Intel wins trial, dodges $1B-plus blow

Intel Corp. ducked getting hit with another multibillion-dollar damage award after a federal jury in Texas cleared it of claims it was infringing on patents formerly owned by NXP Semiconductors NV on ways to speed up computers.

Intel doesn’t infringe two patents owned by closely held VLSI Technology LLC, according to the federal jury in Waco, Texas. The trial was held in the same courthouse where a different jury told Intel to pay VLSI $2.18 billion over other patents last month.

This was the second of three trials in lawsuits VLSI lodged against Intel over patents that until early 2019 were owned by Dutch chipmaker NXP Semiconductors. A third trial, also before U.S. District Judge Alan Albright, is scheduled to begin in June.

In the most recent trial, VLSI was seeking $3 billion damages, saying the inventions were critical to Intel’s ability to make chips faster and with fewer energy requirements. That’s more than 3,000 times what the patents were valued at in past acquisitions, Intel’s lawyers argued.

Intel denied using any of the inventions, saying its own engineers have spent decades developing the chips that are in devices ranging from laptops to military fighter planes. It also argued that the patents didn’t cover new ideas even two decades ago, when they were issued.

Intel said in a statement that it was pleased the jury “rejected VLSI’s meritless claims that Intel’s cutting-edge processors infringe expired patents on MP3 player technology.”

VLSI was seeking damages for a period beginning March 1, 2019, just before the lawsuit was filed. One of the patents, issued in 2002, expired in November; while the other was issued in 2003 and expires in May, according to data compiled by Bloomberg Law.

Intel reported $20.9 billion in net income on $77.9 billion in revenue last year.

VLSI was created in 2016 by the Softbank Group Corp.-owned Fortress Investment Group, according to an antitrust lawsuit Intel and Apple Inc. filed against Fortress. Fortress has “deployed patents in waves of lawsuits against their targets without regard for the merits of the claims,” Intel and Apple said in the complaint, which is pending in federal court in California.

A federal judge initially tossed the antitrust case, but Apple and

Intel amended their complaint a week after the $2.18 billion verdict, arguing that trial and VLSI’s demand for billions more over other patents is evidence of Fortress’ anticompetitive activities. Fortress is scheduled to respond by April 26.

Intel said the cases show the need for legislation “to prevent such ‘litigation investors’ and their shell companies from using low-quality purchased patents to extract exorbitant damages from productive American businesses.”

VLSI has no products, and its only potential revenue is its litigation against Intel. VLSI lawyer Morgan Chu of Irell & Manella told the jury not to be distracted by that issue.

“This was technology that had looked over the horizon, changed the way Intel designed their chips,” Chu told the jurors in closing arguments.

The patents originated with SigmaTel Inc., which was bought by Freescale Semiconductor Inc. for $110 million in 2008, which in turn was bought by NXP in 2015 in a $12 billion deal. In Freescale’s purchase, SigmaTel’s “intangible assets,” which included a portfolio of hundreds of patents, were valued at $7 million, said Intel lawyer William Lee of WilmerHale in Boston.