Fed Circuit Overturns $2.18-billion-dollar Judgement in VLSI Technology LLC v. Intel Corporation

In 2021, VLSI brought a patent infringement case against Intel seeking $3 billion in damages in the Western District of Texas. A jury decision found that Intel had infringed 2 of VLSI’s patents and awarded VLSI a $2.18 billion dollar settlement for said infringement.

The 2 patents at issue were US Patent No. 7,523,373 “Minimum Memory Operating Voltage Technique” and US Patent No. 7,725,759 “System and Method of Managing Clock Speed in an Electronic Device”. Intel’s accused products included various Haswell and Broadwell Microprocessors. The jury found that Intel infringed the ‘373 patent on the basis of literal infringement and infringed the ‘759 patent but only under the doctrine of equivalents.

Generally speaking, the doctrine of equivalents provides a limited exception to the principle that claim meaning defines the scope of rights granted by a patent, the inquiry required by the doctrine is “Does the accused product or process contain elements identical or equivalent to each claimed element of the patented invention?” (see MPEP 2186). However, courts have often emphasized “that the doctrine of equivalents is the exception, however, not the rule,” Eli Lilly & Co. v. Hospira, Inc., 933 F.3d 1320.

Intel appealed the decision to the U.S. Court of Appeals for the Federal Circuit, arguing that Intel did not infringe either of the patents, and specifically with regards to the ‘759 patent, that VLSI improperly invoked the doctrine of equivalents as (a) they were barred by prosecution history estoppel from invoking the doctrine of equivalents, and (b) VLSI’s evidence of equivalents was legally insufficient for a showing of infringement. Additionally, Intel argued that even if they had infringed the patents, the damages awarded with respect to the ‘373 patent were improper.

In a precedential decision released December 4, 2023, the Federal Circuit partially agreed with Intel’s position and reversed the earlier jury decision in part and affirmed in part. First on the ‘373 patent, while the court upheld the finding of infringement on the ‘373 patent, the court found Intel’s arguments with respect to damages to be persuasive. Therefore, while the infringement finding will be upheld, the case will be remanded for another hearing exclusively on damages.

On the ‘759 patent the court disagreed with Intel’s argument that VLSI was barred from bringing up doctrine of equivalents due to prosecution history estoppel but agreed that the evidence of equivalence VLSI provided was legally insufficient to form a verdict of infringement. Specifically, the ‘759 patent claim required “a first master device coupled to the bus, the first master device configured to provide a request to change a clock frequency of a high-speed clock in response to a predefined change in performance of the first master device”. Intel however showed that for their devices the equivalent cores did not request to change frequency based on changes the cores identified in their own performance, because only the software running on the (receiving) power control unit, based on observations of system conditions, called for a frequency change.

VLSI’s argument under the doctrine of equivalents attempted to accommodate this discrepancy by stating that Intel’s combination of (a) the core and (b) the software module on the power control unit that actually called for the frequency change, were equivalent to the first master device required by the claims. In order for this argument to meet the burden required by the doctrine, the court stated VLSI’s testimony needed to show “that the core and certain code, which resides on the power control unit, together perform substantially the same function, in substantially the same way, to achieve substantially the same result as the claimed ‘first master device”.

VLSI’s testimony “contain[ed] no meaningful explanation of why the way in which the request is made is substantially the same as what the claim prescribes. The question [was] not whether, in a schematic drawing used to illustrate functions, an engineer could ‘draw[] . . . [a] line’ in different places. The question is about actual functionality-location differences. It is not enough, moreover, to say that the different functionality location placements were a ‘design choice.” Therefore, VLSI’s testimony was legally insufficient to support a showing of infringement under the doctrine of equivalents.

The court’s holding here may have significant impact on the use of doctrine of equivalents in patent infringement litigation going forward, as the court increasingly emphasizes that the doctrine is a narrow doctrine, only to be applied in “exceptional” circumstances.