Richard Lloyd

Earlier this week a patent infringement lawsuit was filed against Intel in district court in Northern California by a company called VLSI Technology LLC. The chip giant stands accused of infringing eight VLSI patents which relate to semiconductor and microprocessor technology, and all of which originated with NXP Semiconductors or Freescale Semiconductor (which was bought by NXP in 2015).

According to the court filing, VLSI owns a portfolio of 160 US and foreign patents which cover “a wide variety of technologies, including integrated circuit technology”. It appears to take its name from a Silicon Valley business that was set up in the early 1980s and was ultimately acquired by Philips in 1999. A check of the USPTO assignment database shows that the company acquired the patents in a series of transactions dating back to August 2016.

The records show that one Eran Zur is the authorised signatory for VLSI Technology LLC on two of the assignments from last year – you can see those here and here. Zur is, of course, the head of the Fortress IP Group, which has done patent-backed debt financings with a series of NPEs and operating companies. Several of these, inclusing ones with Marathon and Inventergy, have recently resulted in Zur and his team taking control of large portfolios of assets as the entities concerned have struggled to pay what they owe. It is not clear what Fortress’s exact role is in relation to VLSI, but if it is in ultimate control of the assets it would mark an interesting change for the Fortress: it would be actively acquiring patents from a major operating company, rather than simply entering into financings that may or may not end up with it receiving assets. Of course, as many NPEs have struggled in the harsh licensing climate, the lending opportunities have presumably become scarcer.

As this blog reported recently Fortress has hired senior patent litigator Jon James from Perkins Coie as it looks to assert some of the patents in now controls in court. So far it has filed lawsuits against Apple, HTC and ZTE involving rights formerly owned by Inventergy. 

The assignments to VLSI come at a time when there increasing IP-related activity in the semiconductor sector, with consolidation leading to more patents changing hands. WiLAN, for instance, picked up a portfolio of more than 3,300 assets from Freescale in 2015, while NXP itself is in the midst of a takeover by Qualcomm (although there have been recent signs of that deal stalling). If Qualcomm is ultimately successful with the acquisition it will be worth watching whether it disposes of some of NXP’s patent portfolio; and, if it does, whether those assets end up in the hands of patent assertion vehicles.