Intel Hit With Monster $2.2 Billion Fine for Patent Infringement

Intel has been hit with a $2.2 billion patent-infringement fine for violating two patents held by VLSI Technology LLC. The fine is one of the largest ever fines levied against a company for patent infringement, although Intel is appealing the decision.

Why Is Intel Being Fined?

Intel was taken to court for infringing the patents of VLSI Technology LLC. Never heard of them? That's because VLSI Technology LLC is a company that only exists to sue other companies.

It manufacturers no products and does not engage in any form of production, and according to Intel lawyer William Lee, simply "took two patents off the shelf that hadn't been used for 10 years and said, 'We'd like $2 billion.'"

According to Bloomberg, VLSI is seeking more than $7 billion in damages across several lawsuits, all relating to patent infringement. Intel strongly refutes the claims of any wrongdoing.

VLSI claims that as the patents cover areas such as the speed and power consumption of processors, Intel is at fault. Furthermore, the absence of knowledge regarding a patent doesn't excuse a company from infringement, and VSLI lawyer Morgan Chu accused Intel of "willful blindness."

However, on that point, the jury found that Intel had no wilful infringement case to answer, which is good news for Intel. If Intel was found to have infringed VLSI's patent on purpose, the judge could set the fine up to three times higher.

VSLI purchased the patents from NXP Semiconductors, a Dutch-American semiconductor manufacturer that began life as a spin-off from Philips. As it becomes apparent that the company has no intention of using the patents to produce CPUs, you could consider VLSI a patent troll.

Patent trolls are companies that purchase patents to hold without any intention of ever producing the technology or idea, but to use the patent to wield against other companies that often inadvertently infringe.

Will Intel Win the Appeal?

If the claim is upheld, Intel must pay the $2.2 billion fine. Although this is a vast sum, it actually only represents around half of Intel's Q4 2020 profits and a fraction of its $77.9 billion 2020 revenue.

VSLI filed its claims in one of the most litigious courtrooms in the US, and one that specializes in patent litigation. The West District of Texas saw more than 800 patent litigation cases filed in 2020, most of which were overseen by Federal District Judge Alan Albright.

For now, the judge has found in VLSI's favor, but Intel will return to appeal, and the final ruling could take years to reach.