VLSI-Intel II Post-Mortem

It’s been a busy couple weeks of non-blog-related stuff around these parts, so we apologize for neglecting y’all. We’ll try to make it up to you with a few posts’ worth of comprehensive lookbacks and mini-summaries. In this post we’ll share our own thoughts about VSLI-Intel II. The next post will cover other media’s coverage of the trial. Soon to be followed with one more post covering “everything else” of recent interest in the Waco Division. Off we go…!

As regular readers are now (we presume) aware, the VLSI-Intel II jury returned last Wednesday with a verdict of non-infringement. But the jury wasn’t just checking a uniform “defense verdict” box, as it also found that Intel had failed to invalidate VLSI’s patents. In any event, we’re now at a 1-1 split between the parties after VLSI’s $2B verdict in February, and sets up a “rubber match” in June’s scheduled VLSI-Intel III trial.

We’re not going to attempt to reconstruct the trial timeline from scratch, for two main reasons: We already know how it came out in the end; and at the end of the day, beat by beat VLSI-Intel II looked a lot like VLSI-Intel I—though with a few significant differences. In any case, we’re going to limit our analysis below to select highlights.

But first, a quick note on the timeline, for those wondering how it is the verdict came out on Wednesday: 

• VLSI finished its case-in-chief on the afternoon of Wednesday 4/14, and Intel then began its case.
• Friday was a no-trial-day because of a required WDTX judges’ meeting in San Antonio. 
• On Monday 4/19 VLSI crossed Intel’s technical expert Dr. Leeb; Intel put on its damages expert Mr. Houston; and the remainder of that trial day was devoted to VLSI’s rebuttal case (which went for a couple hours this time).
• Summations occurred Tuesday morning 4/20, and the jury began to deliberate at lunch—but notably didn’t finish that afternoon. Ultimately the jury reported its verdict about 3PM Wednesday afternoon.
• Judge Albright sat the jury till almost 6PM for several days during trial, and started before 9AM on multiple days, as well. But arguments on objections outside the jury’s presence were sometimes extensive, thus limiting the amount of time available to present evidence during any given trial day. 

For those counting, that now makes three of four trials before Judge Albright that have taken more than a week to conclude (the exception being ESW-Roku). Parties preparing to try a case in Waco would do well to plan to stay over at least a day or two into that second week.

Now, as promised, here are the selected highlights that jumped out to us:

• Local counsel: Intel increased the “Texan-ness” of the members of its defense team who had speaking roles before the jury. In VLSI-Intel I the role of local trial counsel was filled solely by Baylor Law Professor Jim Wren, who handled voir dire and then took (we think) either one or two witnesses at trial. For VLSI-Intel II, Prof. Wren upped his profile somewhat with an assertive cross-examination of VLSI’s very first witness Mr. Spehar. (We link below to Scott Graham’s in-depth coverage of that examination.) Intel also added esteemed veteran of the EDTX trial bar Harry “Gil” Gillam to its defense team; Gillam took a central role on damages and licensing fact and expert witnesses during both VLSI’s and Intel’s cases. (Intel is also represented by Austin practitioner Steve Ravel, but we don’t believe he spoke in front of the jury.)
• “Hometown” effect: Intel leaned a bit more on the parties’ respective geographic affiliations. The above-mentioned aggressive cross examination was (as was made clear to observers, though not the jurors, from ancillary argument) designed to allow Intel an “open door” to explore NXP’s and VLSI’s ties to Fortress Investment Group. This never happened, but as a “next best” option, Intel made much of the fact that both NXP and Intel were large multinationals, and that of the two, only Intel is actually a US company. (For those unaware, notwithstanding its large Austin presence, NXP is headquartered in the Netherlands.)
• Arguments: Judge Albright showed less patience for “tag team” style argument. i.e., For disputes concerning the testimony of any particular witness, the lawyer handling that witness needs to be familiar with and able to speak to all issues that may come up in connection with that witness’s testimony, on both direct and cross. 
• Objections: Intel in particular (though also VLSI to an extent) was much quicker to interpose objections than in VLSI-Intel I:
  • Intel objected frequently during VLSI’s direct examinations of VLSI’s first two fact witnesses (Mr. Spehar of NXP and Mr. Seaberg, formerly of NXP predecessor Sigmatel). Intel specifically took Mr. Spehar on voir dire regarding his foundation to testify concerning licensing, in light of prior deposition testimony going to lack of knowledge. The objection was overruled—though in this and most other instances, Judge Albright indicated it was a proper subject for cross-examination.
  • Intel also objected to VLSI’s expert relying on deposition testimony from two Austin-based inventors, on the grounds that they lived within 100 miles of Waco and were thus not “unavailable” within the meaning of FRE 804(a)(5) & 804(b)(1). VLSI rebutted that Intel’s 100-mile calculation was “as the crow flies,” but that for the witnesses to drive to Waco would involve more than 100 miles. Judge Albright overruled that objection, as well, and allowed introduction of deposition testimony.
  • Judge Albright overruled scope-based objections to deposition counter-designations: “They play what they want to play; you play what you want to play.”
  • Both parties objected extensively to the other side’s expert demonstratives. Judge Albright upheld objections based on attempts to revisit issues decided during claim construction or on summary judgment, but overruled objections that went to whether a sub-component of an expert’s analysis (average selling price for VLSI, component references of obviousness combinations for Intel) could be misleading or improper taken in isolation, even if the full opinion was ultimately admissible. 
  • Intel’s lead counsel Bill Lee objected multiple times during both Morgan Chu’s opening and summation for VLSI.
• Damages opinion testimony: Arguments regarding the admission of damages expert testimony were extensive. We can’t claim to have followed all the back-and-forth, but the most significant issues that hit our radar were:
  • Judge Albright upheld Intel’s objection to VLSI’s attempt to put on evidence of infringing sales before the date of first notice to Intel, overruling VLSI’s argument that those early sales would be relevant to the hypothetical negotiation, even though damages were precluded because of the Court’s ruling concerning Section 287 marking. Judge Albright ultimately ruled that evidence of pre-notice sales would not be shown to the jury, so long as Intel didn’t open the door by arguing/implying that its products had not been commercially successful.
  • Intel also successfully obtained a ruling from Judge Albright that VLSI’s rebuttal licensing expert Mr. Chandler would be precluded from testifying concerning a pair of very-large-dollar settlement agreements to which Intel was party, which VLSI intended to use as contextual rebuttal to Intel’s expert Mr. Houston’s reliance on several significantly smaller licenses. Those large-dollar amounts had come into evidence during VLSI-Intel I and were specifically referenced by Morgan Chu during VLSI’s summation. Intel strenuously objected that Mr. Chandler had never alleged that the licenses were actually comparable, and were thus inappropriate to put in front of the jury. Judge Albright challenged VLSI’s counsel to point to any section of Mr. Chandler’s report that contained a comparability foundation, and ultimately found the proffer to be lacking. Based on that determination, Judge Albright permitted VLSI to elicit testimony from Mr. Chandler only to the extent that he was aware of Intel licenses that were for larger-dollar amounts than those on which Mr. Houston had relied, but the specific dollar figures were never stated in front of the jury.

And that’s what we’ve got. As with trial #1, it was fascinating to watch the two very different ways these master litigators put on a case. We look forward to a similarly interesting collection of anecdotes following the conclusion of chapter 3 in June.

* * *

The blog thanks Tim Dewberry of Pillsbury and Jacob Porter of Dechert for their background discussion of and contributions to many of the thoughts above.

* * *

We’ll leave you with an updated version of the Trial Tracker that accounts for this verdict, plus a bit of additional recent action out of the EDTX: