VLSI Technology LLC v. Intel Corporation

CourtDistrict Court, W.D. Texas
DecidedMay 10, 2022
Docket6:21-cv-00057
StatusUnknown

This text of VLSI Technology LLC v. Intel Corporation (VLSI Technology LLC v. Intel Corporation) is published on Counsel Stack Legal Research, covering District Court, W.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
VLSI Technology LLC v. Intel Corporation, (W.D. Tex. 2022).

Opinion

WESTERN DISTRICT OF TEXAS WACO DIVISION VLSI TECHNOLOGY LLC, § Plaintiff, § § v. § 6:21-cv-00057-ADA § FILED UNDER SEAL INTEL CORPORATION, § Defendant. § AMENDED ORDER DENYING DEFENDANT INTEL’S RULE 52 MOTION FOR JUDGMENT BARRING RECOVERY UNDER THE DOCTRINE OF UNCLEAN HANDS Came on for consideration is Defendant Intel Corporation’s Motion for Judgment Barring Recovery pursuant to Federal Rule of Civil Procedure 52(c) filed on April 9, 2021. Def.’s Mot., ECF No. 590. Plaintiff VLSI Technology LLC filed its Response in opposition on April 12, 2021. Pl.’s Resp., ECF No. 595. Intel filed its Reply on April 19, 2021. Def.’s Reply, ECF No. 596. After considering the Motion, the briefs filed by the Parties, and the applicable law, the Court DENIES the Motion. I.FACTUAL BACKGROUND VLSI Technology LLC (“VLSI”) is a patent assertion entity that plays a role in an enforcement strategy developed by Fortress Investment Group (“Fortress”), NXP Semiconductors (“NXP”), and VLSI. Def.’s Mot. at 2. Under this strategy, NXP provides patent ownership rights to VLSI while maintaining a claim to a share of any potential licensing returns. Pl.’s Resp. at 4. VLSI is responsible for patent licensing and enforcement, while Fortress provides VLSI with capital funding. Id. Fortress serves as an asset manager for several investment funds that own VLSI's parent company, CF VLSI Holdings LLC, and these investment funds therefore indirectly own VLSI. Id. However, VLSI is independently run by its CEO and Board and is legally distinct from Fortress. Id. agreement, NXP provided VLSI with several patents for the purpose of enforcement. Id. VLSI filed a suit alleging infringement of three of these patents1 against Intel on April 11, 2019. See Pl.’s Compl., ECF No. 1. The Court granted summary judgment of noninfringement as to all asserted claims of the ‘357 patent after considering a respective motion from Intel. Def.’s Mot. at

6. Following trial, the jury returned a verdict finding infringement of the other two patents with damages in the amount of $2.175 billion. Jury Verdict, ECF No. 564 at 6. In bringing this Motion, Intel argues that the judgment in favor of VLSI should be set aside due to inequitable conduct on VLSI’s part. Def.’s Mot. at 1. Intel claims that VLSI engaged in an unconscionable scheme with its corporate allies—Fortress and NXP—that allowed VLSI to pursue patent litigation without significant risk to itself or its partners. Id. Intel further argues that this scheme has allowed VLSI to pursue serial assertions of patent infringement against Intel without regard to the merits of individual claims. Id. at 14. Finally, Intel asserts that VLSI engaged in various egregious litigation tactics when pursuing the current case. Id. at 4–5. Taken altogether, Intel contends that VLSI’s behavior should bar any recovery for the case at issue under the doctrine

of unclean hands. Id. at 1. II. STANDARD OF REVIEW In a bench trial, “[i]f a party has been fully heard on an issue … and the court finds against the party on that issue, the court may enter judgment against the party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue.” Fed. R. Civ. P. 52(c). A motion under Rule 52 in a bench trial is the parallel to a Rule 50 motion for judgment as a matter of law in a jury trial. Martin Midstream Partners v. Boone Towing Inc., 207 F. App’x 439, 440–441 (5th Cir. 2006). When considering a Rule 52(c) motion, the Court

1 U.S. Patent Nos. 8,156,357 (“the ‘357 patent”), 7,523,373 (“the ‘373 patent”), and 7,726,759 (“the ‘759 patent”). is not required “to draw inferences in favor of the non-moving party” and may make its determination “in accordance with its own view of the evidence.” Fairchild v. All Am. Check Cashing, Inc., 815 F.3d 959, 963 n.1 (5th Cir. 2016). The unclean hands doctrine bars recovery “when misconduct of a party seeking relief has

immediate and necessary relation to the equity that he seeks in respect of the matter in litigation.” Gilead Scis., Inc. v. Merck & Co., 888 F.3d 1231, 1239 (Fed. Cir. 2018) (quoting Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 245 (1933)) (internal quotations omitted). Examples of misconduct evincing unclean hands include perjury, manufacture and suppression of evidence, and bribery. Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1293 (Fed. Cir. 2011). The unclean hands doctrine requires that claimants “have acted fairly and without fraud or deceit as to the controversy at issue.” Gilead, 888 F.3d at 1239 (quoting Precision Instrument Manufacturing Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806, 814–15. The doctrine provides a “wide range to the equity court’s use of discretion in refusing to aid the unclean litigant.” Id. A party asserting an unclean hands defense “bears the burden of proving by clear and convincing

evidence that [the opposing party] acted with unclean hands.” In re Omeprazole Patent Litig., 483 F.3d 1364, 1374 (Fed. Cir. 2007). III. DISCUSSION Intel identifies a range of collective behaviors that it claims provide evidence of VLSI’s unclean hands. See generally Def.’s Mot. at 1–11. The Court examines each of these contentions individually before considering them as a whole in its determination of Intel’s Motion. 1. The business arrangement between VLSI, NXP, and Fortress Intel first argues that the business arrangement between VLSI, NXP, and Fortress is itself evidence of unclean hands, insofar as such an arrangement allows for a high volume of litigation to be pursued by VLSI without regard to the merits and with limited downside risk for the entities involved. Id. at 14. Intel references seven lawsuits covering twenty-three patents that have been filed against it by VLSI. Id. at 4. Because Fortress and NXP are insulated from VLSI and the possible negative effects of VLSI’s litigation, Intel claims that this litigation strategy is

unconscionable and “uniquely inequitable.” Id at 14. In its Response, VLSI argues that it is a common practice of patent litigation to spread infringement claims across several separate suits and that this behavior is not evidence of unclean hands. Pl.’s Resp. at 7, n.2. Furthermore, VLSI argues that these other filings do not bear the required “immediate and necessary relation” to the specific patents-in-suit that is required for a finding of unclean hands in this particular case. Id. at 8. Even if these other filings did bear such a relation to this case, VLSI points out that Intel has not provided any evidence that VLSI’s other filings were meritless or made in bad faith. Id. at 9. VLSI also asserts that business arrangements that limit the risks of patent enforcement through the use of private companies that do not practice the patents is not nefarious and is instead good business practice. Id. at 10. Even if this business

arrangement was improper, VLSI contends that such an arrangement does not meet the degree or type of misconduct required for a finding of unclean hands. Id. at 10–11.

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VLSI Technology LLC v. Intel Corporation, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vlsi-technology-llc-v-intel-corporation-txwd-2022.