Since its launch in 2017, VLSI Technology LLC's multivenue litigation against Intel has produced two large jury verdicts in Texas and drama over related invalidity rulings by the Patent Trial and Appeal Board (PTAB). Throughout this complex campaign, Intel has argued that it has a license to the patent portfolio of VLSI—the parent of which, CF VLSI Holdings LLC, is owned by investment funds managed by Fortress Investment Group LLC — under a prior license agreement with Finjan, Inc. that gave Intel rights to the patents of "Finjan and its affiliates, current and future". Intel has asserted that when Fortress acquired Finjan in 2020, VLSI became such an affiliate, placing the extent of Fortress's control of Finjan and VLSI squarely at issue. A Western District of Texas jury has now resolved that factual question in Intel's favor, finding on May 29 that Fortress controlled both VLSI and Finjan during the relevant period—setting the stage for a ruling on Intel's defense by District Judge Alan D. Albright.
VLSI has litigated its former NXP patents against Intel in the District of Delaware, Northern District of California, and Western District of Texas (as well as before the USPTO and in China). Trials in the West Texas leg of that litigation produced sizable jury verdicts, one from March 2021 totaling $2.2B and another from November 2022 reaching $948M. However, those verdicts have since been undercut—by rulings from the PTAB invalidating all tried claims from the $2.2B verdict, in a set of closely watched inter partes reviews (IPRs) that also led to sanctions against two third-party petitioners over alleged gamesmanship; and by a December 2023 appellate ruling by Federal Circuit. The latter decision toppled the $2.2B verdict, reversing and remanding $1.5B in damages as to one patent due to an error in VLSI's damages case; and finding insufficient evidence for the plaintiff's doctrine of equivalents theory for the second patent, which accounted for the other $675M of the verdict (though leaving the finding of direct infringement intact). Notably, as detailed further below, the decision also revived a portion of Intel's license case.
Meanwhile, Intel has waged a multifront battle of its own over its aforementioned license defense, which it has raised, or sought to raise, in California, Delaware, and Texas federal courts as well as in Delaware's Court of Chancery—in the process, seeking additional information about the control of these entities, funds, and investors, as putatively related to its license defense but as also related to assessing judicial conflicts.
Courts have expressed varying levels of openness to this defense. The Delaware Court of Chancery ruled in September 2021 that it lacked subject matter jurisdiction on the license issue because Intel has an "adequate remedy at law in the form of a license defense in the infringement actions" brought in federal courts. In Texas, District Judge Alan D. Albright rejected Intel's defense in March 2022, denying its motion to amend its answer to add that license counterclaim as "futile" in the case with the $2.2B verdict (for reasons detailed further below).
The defense then appeared to gain more traction in the District of Delaware, where Chief Judge Colm F. Connolly granted a similar motion to amend and later indicated that he might impose consequences on VLSI for its failure to reveal additional information relevant to Intel's defense, as required under the heightened disclosure rules that apply in his courtroom. Yet as that suit headed toward a scheduled evidentiary hearing akin to the ones in which Judge Connolly dug into disclosure issues related to IP Edge LLC — which itself led to dramatic results — VLSI and Intel settled the Delaware wing of their litigation, before Judge Connolly could probe any further.
Then came the Federal Circuit's aforementioned decision in December 2023, which held that Judge Albright was wrong to reject Intel's license defense. While Judge Albright had concluded that the proposed defense was "futile" since "VLSI is not a party to the agreement", characterizing Delaware law as providing "that a non-party to a contract is not bound by that contract", the Federal Circuit countered that this was not the case. Rather, the court ruled that the precedent cited by Judge Albright establishes that this is "only 'the ordinary rule,' subject to exceptions for 'unusual circumstances'". In particular, the Federal Circuit noted that in 2019, the Delaware Supreme Court held that "'[c]ontracts may impose obligations on affiliates' in certain contexts" based on caselaw from the Delaware Chancery Court "involving contract provisions covering certain affiliates and non-signatories who were, or came to be, owned or under the control of a signatory party". The Federal Circuit determined that sufficient questions remained as to how these cases should be applied under the present facts that adding the defense would not be futile.
