VLSI Technology LLC’s third Texas patent lawsuit against
A jury in Austin, Texas, awarded VLSI $948 million for infringement of a VLSI microchip patent. In the process, jurors rejected Intel’s argument that VLSI’s US Patent No. 7,606,983 was invalid because its innovation was obvious based on patents issued before it.
Intel tried to put that argument before a patent judge, filing a challenge with the Patent Trial and Appeal Board in February 2020. By then, VLSI had sued the company in Waco, Texas, where Judge
But the PTAB declined to start a proceeding, applying instead the controversial Fintiv rule established during the tenure of former US Patent and Trademark Office director Andrei Inacu, which allowed patent challenges to be denied by the PTAB if parallel infringement cases in federal courts were sufficiently far along.
“Juries don’t provide meaningful validity review of patents for complex technologies, and when we cut off access to PTAB proceedings, we allow invalid patents to be enforced,” said Joe Matal, a partner in Haynes and Boone LLP’s IP practice group and a former acting director and solicitor at the PTO.
In the same vein, Scott McKeown of Ropes & Gray LLP called the verdict just another example of where “the past practice of the PTAB to deny otherwise meritorious challenges in view of competing Texas cases—as a matter of discretion—results in a billion dollar tax on American industry.”
“While the patent may very well be valid, it is absurd that we bypassed the expert agency in favor of a jury of laypeople for technical analysis,” said McKeown, who chairs his firm’s PTAB group.
Created in 2012 by the America Invents Act, the PTAB provides an alternative to federal courts to settle patent disputes. Administrative judges with technical expertise choose whether to hear a cases and, then, whether disputed patents are valid.
Support for Juries
But far from everyone in the field of patent law is down on juries or thinks only PTAB judges are capable of understanding the arcane and technical nuances at the heart of patent disputes.
Federal Circuit Judge
“I have been impressed how seriously they they take the cases and how much they care about getting to the right result,” Dyk said.
Also, the PTAB process has come under fire after a recent Government Accountability Office survey showed that 3 in 4 board judges reportedly felt pressure from politically appointed PTO leaders to modify aspects of decisions.
Several lawyers who represent patent holders pointed to other reasons defendants may favor review by the PTAB that have nothing to do with the expertise of patent judges.
“Defendants essentially always view the PTAB as a better venue for validity determinations” said Alison Aubry Richards, a partner at Global IP Law Group LLC. She said the PTAB has a lower burden of proof for a party seeking to invalidate a patent and allows repeat attacks on a patent’s validity, an issue that has been raised by patent-holders in the past.
Fintiv and the Waco Court
The rule allowing the PTAB to deny cases pending before district courts was established in May 2020 when the board designated as precedential its decision in Apple Inc. v. Fintiv Inc., which set out factors patent judges could consider when deciding whether to institute inter partes review. These factors included the expected trial date, whether a court has paused its proceedings for PTAB review, and the extent of overlapping issues.
Because the Fintiv framework emphasizes the speed of parallel litigation, companies sued in Waco, such as Intel, found it particularly tough to get PTAB review. Albright is known for keeping a fast docket and for his reluctance to pause cases for parallel PTAB reviews.
When PTAB denied Intel a review of the ‘983 patent at issue in VLSI’s suit, the board said there was “no indication that trial will occur after October 2021.” That prediction proved to be too optimistic as the trial was delayed—including in April of this year when several attorneys in the case caught Covid-19 after a jury was enpaneled—and the court had to set a new trial date.
Critics of the Fintiv rule had challenged it in part because of the phenomena of PTAB relying too much on a district court’s schedule to determine a trial’s date.
In the past year, however, PTO Director Kathi Vidal has taken action to curb the rule’s impact.
In June, she issued binding guidance clarifying that PTAB judges shouldn’t invoke the rule when there is “compelling evidence” that a patent is invalid or a petitioner promises not to repeat the validity arguments in their petition as part of their defense in federal court.
The guidance also states petitioners can use a separate metric to establish a court’s trial date whereas in the PTAB’s Fintiv decision it took the court’s “trial schedules at face value absent some strong evidence to the contrary.”
Austin Juries
Another lesson from Tuesday’s verdict may have to do with the jury pool in Austin.
There was some speculation that a jury drawn from politically liberal Austin and its surrounding counties would act and behave differently than one from Waco, where Albright normally hears cases and where a jury in an earlier VLSI-Intel case awarded VLSI a $2.2 billion verdict.
“There’s been so much said about some of the companies wanting to escape Waco for Northern California,” said David Henry, a Waco-based partner at Munck Wilson Mandala LLP.
“But the fact that this was tried in Austin—the alternative West Coast, so to speak—but still you got this verdict, chips away at that argument.”
