Case 1:18-cv-00966-CFC-CJB Document 936 Filed 03/15/22 Page 1 of 16 PageID #: 37445
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`
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`
`
`VLSI TECHNOLOGY LLC,
`
`Plaintiff,
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`
`
`
`
`
`
`v.
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`INTEL CORPORATION,
`
`Case No. 18-cv-966-CFC-CJB
`
`
`
`
`
`
`Defendant.
`
`VLSI’S REPLY MEMORANDUM IN SUPPORT OF ITS MOTION FOR
`SUMMARY JUDGMENT REGARDING INTEL’S AFFIRMATIVE
`DEFENSE OF LICENSE (D.I. 804)
`
`(VLSI’s MSJ #1)
`
`
`
`
`
`
`
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`
`
`
`
`Dated: March 8, 2022
`
`Brian E. Farnan (Bar No. 4089)
`Michael J. Farnan (Bar No. 5165)
`FARNAN LLP
`919 N. Market St., 12th Floor
`Wilmington, DE 19801
`Telephone : (302) 777-0300
`Fax : (302) 777-0301
`bfarnan@farnanlaw.com
`mfarnan@farnanlaw.com
`
`Morgan Chu (admitted pro hac vice)
`Benjamin Hattenbach (admitted pro hac vice)
`Iian D. Jablon (admitted pro hac vice)
`Ian Washburn (admitted pro hac vice)
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`Case 1:18-cv-00966-CFC-CJB Document 936 Filed 03/15/22 Page 2 of 16 PageID #: 37446
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`Christopher Abernethy (admitted pro hac vice)
`Amy E. Proctor (admitted pro hac vice)
`Dominik Slusarczyk (admitted pro hac vice)
`S. Adina Stohl (admitted pro hac vice)
`Charlotte J. Wen (admitted pro hac vice)
`IRELL & MANELLA LLP
`1800 Avenue of the Stars, Suite 900
`Los Angeles, California 90067
`Telephone: (310) 277-1010
`mchu@irell.com
`bhattenbach@irell.com
`ijablon@irell.com
`iwashburn@irell.com
`cabernethy@irell.com
`aproctor@irell.com
`dslusarczyk@irell.com
`astohl@irell.com
`cwen@irell.com
`
`Attorneys for Plaintiff VLSI Technology LLC
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`Case 1:18-cv-00966-CFC-CJB Document 936 Filed 03/15/22 Page 3 of 16 PageID #: 37447
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`TABLE OF CONTENTS
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`Page
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`I.
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`INTRODUCTION ........................................................................................ 1
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`II.
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`ARGUMENT ................................................................................................ 2
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`1.
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`VLSI Is Not Bound By the Finjan Settlement. .................................. 2
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`A. VLSI Is Not a Party to the 2012 Contract ................................ 2
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`B.
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`VLSI Did Not Adopt the Finjan Settlement ............................ 4
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`VLSI’s Patents Are Not “Finjan’s Patents.” ...................................... 6
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`Intel’s License Defense Is Barred By Res Judicata. .......................... 8
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`2.
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`3.
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`III. CONCLUSION ............................................................................................. 9
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`Case 1:18-cv-00966-CFC-CJB Document 936 Filed 03/15/22 Page 4 of 16 PageID #: 37448
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`
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`Cases
`
`TABLE OF AUTHORITIES
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` Page(s)
`
`Amadeus Global Travel Distribution, S.A. v. Orbitz, LLC,
`302 F. Supp. 2d 329 (D. Del. 2004)...................................................................... 8
`
`Brown v. Henderson,
`257 F.3d 246 (2d Cir. 2001) ................................................................................. 7
`
`In re Fed.-Mogul Glob., Inc.,
`526 B.R. 567 (D. Del. 2015) ................................................................................. 5
`
`Kleppinger v. Associates Corp. of North America,
`2003 WL 22329032 (N.D. Tex. Oct. 6, 2003) ...................................................... 9
`
`Linton v. Whitman,
`2009 WL 2060091 (W.D. Tex. July 9, 2009) ....................................................... 9
`
`Medicalgorithmics S.A. v. AMI Monitoring, Inc.,
`2016 WL 4401038 (Del. Ch. Aug. 18, 2016) ....................................................... 2
`
`MicroStrategy Inc. v. Acacia Research Corp.,
`2010 WL 5550455 (Del. Ch. Dec. 30, 2010)........................................................ 3
`
`Nilsen v. City of Moss Point, Miss.,
`701 F.2d 556 (5th Cir. 1983) ................................................................................ 8
`
`Oyster Optics, LLC v. Infinera Corp.,
`843 F. App’x. 298 (Fed. Cir. 2021) ...................................................................... 3
`
`Respler on Behalf of Magnum Hunter Resources Corp. v. Evans,
`27 F. Supp. 3d 418 (D. Del. 2014) ........................................................................ 8
`
`Sci. Accessories Corp. v. Summagraphics Corp.,
`425 A.2d 957 (Del. Super. 1980) .......................................................................... 5
`
`Seltzer v. I.C. Optics, Ltd.,
`339 F. Supp. 2d 601 (D.N.J. 2004) ....................................................................... 7
`
`In re Shorenstein Hays-Nederlander Theatres LLC Appeals,
