Intel ordered to pay $2.2 billion to VLSI for patent infringement

Posted on Wednesday, Mar 03 2021 @ 11:27 CET by Thomas De Maesschalck
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It's a bad day for Intel as the company has lost a big patent infringement case before a Waco, Texas jury. The chip giant is ordered to pay $2.18 billion in damages to VLSI Technology LLC, for infringing on two patents that describe methods to reduce the power consumption of computer chips.

One of Intel's lawyers, William Lee, denied any wrongdoing and essentially called VLSI a patent troll. Intel claims it independently developed its own, superior technology to achieve these objectives. The chip giant states VLSI is a four-year-old firm with no products and no sources of income other than patent litigation. Lee unsuccessfully argued before the jury that VLSI had simply taken "two patents off the shelf that hadn't been used for ten years" and demanded over $2 billion in damages.

Over the years, the two patents have belonged to a wide variety of semiconductor companies. The first patent was awarded to SigmaTel in 2010, which subsequently got taken over by Freescale Semiconductor. The other patent got awarded to Freescale in 2012. In turn, Freescale got bought out by automotive chip maker NXP in 2015. NXP subsequently sold the patents in question to VLSI Technology, a former chip maker that's now a subsidiary of Fortress Investment Group. The latter is owned by Softbank, the current owner of ARM. VLSI was once a well-known chip maker -- but these days the remnants of the firm seem little more than a patent vehicle.

ARS Technica has some more info about the patents:
The two patents focus on methods for minimizing the power consumption of computing chips. One way to do this is by varying the system voltage: setting a higher voltage when high performance is needed, then lowering the voltage to conserve power afterward. One patent claims the concept of storing information about a memory chip's minimum voltage in nonvolatile memory so the system can ensure that the memory circuit has a high enough voltage.

VLSI's other patent focuses on altering clock frequencies as a power-saving technique. Once again, raising the clock frequency of an electrical bus can increase system performance but consume more power. NXP's second patent is based on the idea that a device on a bus can request a change to the clock frequency when it needs faster performance.

How much is $2.2 billion for Intel?

To put the fine in perspective, $2.2 billion is a little more than Intel's monthly net income. If it's upheld, it would be one of the largest patent judgments in US history. The Texas jury found that there was no willful infringement of the two patents -- otherwise, the damages could have been three times higher. Intel strongly disagrees with the judgment, it will appeal and is confident that it will prevail.

Chip analyst Patrick Moorhead from Moor Insights & Strategy believes Intel and VLSI will eventually arrive at some kind of cross-license agreement:
Moor Insights & Strategy analyst Patrick Moorhead told SiliconANGLE that VLSI shouldn’t be confused with companies such as Qualcomm Inc., which actually create intellectual property themselves and then license it. Rather, it just buys up patents and then attempts to force other companies to pay to use it, he said.

“Intel will likely appeal, but even if the company has to pay, it has more than enough cash to pay the penalty,” Moorhead said. “I would also expect Intel to countersue VLSI on one of its patents to arrive at some kind of cross-license agreement ultimately.”
Rob Enderle, an analyst with Enderle Group, thinks the verdict will be overturned. Enderle points out jurors at this sort of jury trials often have trouble understanding the technical issues of the case. Enderle explains VLSI is on a known list of patent trolls and believes the trial will incentive Intel to lobby harder to restrict patent trolling.

What Intel is up to in its moonshot labs

Speaking about innovation, did you know Intel has its own moonshot lab? Ian Cutress from AnandTech had a video call with Intel's Richard Uhlig to get some insight on what the chip giant is working on in its Intel Labs division. In total, the Intel moonshot division employs about 700 researchers. You can read about Intel Labs over here.
IC: Can you give us a sense of scale of how big Intel Labs is – budgets, employees, offices? It’s my understanding its more than just Silicon Valley.

RU: We are round about 700 researchers, largely PhDs in those domains that I talked about at the beginning, and we cover everything up and down the stack. We're a worldwide organization as you noted, and we have labs in on the West Coast in Oregon and California. But we're also present in India, in China, in Germany, in Israel, in Mexico. That worldwide footprint is important to how we do our work, because we don't just do research inside the company - we engage academia, and we are spread out as this allows us to be working closely and directly with researchers at leading universities across the planet. This also allows us to engage different government agencies as well, and to understand the market specifics of each of those geographies. It's important to our whole methodology.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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