Factual Stipulations May Simplify Discovery, but Also Help Plaintiff Navigate Difficult Issues of Fact and Law

VLSI TECHNOLOGY LLC v. INTEL CORP.

Before Moore, Chen, and Kleeh.  Appeal from the United States District Court for the Northern District of California.

Summary: The Federal Circuit reversed summary judgment of noninfringement by enforcing plaintiff’s stipulation as to the portion of accused products with a U.S. nexus, and affirmed the exclusion of one of plaintiff’s damages expert’s for failing to comply with the disclosure requirements of the N.D. Cal. Local Patent Rules.

In a longstanding patent dispute with Intel, VLSI accused Intel microprocessors of infringing eight patents directed to semiconductor and microprocessor technology. To simplify litigation involving multiple patents and hundreds of accused products each with varying degrees of foreign and domestic activity, the parties stipulated that (1) seventy percent of the global Intel products and activities “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,”  and (2) “neither party makes any admission about patent infringement . . . or damages.” The district court concluded VLSI could not rely on the stipulation for proof of domestic activity for infringement and granted summary judgment of noninfringement.  The district court also struck one of two VLSI damages expert reports.

The Federal Circuit reversed the noninfringement decision. The Federal Circuit interpreted the stipulation like any contract. The Federal Circuit rejected Intel’s argument that the stipulation was merely a mechanism to simplify damages calculations. It concluded the stipulation was unambiguous that 70% of accused products will be treated as having a U.S. nexus for infringement purposes and damages calculations. The Federal Circuit affirmed the district court’s decision to strike a damages reports for violating N.D. Cal. Local Patent Rules requiring early disclosure of theories of recovery and factual support. VLSI had provided limited support for the stricken contentions, did not disclose readily available figures, and placed relevant references in “several-page-long string citations.”

Editor: Sean Murray