`213 A.3d 39 (Del. 2019) ....................................................................................... 3
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`Case 1:18-cv-00966-CFC-CJB Document 936 Filed 03/15/22 Page 5 of 16 PageID #: 37449
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`Sun Capital Partners III, LP v. New England Teamsters & Trucking
`Indus. Pension Fund,
`943 F.3d 49 (1st Cir. 2019) ................................................................................... 7
`
`United States v. Bestfoods,
`524 U.S. 51 (1998) ................................................................................................ 7
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`Case 1:18-cv-00966-CFC-CJB Document 936 Filed 03/15/22 Page 6 of 16 PageID #: 37450
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`I.
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`INTRODUCTION
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`Intel cannot meet its burden of proof on its license defense. First, the
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`undisputed facts show that VLSI is not a party to, never adopted, and therefore
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`cannot be bound by the 2012 Finjan Settlement upon which Intel bases its license
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`argument. Second, even were VLSI deemed a party to the Finjan Settlement (it
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`cannot be), for multiple reasons the plain language of that contract excludes
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`VLSI’s patents—which VLSI acquired from NXP in and after 2016—from the
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`scope of the patents Intel licensed from Finjan. Third, Intel waived its license
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`defense by failing to litigate it during the parties’ two patent infringement trials
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`in Texas, and res judicata precludes Intel from now seeking to litigate the
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`defense here. For each of these independent reasons, summary judgment should
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`be entered in VLSI’s favor.
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`In its opposition, Intel cites a handful of inapposite decisions in which a
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`contract was found to extend to a later-created or later-acquired non-signatory
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`entity. However, unlike in those cases, VLSI is a complete stranger to the
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`contract under which Intel is claiming a license. VLSI was not created or
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`acquired by Finjan or its “Affiliates,” nor is Finjan using VLSI as a proxy to sue
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`Intel on Finjan’s patents. To the contrary, VLSI and Finjan are separately owned
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`and operated, and VLSI had no role in the July 2020 Finjan-Goldfish merger.
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`The sole relevant commonality between VLSI and Finjan is that their
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`respective owners have each retained non-party Fortress as investment advisors.
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`Case 1:18-cv-00966-CFC-CJB Document 936 Filed 03/15/22 Page 7 of 16 PageID #: 37451
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`Intel’s contention that the Court should therefore find that the term “Finjan” in
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`the Finjan Settlement now means “VLSI” is wholly unsupported by the decisions
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`Intel cites and is contrary to Delaware law.
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`II. ARGUMENT
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`1.
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`VLSI Is Not Bound By the Finjan Settlement.
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`A. VLSI Is Not a Party to the 2012 Contract
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`VLSI has submitted a host of evidence showing that VLSI is not a party
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`to the Finjan Settlement, was not created by Finjan or its “Affiliates,” is not
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`asserting any patents acquired from Finjan, and is owned and operated separately
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`from Finjan. D.I. 810-00 (“SOF”) ¶¶ 3-5, 14-15, 23-25. Intel nonetheless argues
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`that VLSI should be bound by the Finjan Settlement because Fortress provides
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`services to each of VLSI and Finjan in Fortress’s capacity as investment advisors
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`for their respective (and different) owners. However, Intel cites no authority
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`holding that VLSI is obligated to give Intel a free license to VLSI’s patents
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`simply because both VLSI’s owners and (separately) Finjan’s owners each
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`retained Fortress.
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`Instead, Intel cites several decisions based on inapposite facts. For
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`example, in Medicalgorithmics S.A. v. AMI Monitoring, 2016 WL 4401038 (Del.
