PTAB Rules VLSI Patent Unpatentable

The Patent Trial and Appeal Board (PTAB) recently ruled that an important VLSI patent was unpatentable. The patent at issue was responsible for $1.5 billion of a $2.2 billion Texas jury verdict VLSI won in 2021 against Intel for patent infringement. This was one of the largest patent infringement verdicts in history at the time.

Intel appealed the verdict to the Federal Circuit, which handles appeals in patent cases, arguing that its products didn’t infringe and that the trial was tainted by inadmissible evidence. Intel has now informed the Federal Circuit about the invalidated patent.

VLSI is a patent licensing entity owned by investment funds managed by SoftBank Group Corp. subsidiary Fortress Investment Group. It acquired the patents in the 2021 case from NXP Semiconductors.

Intel and VLSI have been engaged in a patent war for several years, with each side winning a share of the battles.

In another trial in the same Texas court Intel was found not to infringe other VLSI patents. VLSI had claimed $3 billion in damages in that case.

In yet a third trial in the same Texas court, Intel was found to have infringed a VLSI patent and ordered to pay $949 million in damages. Post-trial motions are pending.

A case between the companies in the Northern District of California is scheduled for trial next year.

The war has been fraught with allegations of skullduggery and abuse of the legal system.

In December, US Patent and Trademark Office (USPTO) Director Kathi Vidal dismissed Patent Quality Assurance, LLC (PQA) and OpenSky Industries from their respective challenges of VLSI patents. In October, Director Vidal issued a precedential ruling holding that OpenSky abused the inter partes review (IPR) process in its conduct with VLSI and sanctioned OpenSky by excluding it from the IPR proceedings.

As the USPTO explains,

Inter partes review is a trial proceeding conducted at the [PTAB] to review the patentability of one or more claims in a patent only on a ground that could be raised under §§ 102 or 103, and only on the basis of prior art consisting of patents or printed publications. For first-inventor-to-file patents, inter partes review process begins with a third party (a person who is not the owner of the patent) filing a petition after the later of either: (1) 9 months after the grant of the patent or issuance of a reissue patent; or (2) if a post grant review is instituted, the termination of the post grant review.

35 U.S. Code § 102 sets forth the “novelty” condition for patentability. 35 U.S. Code § 103 sets forth the “non-obviousness” condition for patentability.

Novelty and non-obviousness are both determined in light of prior art – any evidence that an invention is already known, such as prior patents and patent applications, as well as products and publications.

To be patentable, an invention must not be “obvious” to “a person having ordinary skill in the art” (abbreviated PHOSITA) -- a hypothetical person with the normal skills and knowledge in a particular technical field.

Vidal determined that the Open Sky IPR petitions were filed in an attempt to extort VLSI and Intel, rather than a genuine patent challenge.

PQA and OpenSky were formed after the 2021 Texas jury verdict and raised patent invalidity arguments that mirrored those raised by Intel in that case.

In the latest PTAB decision, PQA filed a petition requesting institution of inter partes review of certain claims of U.S. Patent No. 7,523,373 B2, owned by VLSI Technology LLC.

The ’373 patent is titled Minimum Memory Operating Voltage Technique. It describes

a method of determining the minimum operating voltage for integrated-circuit memory, storing the value of that voltage in nonvolatile memory, and using the value to determine when an alternative power-supply voltage may be switched to the memory or ensuring that the minimum operating voltage is otherwise met.

As the PTAB explains,

The ’373 patent describes that various thresholds may be used for switching the memory’s operating voltage from VDDlogic to VDDmem and that additional voltages may be provided to the memory using an additional voltage regulator…. For example, power supply selector 21 may switch the memory’s power supply based on the minimum memory operating voltage required for reads, the minimum operating voltage required for writes, the minimum data retention voltage, or variations of those that depend on the memory’s operating condition.

Intel Corporation also filed a petition for inter partes review and a Motion for Joinder, which the PTAB granted.

In May, the PTAB had rejected VLSI’s attempt to have Intel removed from the IPR.

VLSI has argued that Intel already had lost the opportunity to challenge the patent earlier.

In its latest decision, the PTAB held that every claim of VLSI’s patent was obvious in light of earlier patents and patent applications.

The PTAB rejected VLSI's argument that the jury verdict against Intel showed that the claimed invention wasn’t obvious because it was commercially successful. The PTAB said that VLSI waived that argument, and that the Intel products at issue in the 2021 trial had other features beyond those covered by the patent.

The other patent responsible for the 2021 verdict was invalidated in May.

In a press release, Intel referred to the VLSI patents as “low-quality.”

As Bloomberg Law reported, Intel

said it was “pleased” with the ruling but also sounded frustration that its initial petitions challenging the two patents were denied on a discretionary basis under a PTAB rule, called Fintiv, that allowed the board to dispatch the challenges based on factors like the expected trial date in parallel district court cases.

Because the multi-factor Fintiv framework emphasized the speed of parallel litigation, companies that were sued in Waco, such as Intel, found it particularly tough to get PTAB review.

Intel stated that

there remain a handful of patents being asserted in abusive patent litigation where the Patent Office issued similar ‘discretionary denials’ without even considering petitioners’ invalidity submissions.”

VLSI can appeal the PTAB’s decision to the Federal Circuit.