Intel ordered to pay $2.18bn in patent trial

3 Mar 2021271 Views

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The hefty sum is one of the largest patent trial pay-outs levelled at a tech company, but Intel plans to appeal.

Intel has been ordered to pay out $2.18bn after a court ruled against the chipmaker in a patent infringement trial.

The jury in Texas ruled in favour of VLSI Technology, which claimed that Intel had infringed on two of its patents that relate to reducing power consumption in computer chips. The court ordered that damages of $1.5bn and $675m respectively be paid, amounting to around a tenth of Intel’s quarterly earnings.

The story behind the patents and the history of VLSI and its current incarnation is a complex one. VLSI was last an independent company in 1999, before it was acquired by Philips.

The patents in question were first issued to Freescale Semiconductor and SigmaTel Inc between 2009 and 2012. Freescale acquired SigmaTel and then NXP Semiconductors, the Dutch chipmaker and spin-out from Philips, purchased Freescale and the patents with it in 2015.

According to Bloomberg, the patents were transferred to a newly created version of VLSI in 2019, backed by investment firm Fortress Investment Group. VLSI then filed a case against Intel saying it had violated the patents.

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Intel argued in the case that it had developed its own method of reducing power consumption in chips and claimed that VLSI has no products and exists only to file patent litigation cases. The company’s lawyer said that if VLSI was entitled to any payment at all, it should be no more than $2.2m and that its demands for more than $2bn were “outrageous”.

The jury disagreed with Intel and ruled in favour of VLSI to the tune of $2.18bn. NXP is due to receive part of that financial windfall.

“We are very pleased that the jury recognised the value of the innovations as reflected in the patents and are extremely happy with the jury verdict,” chief executive of VLSI, Michael Stolarski, said.

A spokesperson for Intel said the company “strongly disagrees” with the ruling and will appeal.

The $2.18bn figure is one of the largest payouts for a patent trial and a hefty sum for Intel. For context, the company’s last quarterly revenues were $20bn.

Jonathan Keane is a freelance business and technology journalist based in Dublin

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