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`Ch. Aug. 18, 2016), a non-signatory was bound by a contract where it was
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`commonly owned and “operated in a coordinated fashion as a single business”
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`with a signatory, and the non-signatory affiliate repeatedly held itself out as a
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`party to the agreement and accepted its benefits. Id. at *1, 18-19.
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`Likewise, in In re Shorenstein Hays-Nederlander Theatres LLC Appeals,
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`213 A.3d 39, 57-59 (Del. 2019), a non-signatory affiliate was bound where it
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`was owned and controlled by the same individual who owned the signatory, and
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`the non-signatory had engaged in conduct indicating its assent to be bound.
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`Similarly, in MicroStrategy v. Acacia Research, 2010 WL 5550455, at
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`*12 (Del. Ch. Dec. 30, 2010), the plaintiff signed a contract binding its current
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`and future “Affiliates,” and five months later formed a new wholly-owned
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`subsidiary to circumvent its obligations under the agreement. Id. at *10, 12.
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`In sharp contrast, here VLSI is a stranger to the contract between Intel and
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`Finjan and never adopted it. VLSI was created years after the fact, and VLSI’s
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`creation had nothing to do with Finjan. VLSI did not acquire Finjan, nor did
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`Finjan acquire VLSI. VLSI and Finjan are separately owned and operated, and
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`VLSI is not asserting patents ever owned by Finjan. SOF ¶¶ 5, 22-25, 14-15.
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`Further, VLSI has consistently taken the position since learning of the Finjan
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`Settlement in August 2020 that VLSI is not a party to or bound by it. SOF ¶¶ 6-
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`8; D.I. 875-01, Ex. F ¶ 87.
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`Intel also cites Oyster Optics, LLC v. Infinera, 843 F. App’x. 298, 300
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`(Fed. Cir. 2021), and contends that decision “bound” a non-signatory affiliate to
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`a license agreement. D.I 873 at 10. Intel is wrong. In Oyster Optics, the issue
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`presented was whether, under New York law, the license extended to a non-
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`signatory that later acquired the original licensee. 843 F. App’x. at 299-300.
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`The facts before this Court are entirely different. Nothing in Oyster Optics
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`supports the conclusion that a licensee (here, Intel) could somehow obtain a free
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`license to all patents owned by an unrelated entity (Goldfish) that subsequently
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`acquires the licensor (Finjan) – let alone a free license to all patents owned by
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`that acquirer’s purported “affiliates” (VLSI). And, as previously discussed,
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`numerous courts have rejected contract arguments nearly identical to Intel’s.
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`D.I. 807 at 8-10.
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`B. VLSI Did Not Adopt the Finjan Settlement
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`Intel incorrectly contends that VLSI “implicitly” adopted the Finjan
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`Settlement, claiming that Fortress learned about the license provisions before the
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`Finjan-Goldfish merger, and Fortress’s knowledge should supposedly be
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`imputed to VLSI. D.I. 873 at 13.
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`There is no evidence that Fortress knew about the license provisions of
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`the Finjan Settlement before the merger. See D.I. 878-00 (“RSOF”) ¶ 21.
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`. Thus, even if Fortress knew of the license
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`
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`provisions of the Finjan Settlement, Fortress would have had a contractual
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`obligation not to share such information with VLSI. E.g., D.I. 810-02 § 7;
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`Reply-Ex. 5 (Northrop) at 64:14-65:16; Reply-Ex. 6; D.I. 802-01, Ex. 21 at
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`SIDLEY_00003910. Further, because VLSI has nothing to do with Finjan, there
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`would have been no reason for Fortress to discuss Finjan with VLSI. SOF ¶¶ 5,
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`7, 22, 24-27. Thus, as a matter of law, Fortress’s alleged knowledge concerning
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`the Finjan Settlement is not imputed to VLSI. E.g., Sci. Accessories v.
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`Summagraphics, 425 A.2d 957, 962 (Del. 1980) (agent’s duty to disclose does
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`not require disclosing information outside the scope of agency, nor does it
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`require disclosing confidential information “which would be a breach of duty to
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`a third person.”). And it is undisputed that VLSI did not have actual knowledge
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`of the Finjan Settlement. SOF ¶¶ 4, 6; D.I. 874 at 2-3.
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`Intel cites multiple cases discussing implicit adoption of a contract. None
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`of those cases supports the proposition that Fortress’s alleged knowledge of the
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`Finjan Settlement (supposedly gained in the context of Fortress confidentially
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`advising Goldfish) could be construed as VLSI agreeing to give Intel a free
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`license to all of VLSI’s patents. E.g., In re Fed.-Mogul Glob., 526 B.R. 567,
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`576-77 (D. Del. 2015) (rejecting ‘implicit adoption’ where plaintiff failed to
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`provide specific proof of any “conduct” by which non-signatory “embraced a
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`direct benefit of the contract”).
