Intel Slapped With $949M Patent Infringement Verdict In VLSI Case

Patent-holding firm racks up the nearly $1 billion lawsuit win after another successful suit in 2021 netted nearly $2.2 billion from the semiconductor giant. Intel, already reeling from tough financial results in 2022, has already lost an appeal from the first lawsuit and is planning to appeal the latest ruling. One channel partner calls the case a “drive-by shooting.”

A Texas federal jury on Tuesday said Intel Corp. must pay VLSI Technology $948.8 million for infringing on a computer chip patent, according to reports.

VLSI, which is affiliated with Arm owner SoftBank Group Corp., argued at the six-day trial in U.S. District Court in Waco, Texas that Intel’s Cascade Lake and Skylake microprocessors violated the company’s patent covering improvements to data processing.

An Intel spokesperson said the company “strongly disagrees” with the verdict and will appeal.

“This case is just one example of many that shows the U.S. patent system is in urgent need of reform. VLSI is a ‘patent troll’ created by Fortress, a hedge fund that is bankrolled by large investment groups for the sole purpose of filing lawsuits to extract billions from American innovators like Intel,” an Intel spokesperson said in a statement. “This is the third time that Intel has been forced to defend itself against meritless patent infringement claims made by VLSI.”

CRN has reached out to VLSI for comment.

VLSI is a subsidiary of asset manager Fortress Investment Group, which itself is owned by SoftBank. SoftBank also owns British chip designer Arm.

A lawyer for Santa Clara, Calif.-based Intel said during the trial that the company’s engineers developed its innovations independently, and that its modern microprocessors would not work with VLSI’s outdated technology, according to a Reuters report. An attorney for VLSI, meanwhile, reportedly said that Intel’s chips caused “millions and millions of infringements per second.”

VLSI bought the patent in question from Dutch chipmaker NXP Semiconductors.

Last March, VLSI was awarded nearly $2.2 billion in a separate Texas trial over different patents. Two more patent cases from VLSI against Intel are pending in Northern California and Delaware. The trial for the California case is slated to start in 2024.

Meanwhile, Intel is searching for ways to slice $10 billion from its budget by 2025 – including possibly laying off thousands of workers. The company has seen a heavy economic toll from global inflation and a softening consumer PC market – reporting a 59 percent year-over-year net income drop for its third fiscal quarter ended Oct. 1.

Harry Zarek, founder of Ontario, Canada-based Compugen, said Intel will carry on. “This is a ‘drive-by shooting’ that causes short term commotion but has no impact on Intel strategy,” he said. “We don’t see this as having any impact on our work or relationship.”

Kent Tibbils, vice president of marketing for Intel distributor ASI Corp. in Fremont, Calif., also doesn’t anticipate a huge channel impact. “Since Intel is appealing the decision – as they should – nothing is final yet and as long as this doesn’t result in changes to Intel’s partner engagement, I don’t see this having any impact on the channel,” he wrote in an email to CRN. “Unfortunately, it seems these types of suits will continue and I think it places a heavy burden on jury members to try to understand highly advanced technologies – particularly at a micro code level in semi-conductor design. I’m sure Intel is not the only victim.”