USPTO director sanctions patent challenger in $2.1 bln Intel dispute

Intel's logo is pictured during preparations at the CeBit computer fair, which will open its doors to the public on March 20, at the fairground in Hanover, Germany, March 19, 2017. REUTERS/Fabian Bimmer//File Photo
  • Director finds OpenSky attempted to extort Intel, patent owner VLSI
  • Novel order bans OpenSky from patent-challenge proceeding

(Reuters) - U.S. Patent and Trademark Office Director Kathi Vidal on Tuesday harshly sanctioned an entity that challenged a patent at the heart of VLSI Technology LLC's $2.1 billion jury verdict against Intel Corp, finding it abused the PTO's patent-challenge process in an attempt to extort both companies.

Vidal banned OpenSky Industries LLC from participating in the Patent Trial and Appeal Board proceeding, ordered it to compensate VLSI unless it can convince the board otherwise, and said its attorneys may have committed ethical violations.

OpenSky's behavior "warrants sanctions to the fullest extent of my power," Vidal said in the order.

OpenSky's attorneys did not immediately respond to a request for comment.

A spokesperson for Intel emphasized that Vidal found it was "not involved or implicated in the OpenSky conduct in any way." The spokesperson said the company looks forward to the inter-partes review proceeding, which Vidal said should be allowed to continue if the board finds it has "compelling merits."

VLSI said in a statement provided by its attorney that it appreciated the review and agreed with Vidal's findings, but was "deeply concerned" that allowing the case to continue will "perpetuate the harm caused to VLSI" and "reward Intel."

"Put simply, Intel’s opportunity to relitigate the validity of VLSI’s patent would not have been possible without OpenSky’s abusive conduct," VLSI said.

A spokesperson for the PTO declined to comment on the order.

VLSI won $2.1 billion from Intel in Waco, Texas, court last year for infringing two of its patents. Vidal announced in June that she would review board decisions to hear challenges contesting the validity of the VLSI patents that had been requested by OpenSky and Patent Quality Assurance LLC.

Vidal's review of the Patent Quality Assurance case is still in progress. Both companies were formed after the verdict and have no apparent connection to Intel.

Vidal said in the Tuesday order that Nevada-based OpenSky had sent emails offering to sabotage its own case if VLSI paid it off and separately asked for payment from Intel in exchange for winning the challenge. Both offers were rejected, according to the order.

OpenSky's lead attorney in the proceeding, Andrew Oliver of Amin Turocy & Watson, authored some emails to Intel's counsel that Vidal cited as problematic but said Wednesday that another lawyer, Chris Ivey of Stradling Yocca Carlson & Rauth, handled the settlement negotiations at issue. Ivey did not immediately respond to a request for comment on Wednesday.

Vidal found that OpenSky misused the board's inter-partes review process "for the primary purpose of extorting money," and sanctioned the company to "safeguard the proper functioning of the patent system, and the confidence therein."

The case is OpenSky Industries LLC v. VLSI Technology LLC, Patent Trial and Appeal Board, IPR2021-01064.

For OpenSky in the PTAB proceeding: Andrew Oliver and Vinay Joshi of Amin Turocy & Watson

For Intel: Benjamin Fernandez, David Cavanaugh and Steven Horn of Wilmer Cutler Pickering Hale and Dorr

For VLSI: Babak Redjaian of Irell & Manella, Kenneth Weatherwax of Lowenstein & Weatherwax

(NOTE: This story has been updated with comment from OpenSky's attorney and to add more detail on the company's representation in the dispute.)

Read more:

USPTO director wades into fight over $2.1 bln Intel patent verdict

Intel loses U.S. patent trial, ordered to pay $2.18 billion to VLSI Tech

U.S. panel to review patent from $2.1 bln Intel court loss

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Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets. Reach him at blake.brittain@thomsonreuters.com