The United States Court of Appeals for the Federal Circuit on Monday rejected a $2.18 billion patent-infringement verdict earlier issued to VLSI Technology against Intel Corp. (INTC.O). The result is a significant reversal of one of the greatest verdicts in US patent law history.
The appeals court overturned a jury conviction from 2021 that found Intel guilty of violating one VLSI patent. The matter has now been returned to Texas for a fresh trial, to determine the proper damages for claimed violation of a second VLSI patent.
Fortress Investment Group manages investment funds that own VLSI Technology, a patent-holding business. Earlier this year, Mubadala Investment Co. in Abu Dhabi agreed to buy a controlling stake in Fortress from Japan-based Softbank Group Corp. (9984.T).
VLSI representatives did not immediately respond to the court’s judgment.
Intel, on the other hand, was pleased with the decision. According to a corporate representative, Intel wants to argue in the upcoming damages trial that VLSI’s patent has “little value.”
The legal issue includes many cases brought by VLSI against Intel in several US courts, claiming violations of several semiconductor technology patents. The first trial, held in Waco, Texas, ended with a jury paying VLSI $2.18 billion, claiming that Intel microprocessors infringed on patents obtained from Dutch chipmaker NXP Semiconductors (NXPI.O).
However, the Federal Circuit concluded on Monday that there was insufficient evidence to sustain the jury’s judgment of infringement for one of the two patents at issue, which accounted for $675 million of the initial conviction. While the court upheld Intel’s violation of another VLSI patent, it raised concerns about the damages analysis, leading to the decision to retry the case to establish the proper judgment.
The jury first awarded VLSI $1.5 billion in damages for Intel’s patent infringement in the first trial. Following the court’s verdict, Intel’s shares fell more than 4% on Monday morning, with other big chipmakers following suit.
Notably, Intel already rejected VLSI’s effort to get more than $3 billion in damages in a subsequent Waco jury trial in 2021. In a related lawsuit last year, a jury in Austin, Texas, found that VLSI was entitled to roughly $949 million from Intel in a third patent dispute. Following that, the businesses agreed to dismiss another potentially multibillion-dollar action in Delaware, with another trial set to begin in Northern California in 2024.