Although that ruling revived the license issue in West Texas, the defense then hit a wall in the Northern District of California: While District Judge Beth Labson Freeman granted Intel's request to add a license counterclaim in that venue in February 2024, after having previously denied its motion to compel related discovery, she ultimately dismissed the case that same April, ruling that a forum selection clause in the 2012 license agreement with Finjan requires that any claim be brought in Delaware. The court dismissed the lone remaining license claim forforum non conveniensrather than transferring it to the District of Delaware.
Intel turned back to Delaware as a result, filing a declaratory judgment action there in July 2024 that sought a judgment that it is licensed to VLSI's entire portfolio. VLSI subsequently moved to dismiss, stay or transfer the case to the Western District of Texas, where Judge Albright was at that point still considering the parties' submissions concerning whether Intel's license defenseinvolved any issue for presentation to a jury. A familiar dispute over disclosures then arose after the Delaware action was assigned to Judge Connolly, as VLSI's prior, affirmative case had been: After VLSI made another statement (in connection with its motion to dismiss, stay, or transfer) concerning its corporate ownership that largely tracked what it previously disclosed to Judge Connolly, to the court's dissatisfaction, also making certain disclosures as to litigation funding, Intel filed a motion to show cause why VLSI has not violated Judge Connolly's standing orders concerning such disclosures.
However, the action subsequently shifted back to West Texas, where in early December 2024, one day before the Delaware court was to hold a hearing on VLSI's motion to dismiss or transfer, Judge Albright set a May 2025 trial date for Intel's license defense. At that Delaware hearing, rather than focusing on the merits, the parties instead agreed—at Judge Connolly's strong urging—to stay the case pending the outcome of the Texas trial. Should issues remain to be tried, Judge Connolly suggested the possibility of a date to be set in January 2026.
Back in Texas, as the case approached trial, the parties filed dueling summary judgment motions. VLSI asked Judge Albright to rule that Intel has no license, while Intel asked the court to rule in its favor on most issues, leaving for a jury only whether VLSI and Finjan are under Fortress's common control. Intel also challenged VLSI's planned presentation from seven experts, arguing that their "public policy and legal opinions" are impermissible.
As evidence of Fortress's exercise of control over VLSI, Intel contended in its summary judgment motion that:
(1) Fortress formed VLSI and directed and led the negotiations for VLSI's acquisition of patents from NXP; (2) Fortress assigns VLSI's board members; (3) Fortress employees, who are paid by Fortress and not VLSI, constitute a majority of VLSI's board; (4) the Fortress-controlled VLSI board approves VLSI's expenditures; (5) Fortress has direct access to VLSI's bank account and keeps limited funds in it; and (6) VLSI must request funding from Fortress.
With respect to Fortress control of Finjan, Intel argued that:
(1) Fortress created and controls [Finjan's (FHL's)] parent company; (2) Fortress appoints members to FHL's board; (3) Fortress employees, compensated by Fortress, hold the majority of FHL's board seats; (4) Fortress maintains access to FHL's bank account; and (5) FHL must request funding from Fortress employees.
Control issues aside, among other things, VLSI countered that the Intel license from Finjan does not bind it because it did not sign that license, Finjan never had any authority to bind VLSI (which did not exist at the time of the license), and VLSI never agreed to be bound by that license. Per VLSI, "as a matter of black-letter contract law", it is free to pursue its patent infringement claims against Intel. The plaintiff subsequently filed a motion for leave to submit supplemental briefing regarding "new fact arguments", one of which was that, per Intel, Fortress adopted the settlement agreement with Finjan through its acquisition "due diligence".
