SAN JOSE, Calif. May 2 Patent owner Intellectual Ventures has settled a lawsuit against one of its own investors, chipmaker Xilinx, a case that had been closely followed by advocates seeking to change the U.S. patent system.
A court filing on Thursday disclosing the settlement did not discuss terms. Intellectual Ventures and Xilinx Inc had been scheduled for trial this month.
Separately, a U.S. jury on Friday found that Canon Inc violated two Intellectual Ventures patents over digital imaging technology. Damages will be decided at a later proceeding.
In a statement, Intellectual Ventures chief litigation counsel Melissa Finocchio said the company was pleased with the Canon verdict. An IV spokeswoman declined to comment on the Xilinx settlement.
Representatives for Xilinx and Canon could not immediately be reached for comment.
Chipmaker Xilinx invested in two Intellectual Ventures funds and licensed a portion of IV's patents, but resisted IV's entreaties to license more patents in 2010, court filings show. Xilinx eventually asked a California federal judge to declare those IV patents invalid, while IV countersued in Delaware, accusing Xilinx of infringement.
The proceeding came in the midst of a heated debate over whether it is too easy for patent owners to extract large royalty payments, and whether patent buying firms spur or stifle innovation. Advocates for patent reform point to the Xilinx litigation as a crucial source of information about the way patent aggregators like IV operate.
Last month, U.S. District Judge Leonard Stark in Delaware found IV's expert witness on damages "unreliable and irrelevant," and excluded his testimony from trial. Three other chipmakers had previously settled patent lawsuits with IV on undisclosed terms.
Created in 2000, Intellectual Ventures has raised about $6 billion and acquired 70,000 patents and other intellectual property assets. IV is assembling a new patent acquisition fund with investors including Microsoft Corp and Sony Corp , while Apple Inc and Intel Corp declined to participate.
Over the years IV and other firms like it have faced criticism from some in the technology industry, who argue that firms like IV, which do not primarily make products, exploit the patent system by demanding royalties and threatening litigation.
IV argues that by buying patents from inventors, it creates a mechanism for them to capitalize on their ideas.
In the Canon lawsuit, also in a Delaware federal court, the jury on Friday upheld the validity of IV's patents and found patent infringement, according to court filings. IV will now proceed to a second trial against Canon next week on two additional patents.
The Xilinx case in U.S. District Court, District of Delaware is Intellectual Ventures I LLC et al vs. Xilinx Inc., 10-1065.
The Canon case in U.S. District Court, District of Delaware is Intellectual Ventures I LLC et al vs. Canon Inc et al, 11-792. (Reporting by Dan Levine; Editing by Grant McCool)