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`In stark contrast, here VLSI was unaware of the Finjan Settlement until
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`Intel raised its license argument. SOF ¶¶ 4, 6; D.I. 810-05 ¶ 6. Further, Intel has
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`not identified a single tangible “benefit” that VLSI (or Fortress for that matter)
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`supposedly accepted, let alone any conduct by which VLSI affirmatively sought
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`Case 1:18-cv-00966-CFC-CJB Document 936 Filed 03/15/22 Page 11 of 16 PageID #: 37455
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`to obtain such a benefit. To the contrary, once Intel put VLSI on notice of the
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`contract in August 2020, VLSI has consistently maintained that VLSI is not a
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`party to, or bound by it. SOF ¶ 6.
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`Intel’s self-serving contention that VLSI (and Fortress) unknowingly
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`received a benefit because Intel has to date “only” filed IPR challenges against
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`VLSI patents that VLSI had already asserted against Intel lacks merit, as
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`discussed in VLSI’s previous briefing. D.I. 876 at 7-8.
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`2.
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`VLSI’s Patents Are Not “Finjan’s Patents.”
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`Intel’s license defense also fails for the separate and additional reason that
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`VLSI’s patents are not “Finjan’s Patents.”
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`First, Intel’s contention that the term “Finjan” as used in the Finjan
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`Settlement actually means “VLSI” defies common sense and Delaware law. D.I.
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`807 at 11-13.
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`Further, VLSI’s patents are not “Finjan’s Patents” because consideration
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`would be owed to “third person[s]” if the asserted patents were licensed to Intel,
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`including to NXP, VLSI (and its investors), and VLSI’s counsel. Id. at 13-16.
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`Intel has no evidence to the contrary. Indeed, Intel has repeatedly represented to
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`this and other courts that “NXP maintains a financial stake in VLSI’s assertion
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`of the former NXP patents.” D.I. 724 ¶ 164; D.I. 625 ¶ 164; Reply-Ex. 3 ¶ 129.
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`Now, Intel reverses course and argues that NXP would not have a
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`financial interest if VLSI were to give Intel a free license. Intel cannot controvert
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`its prior admissions to avoid summary judgment. E.g., Brown v. Henderson, 257
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`F.3d 246, 252 (2d Cir. 2001). Moreover, Intel’s question-begging contention
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`that after years of cooperation between VLSI and NXP against Intel pursuant to
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`the VLSI-NXP PPCA, Finjan could now somehow force VLSI to give Intel a
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`free license to all of VLSI’s patents with no consideration to any of VLSI (or its
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`investors), NXP, or VLSI’s counsel is unsupported by Delaware law or the
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`PPCA itself. See, e.g., D.I. 810-05 ¶¶ 4, 11; D.I. 810-12 (PPCA) §§ 3.1, 3.2
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`& 7.3, Reply-Ex. 2 (PPCA) §§ 2.4 & 4.3.
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`Intel contends that VLSI and Finjan are supposedly “Affiliates” because
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`both are allegedly “controlled” by Fortress. In support of this erroneous theory,
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`Intel incorrectly contends Fortress “controls” VLSI because Fortress personnel
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`comprise a majority of VLSI’s directors and also provide various administrative
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`services to VLSI. D.I. 873 at 3-4. But as explained in VLSI’s briefing, VLSI is
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`owned by outside investors, not by Fortress, and VLSI is run by an independent
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`CEO who is not employed by Fortress. D.I. 807 at 16; SOF ¶¶ 19-20, 27. The
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`owners of VLSI’s parent company have retained Fortress, and Fortress personnel
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` RSOF ¶¶ 12, 14.
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`
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`As a matter of law, Intel has not met its burden of showing that Fortress
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`“controls” VLSI. E.g., Seltzer v. I.C. Optics, Ltd., 339 F. Supp. 2d 601, 610
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`(D.N.J. 2004) (“domination or control . . . cannot be established by overlapping
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`Case 1:18-cv-00966-CFC-CJB Document 936 Filed 03/15/22 Page 13 of 16 PageID #: 37457
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`boards of directors”); United States v. Bestfoods, 524 U.S. 51, 69 (1998); Sun
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`Capital Partners III, LP v. New England Teamsters & Trucking Indus. Pension
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`Fund, 943 F.3d 49, 56-60 (1st Cir. 2019).
