer, jurisdiction or DJ actions in Delaware. If the Federal Circuit supports Connolly’s orders, NPEs will have to think carefully about whether they wish to remain registered in Delaware.

The Delaware action is part of a wider dispute between VLSI and Intel which has seen VLSI bring patent infringement claims in California, Texas and Delaware. VLSI has been successful in two actions in Texas, with juries there awarding VLSI over $3 billion. Intel has taken the first of these to the Federal Circuit, having filed its opening brief in September 2022. Intel has also challenged several of the patents in question in front of the PTAB of the USPTO.

The US patents suit are: 6,212,633; 7,246,027; 7,247,552; 7,523,331; and 8,081,026. These are various former NXP properties that relate to semiconductor technology. The patents cover technology such as power saving in integrated circuits and semiconductor packaging.

Written by Andrew Thompson, Partner, EIP. Co-authored by Peter Scull, Registered US Patent Attorney in Denver, CO | EIP.



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