The dispute centers on VLSI's allegations that Intel infringed U.S. Patent No. 8,566,836, which relates to selecting cores in multicore processors to execute specific tasks. VLSI sued Intel in 2017 for infringement of eight patents, asserting that Intel's processors violated multiple claims covering both method and apparatus innovations for optimizing processor performance. The case involves sophisticated semiconductor technology used in Intel's global manufacturing and distribution operations.
Chief Judge Moore, writing for the three-judge panel, found that a stipulation entered early in the litigation established U.S. nexus for 70% of Intel's accused products and activities. The agreement stated that 'seventy percent (70%)' of Intel products meeting technical requirements 'will be deemed to have a United States nexus as required by each subsection of 35 U.S.C. § 271 and for determining any patent infringement damages.' As Moore explained, 'the stipulation's plain and unambiguous language establishes that, for all accused Intel products and activities determined to meet the technical requirements of the asserted claims, 70% will automatically be treated as having a U.S. nexus for infringement purposes.'
The court delivered its strongest criticism of Intel's attempts to escape the stipulation's reach. Moore wrote that the court would 'decline to look past the clear language of the stipulation to "rescue" Intel from its decision to "freely enter[]" an agreement "which it later finds to be imprudently made."' The panel rejected Intel's argument that the stipulation was merely a damages calculation tool, noting that 'Section 271 is entirely about infringement, not damages.'
U.S. District Judge Beth Labson Freeman had granted Intel's motion for summary judgment on two grounds: extraterritoriality and rejection of VLSI's doctrine of equivalents theory. The district court concluded there was no genuine dispute that the claims' measurement-related limitations were infringed only outside the United States. Freeman also struck certain damages theories from VLSI expert Dr. Sullivan for inadequate disclosure under local patent rules. The case involved extensive discovery across multiple years with hundreds of accused Intel products.
Intel argued that the stipulation created an 'absurd' result because it would contradict the agreement's statement about not admitting infringement. But Moore explained that 'stipulating to a fact relevant to infringement, such as U.S. nexus, is not tantamount to an admission about infringement itself.' The court found Intel's interpretation would render meaningless the stipulation's reference to Section 271, which governs patent infringement liability. Intel also contended its accused products required external testing equipment to perform the claimed measuring functions, but VLSI presented evidence of built-in measurement circuitry that created factual disputes precluding summary judgment.
The Federal Circuit also reversed the district court's claim construction for apparatus claims, finding no clear prosecution disclaimer that would import an 'upon identifying' timing requirement into claim 10. Moore noted that the patent applicants' prosecution statements were 'at best, ambiguous or amenable to multiple reasonable interpretations,' insufficient to meet the 'clear and unmistakable' standard for prosecution disclaimer. This ruling revived VLSI's doctrine of equivalents theory for the apparatus claims, which the district court had rejected based on the erroneous claim construction.
However, the appellate court affirmed the district court's decision to strike Dr. Sullivan's net present value and value per unit damages theories for violating local patent disclosure rules. The court found no abuse of discretion in the magistrate judge's determination that VLSI's damages contentions contained only 'scattershot references to Intel data or documents' that failed to provide adequate notice. Despite this setback, VLSI retains damages theories from another expert, Mr. Chandler, which survived the district court's scrutiny and remain available for trial on remand.