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`Likewise, Intel has failed to demonstrate that Fortress “controls” Finjan.
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`To the contrary, the record shows that Fortress’s relationship with Finjan is
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`analogous to Fortress’s relationship with VLSI.
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` RSOF ¶ 20.
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` Id. ¶ 16. Thus, Intel
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`has not shown that Fortress “controls” Finjan. E.g., Amadeus Glob. Travel
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`Distrib., S.A. v. Orbitz, LLC, 302 F. Supp. 2d 329, 337 (D. Del. 2004)
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`(“Delaware law . . . require[s] that control be actual.”).
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`3.
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`Intel’s License Defense Is Barred By Res Judicata.
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`Res judicata is decided under the law of the courts in the state in which the
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`judgment was entered, which here will be Texas. E.g., Respler on Behalf of
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`Magnum Hunter Resources v. Evans, 17 F. Supp. 3d 418, 420 (D. Del. 2014).
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`Once judgment enters in Waco, Intel’s license defense in this action will be
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`barred by res judicata because the license defense Intel seeks to assert here is
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`based on the same facts as the license defense that Intel waived in Texas. E.g.,
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`Nilsen v. City of Moss Point, 701 F.2d 556, 560, 563 (5th Cir. 1983) (denial of
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`Case 1:18-cv-00966-CFC-CJB Document 936 Filed 03/15/22 Page 14 of 16 PageID #: 37458
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`untimely motion to amend preclusive where same claim is subsequently raised
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`in another court); Kleppinger v. Assocs. of N. Am., 2003 WL 22329032, at *5-6
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`(N.D. Tex. Oct. 6, 2003) (same); Linton v. Whitman, 2009 WL 2060091, at *8
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`(W.D. Tex. July 9, 2009) (denial of motion to amend preclusive even if based
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`on procedural grounds).
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`III. CONCLUSION
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`Intel has failed to carry its burden of proof. VLSI respectfully requests
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`the Court enter summary judgment in VLSI’s favor.
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`Case 1:18-cv-00966-CFC-CJB Document 936 Filed 03/15/22 Page 15 of 16 PageID #: 37459
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`Dated: March 8, 2022
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`Respectfully submitted,
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`FARNAN LLP
`
`/s/ Brian E. Farnan
`
`Brian E. Farnan (Bar No. 4089)
`Michael J. Farnan (Bar No. 5165)
`FARNAN LLP
`919 N. Market St., 12th Floor
`Wilmington, DE 19801
`Telephone : (302) 777-0300
`Fax : (302) 777-0301
`bfarnan@farnanlaw.com
`mfarnan@farnanlaw.com
`
`Morgan Chu (admitted pro hac vice)
`Benjamin Hattenbach (admitted pro hac vice)
`Iian D. Jablon (admitted pro hac vice)
`Ian Washburn (admitted pro hac vice)
`Christopher Abernethy (admitted pro hac vice)
`Amy E. Proctor (admitted pro hac vice)
`Dominik Slusarczyk (admitted pro hac vice)
`S. Adina Stohl (admitted pro hac vice)
`Charlotte J. Wen (admitted pro hac vice)
`IRELL & MANELLA LLP
`1800 Avenue of the Stars, Suite 900
`Los Angeles, California 90067
`Telephone: (310) 277-1010
`mchu@irell.com
`bhattenbach@irell.com
`ijablon@irell.com
`iwashburn@irell.com
`cabernethy@irell.com
`aproctor@irell.com
`dslusarczyk@irell.com
`astohl@irell.com
`cwen@irell.com
`
`Attorneys for Plaintiff VLSI Technology LLC
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`Case 1:18-cv-00966-CFC-CJB Document 936 Filed 03/15/22 Page 16 of 16 PageID #: 37460
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`CERTIFICATE OF COMPLIANCE
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`The foregoing document complies with the type-volume limitation of this
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`Court's March 2, 2020 form Scheduling Order For All Case Where Infringement is
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`Alleged. The text of this brief, including footnotes, was prepared in Times New
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`Roman, 14 point font. According to the word processing system used to prepare it,
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`the brief contains 2,042 words, excluding case caption, signature blocks, table of
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`contents, and table of authorities.
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`Dated: March 8, 2022
`
`/s/ Brian E. Farnan
`Brian E. Farnan (Bar No. 4089)
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