Judge hits pause in Intel patent case, says VLSI must detail investors

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The Intel Corporation logo is seen on a display in a store in Manhattan, New York City, U.S., November 24, 2021. REUTERS/Andrew Kelly

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  • VLSI previously won more than $2 billion from Intel in Texas
  • Judge said disclosures of VLSI’s owners not specific enough

(Reuters) – A Delaware federal judge put VLSI Technology LLC’s patent case against Intel Corp on hold Monday, citing a failure to provide sufficient information about the company’s investors.

U.S. District Judge Colm Connolly said a court declaration from VLSI CEO Michael Stolarski gave vague information and improperly redacted details about several entities with a stake in the company.

The case is part of a blockbuster dispute over computer-chip patents that led to a $2.1 billion jury verdict for VLSI against Intel in Waco, Texas last year. Intel defeated VLSI’s bid for over $3 billion more in a second Waco trial, and a third trial in Austin was postponed after participants tested positive for COVID-19.

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Connolly announced that he was pausing the Delaware case until VLSI fully complies with a standing court order to reveal every entity with an interest in it.

Stolarski and VLSI’s lead attorney did not immediately respond to requests for comment.

“We welcome the Court’s interest in understanding who is backing VLSI’s case,” an Intel spokesperson said.

VLSI is a patent-holding company owned by investment funds managed by Fortress Investment Group LLC, a SoftBank Group Corp subsidiary. VLSI sued Intel in Delaware in 2018 for infringing five patents related to semiconductor technology.

Connolly issued a standing order in April that requires a corporate party to disclose every “owner, member, and partner.” In response, Stolarski named 10 entities that jointly own VLSI Technology’s parent company VLSI Holdings.

Stolarski said the majority owner, Fortress-managed FCOF IV UST LLC, is an investment fund “comprised of six individual funds, with combined total net assets of approximately $1.8 billion.” The “ultimate owners” of FCOF IV, he said, are “hundreds of outside investors” including “pension and retirement funds, sovereign wealth funds, foundations, high net worth individuals, endowments” and others.

VLSI’s nine minority owners are also Fortress-managed investment funds, Stolarski said.

Connolly said Monday that VLSI’s disclosures were “clearly inadequate.” He noted that Stolarski failed to identify the six funds that own FCOF IV or the investment funds backing VLSI’s minority owners.

Connolly also said he was “troubled” by VLSI’s redactions to some of its disclosures about its backers, and ordered them to be made public.

The case is VLSI Technology LLC v. Intel Corp, U.S. District Court for the District of Delaware, No. 1:18-cv-00966.

For VLSI: Morgan Chu of Irell & Manella

For Intel: William Lee of Wilmer Cutler Pickering Hale and Dorr

Read more:

Intel loses U.S. patent trial, ordered to pay $2.18 billion to VLSI Tech

Intel defeats VLSI Technology in $3.1 bln patent trial

COVID-19 cases derail billion-dollar Intel patent trial for now

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Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets. Reach him at blake.brittain@thomsonreuters.com