On April 10, 2025, Judge Albright denied both parties' summary judgment motions in a brief order, holding that "[t]he matters presented before the Court are complex and ought to be resolved on a full plenary trial record, to assure a just result and facilitate appellate review". Judge Albright explained that the question of "[w]hether Intel is licensed to the asserted patent under the Finjan License has underlying factual issues (i.e., whether Finjan and VLSI are under common control of Fortress", but held that it "is ultimately a question of law for the judge that is to be determined by the court"—one that the court could resolve "either on a pretrial motion for summary judgment or on a motion for judgment as a matter of law at the close of the evidence and after the jury verdict".
While much of the parties' remaining pretrial motion practice and resulting orders are under seal, a filing from VLSI indicates that Judge Albright granted Intel's motion in limine "to preclude VLSI from offering any evidence or argument at trial regarding [the tried '983 Patent], including the jury's award of $948.8 million in damages for Intel's infringement of that patent, and the fact that the jury issue of 'common control' directly pertains to the question of whether Intel can carry its burden to show that it is allegedly licensed to VLSI's patent portfolio".
With those limits in place, the parties' respective cases at trial—which began on May 27—reportedly focused on the leadership and ownership structure of both VLSI and Finjan. For instance, Law360 reports that counsel for Intel with WilmerHale underscored that the majority of both entities' boards are comprised of Fortress executives, on which subject Eran Zur, Fortress's head of intellectual property; and Ami Patel Shah, the managing director of Fortress's IP fund; both testified on the first day of trial. When WilmerHale's Joseph Mueller asked why Fortress employees needed to be in control, Zur reportedly characterized this as necessary because their investors had "put their trust in him to make sure their money is being properly handled" (as summarized by Law360). Accordingly, both Zur and Shah insisted that they were participating in boards as representatives of their investors and not on behalf of Fortress, Shah explaining that "We all play different roles in different parts depending on the situation".
On the second day of trial, Law360 reports that WilmerHale's Mindy Sooter asked VLSI CEO Scott Bain, a former PTAB judge who took over from outgoing VLSI CEO Mike Stolarski in April, about various aspects of his authority during direct examination—perhaps most notably, probing the extent of his ability to act without the approval of VLSI's board. Significantly, Bain agreed that he could not sign—or decline to sign—a license agreement if the board were to order otherwise. Intel also pointed to testimony from Stolarski that "VLSI had to request funds to be released from Fortress" (as paraphrased by Law360), while former Fortress Managing Director Jonathan James and former Finjan CFO Jevan Anderson testified that that had also been the case for Finjan. Though Fortress Senior Vice President Steven Brogden characterized this approval as needed merely for compliance checks, he also testified that "Fortress had access to VLSI's bank account and would keep only limited funds there" (again, per Law360's summary).
The remainder of the trial's second day primarily consisted of expert testimony, according to Law360. Intel finance and economics expert Ray Perryman testified in part that Fortress controls both VLSI and Finjan due to the various ways it has the power to "step in when money was switching hands, be it between investors and VLSI, or VLSI and vendors" (as paraphrased by Law360). In contrast, VLSI's expert on corporate governance, private equity, corporate finance, and the investment industry, Shane Goodwin, pushed back on Intel's prior characterization of Finjan and VLSI as "sister companies", citing their lack of shared ownership. Zur also returned to testify that although the VLSI board has power over the company, the board itself is controlled by investors and not Fortress.
On May 29, the third day of trial, the jury returned a verdict for Intel, finding that the company had "prove[n] by a preponderance of the evidence that, at any point after November 20, 2012"—the date Intel executed its license with Finjan—"Fortress Investment Group controlled both VLSI Technology LLC and Finjan LLC (formerly known as Finjan, Inc.)".
Now that the jury has found that the two companies are "under common control of Fortress" (as previously framed by the court), it now falls to Judge Albright to decide whether Intel has a license on that basis—potentially through a renewed motion for judgment as a matter of law, as Law360 has reported that the court denied an Intel motion for judgment as a matter of law submitted after Intel rested its case, but before the jury gave its verdict.
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