Patent Case Summaries October 12, 2022

Patent Case Summaries | Week Ending October 7, 2022

A weekly summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit and the opinions designated precedential or informative by the Patent Trial and Appeal Board.

OpenSky Industries, LLC, et al. v. VLSI Technology LLC, No. IPR2021-01064 (PTAB Oct. 4, 2022) (precedential). Opinion by Vidal.

After VLSI sued Intel in district court for patent infringement, Intel filed two IPR petitions, but the Patent Trial and Appeal Board exercised its discretion to deny institution under Fintiv due to the advanced stage of the litigation and other considerations. The litigation eventually resulted in a $675 million jury verdict against Intel.

Shortly after the verdict, OpenSky was formed as a legal entity and proceeded to file IPR petitions that copied extensively from Intel’s petitions. The Board instituted IPR, and Intel then filed a substantially identical petition along with a motion for joinder. The Board joined Intel to the OpenSky proceeding. Meanwhile, VLSI challenged the institution decision on the ground that OpenSky’s petition and related actions constituted an abuse of the IPR process.

Director Vidal sua sponte ordered review of the Board’s institution decision to address issues of first impression relating to the allegations of abuse of process. The Director ordered the parties to brief the issues, exchange certain information, and answer interrogatories. OpenSky, however, “did not comply with the Mandated Discovery as ordered.” It produced “minimal” documents and provided “wholly inadequate answers to [the Director’s] interrogatories.” As a sanction, the Director held “disputed facts as established against OpenSky.”

The Director determined that, after the Board had issued its institution decision, OpenSky sought compensation from both VLSI and Intel “in exchange for advocacy against whichever party does not pay,” demonstrating that the IPR lacked a legitimate purpose. The Director concluded that “OpenSky, through its counsel, abused the IPR process by filing this IPR in an attempt to extract payment from VLSI and [from] Intel, and expressed a willingness to abuse the process in order to extract the payment.” The Director further found that “OpenSky engaged in abuse of process and unethical conduct by offering to undermine and/or not vigorously pursue this matter in exchange for a monetary payment.” “Taken together, the behavior warrants sanctions to the fullest extent of [the Director’s] power.”

As a sanction, the Director precluded OpenSky and its counsel from participating in the proceeding, and elevated Intel to an active role. The Director also ordered OpenSky “to show cause as to why it should not be ordered to pay compensatory damages to VLSI, including attorney fees, to compensate VLSI for its time and effort in this proceeding.”

On the merits, the Director remanded for the Board to determine whether OpenSky’s petition, based on the record prior to institution, “presents a compelling, meritorious challenge” to VLSI’s patent (which “is a higher standard than the reasonable likelihood required for the institution of an IPR”). If so, the proceeding “will, in the interest of the public, continue.” Otherwise, the Board will dismiss the IPR.

The Director acknowledged that “some may believe that I am allowing Intel to benefit from OpenSky’s wrongdoing by not immediately terminating the proceeding,” but she found “no evidence that Intel was complicit in OpenSky’s abuse” and therefore focused “on a principled, replicable approach that is in the best interest of the public and advances the USPTO and AIA goals.”

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