4/19/2021
`
`Intel Owes VLSI Another $3B For Chip IP, Economist Tells Jury - Law360
`
`Portfolio Media. Inc. | 111 West 19th Street, 5th floor | New York, NY 10011 | www.law360.com
`Phone: +1 646 783 7100 | Fax: +1 646 783 7161 | customerservice@law360.com
`
`Intel Owes VLSI Another $3B For Chip IP, Economist Tells
`Jury
`
`By Cara Salvatore
`Law360 (April 14, 2021, 8:36 PM EDT) -- Intel owes $3 billion for allegedly infringing two chip-technology
`patents, an economics consultant for VLSI told a Texas federal jury Wednesday as the patent holder seeks
`what would be a record verdict dwarfing its recent $2 billion win against the tech giant.
`
`In this second of three trials in a multipatent case, VLSI has argued Intel used patented ideas regarding on-
`chip integrated voltage regulation, invented around the year 2000 — U.S. Patent No. 6,633,187, which
`covers "waking up" chip cores quickly from power-saving idle states, and U.S. Patent No. 6,366,522, which
`covers regulating power draw while the cores are awake.
`
`Expert witness Ryan Sullivan of Intensity LLC revealed Wednesday that VLSI believes Intel owes reasonable
`royalties of $2.11 billion for infringement of the '187 patent and $984 million for infringement of the '522
`patent, a total of just over $3.09 billion.
`
`Sullivan's recommendations were born of a regression analysis intended to "isolate the price benefits, the
`revenue benefits, and the profit benefits" Intel allegedly earned purely from the higher clock speeds and
`better performance provided by the two technologies, Sullivan said.
`
`He made a model that matched Intel's confidential sales data with product feature data, and then assigned
`a coefficient to each of about 150 factors. The coefficient "reflects the relationship between price and that
`factor," Sullivan said.
`
`Wrapping up the two patents into a single factor, clock speed, Sullivan found the coefficient for clock speed
`was 0.764: For every 1% improvement in a chip's clock speed, the price increase attributable to it was
`0.764%.
`
`That finding "is highly relevant and statistically reliable," Sullivan said.
`
`Though the damages period in the case is only 2019 to 2020, Sullivan used sales data from 2012 to 2019 to
`get the most accurate picture of the dollar value of the features, he said.
`
`Multiplying the chip-performance boosts that earlier expert witnesses found from the patented technologies
`— which were in the 2 to 5 percent range — by certain Intel revenue points, Sullivan found that Intel earned
`over $4 billion solely because of the patented technologies.
`
`He then reduced that number to account for the relative contributions of the parties to the money earned.
`The people who came up with the technology were responsible for roughly 21% of the revenue, Sullivan
`said, and Intel bore the remainder of the responsibility because it commercialized it.
`
`That left the final numbers: a $1,545,709,611 reasonable royalty for the power savings of the '187 patent;
`a $563,512,533 royalty for the performance benefit of the '187 patent; and a $984,084,853 royalty for the
`benefits of the '522 patent, according to Sullivan.
`
`That equates to just a few dollars per computing core, he said.
`
`On cross-examination, Intel made the case that in the three times the patents have previously changed
`hands, they've never been valued at more than a sliver of the number VLSI put in front of the jury. Invented
`at SigmaTel, the patents were sold with that company to Freescale Semiconductor around 2008, and all of
`the intangible assets in that sale together were valued at $7 million on tax documents, Intel lawyer Bill Lee
`
`https://www.law360.com/articles/1375152/print?section=ip
`
`1/2
`
`Page 1 of 2
`
`KOSS-2028
`IPR2021-00381
`
`

`

`4/19/2021
`
`Intel Owes VLSI Another $3B For Chip IP, Economist Tells Jury - Law360
`
`of WilmerHale said.
`
`The complex patent damages consideration known as the Georgia-Pacific factors requires the jury to look at
`the real-world value of the patents, Lee said.
`
`"Real-world information would include the prices at which these patents have been bought and sold before,
`wouldn't it?" Lee asked Sullivan.
`
`"That can be," Sullivan answered.
`
`Shortly after, U.S. District Judge Alan Albright closed the proceedings to the public for half an hour to
`discuss confidential information of VLSI's.
`
`On redirect, VLSI lawyer Amy Proctor hinted that the discussion had to do with the financial arrangement
`between VLSI and Dutch chip conglomerate NXP, the company from which VLSI obtained the patents a few
`years ago, leading toward the conclusion that their "real-world value" was, in fact, higher than had been
`suggested.
`
`"Is there an expectation that additional money will change hands between NXP and VLSI?" Proctor asked
`Sullivan.
`
`"Yes," he said. "Any royalties that are received by VLSI, a large chunk of that goes to NXP. So that's why it's
`a cooperation agreement. So the up-front payment was just a partial or an initial payment to, in effect, get
`the licensing program under way."
`
`And further, Sullivan insisted, the earlier company acquisitions were done by people who didn't understand
`the real value of the patents because they didn't have Intel's secret data and secret testing tools to
`understand how much benefit Intel derived from the technologies.
`
`"Is it fair to say we in this room today, those who have not been excluded [during sealed portions of the
`trial], actually know more today than NXP does at this same moment?" Proctor asked. Sullivan said yes.
`
`After Sullivan left the stand, VLSI rested its case, and Intel began its case with two employees who gave an
`overview of the company's operations and then discussed how the chip giant developed and implemented
`on-chip voltage regulation internally, with testimony that no one in the company knew of the patents.
`
`That testimony was not as relevant as it could have been earlier in the case, however, because after VLSI
`rested its case, Judge Albright granted Intel judgment as a matter of law as to willfulness.
`
`Intel started delving heavily into integrated-circuit chips around 2008, VLSI lawyer Morgan Chu of Irell &
`Manella LLP told the jury in Monday's opening arguments.
`
`The current trial is the second of three planned trials in the case. The jury in the first trial delivered one of
`the largest patent infringement wins in history to VLSI, awarding nearly $2.18 billion on two other patents.
`
`The patents-in-suit are U.S. Patent Nos. 6,366,522 and 6,633,187.
`
`VLSI is represented by Morgan Chu, Ben Hattenbach, Alan Heinrich, Christopher Abernethy, Ian Washburn,
`Elizabeth Tuan, Adina Stohl, Amy Proctor, Dominik Slusarczyk, Charlotte Wen, Brian Weissenberg, Benjamin
`Manzin-Monnin, Jordan Nafekh and Babak Redjaian of Irell & Manella LLP, Craig Cherry of Haley & Olson PC
`and Andy Tindel, J. Mark Mann and G. Blake Thompson of Mann Tindel Thompson.
`
`Intel is represented by William Lee, Louis Tompros, Kate Saxton, Gregory Lantier and Amanda Major of
`WilmerHale, J. Stephen Ravel and Kelly Ransom of Kelly Hart & Hallman LLC and James Wren of Baylor Law
`School.
`
`The case is VLSI Technology LLC v. Intel Corp., case number 6:19-cv-00255, in the U.S. District Court for
`the Western District of Texas.
`
`--Editing by Orlando Lorenzo.
`
`All Content © 2003-2021, Portfolio Media, Inc.
`
`https://www.law360.com/articles/1375152/print?section=ip
`
`2/2
`
`Page 2 of 2
`
`KOSS-2028
`IPR2021-00381
`
`