Paper 131
`
`Director PTABDecision Review@uspto.gov
` Date: August 3, 2023
`571-272-7822
`
`
`
`
`
` PUBLIC VERSION
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE OFFICE OF THE UNDER SECRETARY OF COMMERCE
`FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`PATENT QUALITY ASSURANCE, LLC,
`INTEL CORPORATION,
`Petitioners,
`
`v.
`
`VLSI TECHNOLOGY LLC,
`Patent Owner.
`____________
`
`IPR2021-012291
`Patent 7,523,373 B2
`____________
`
`
`
`
`
`
`Before KATHERINE K. VIDAL, Under Secretary of Commerce for
`Intellectual Property and Director of the United States Patent and
`Trademark Office.
`
`
`DECISION
`Determining Failure to Comply with Mandatory Discovery;
`Misrepresentation of Fact, and
`Misleading Argument; and
`Ordering Petitioner Patent Quality Assurance, LLC to Show Cause
`
`
`1 Intel Corporation (“Intel”), which filed a Petition in IPR2022-00479, has
`been joined as a party to this proceeding. Paper 30.
`
`
`
`Controlled by: United States Patent and Trademark Office, OCAO, RICPO, 571-272-9990
`
`

`

`
`
`
`PUBLIC VERSION
`
`
`IPR2021-01229
`Patent 7,523,373 B2
`
`
`I previously ordered Petitioner Patent Quality Assurance, LLC
`(“PQA”) to show cause why it should not be sanctioned for its conduct in
`this proceeding. Although this decision is on a motion for reconsideration, I
`consider the issues anew, because I provided PQA with additional briefing
`to show cause why it should not be sanctioned.
`Having considered the issues anew, I determine that PQA’s conduct in
`this proceeding rises to the level of sanctionable conduct, and hereby give
`the parties notice that I am contemplating imposing an attorney-fee order or
`an admonishment as a sanction.
`
`PROCEDURAL HISTORY
`I.
`On January 26, 2022, the Patent Trial and Appeal Board (“PTAB” or
`“Board”) issued a decision granting institution of an inter partes review
`(“IPR”) of claims 1–16 (“challenged claims”) of U.S. Patent No. 7,523,373
`B2 (“the ’373 patent”), based on a Petition filed by PQA. Paper 10
`(“Institution Decision”). This Decision on whether to issue sanctions to
`PQA arises on Director Review of the Decision on Institution in this
`proceeding. See generally Paper 31; Paper 35; Paper 102.2
`There is a complex background to this proceeding, some of which
`provides necessary context for the discovery I ordered in this proceeding and
`some of which is directly relevant to my finding below that PQA made
`misleading arguments about the availability of an expert witness.
`
`
`2 Paper 102 is the nonconfidential version of my previous decision on
`Director Review; Paper 101 is the confidential version.
`2
`
`
`
`Controlled by: United States Patent and Trademark Office, OCAO, RICPO, 571-272-9990
`
`

`

`
`
`
`PUBLIC VERSION
`
`
`IPR2021-01229
`Patent 7,523,373 B2
`
`
`A.
`
`Jury Verdict in the U.S. District Court for the Western District of
`Texas
` VLSI sued Intel for infringement of the ’373 patent in the Waco
`Division of the United States District Court for the Western District of Texas
`on April 11, 2019. VLSI Tech. LLC v. Intel Corp., Case No. 1-19-cv-00254-
`ADA (consolidated as 1-19-cv-00977) (W.D. Tex.).
`The trial resulted in a jury verdict finding that Intel infringed claims 1,
`5, 6, 9, and 11 of the ’373 patent. Ex. 1031, 2–4. The jury awarded VLSI
`$1.5 billion in damages for infringement of the ’373 patent.3 Id. at 6. Intel
`did not challenge, and the jury did not consider, the validity of the claims of
`the ’373 patent. See id.; Paper 10, 6. Intel appealed to the United States
`Court of Appeals for the Federal Circuit, and that appeal is currently pending
`as VLSI Technology LLC v. Intel Corporation, No. 22-1906 (Fed. Cir. June
`15, 2022). Because validity of the ’373 patent was not at issue in the jury
`trial, the appeal will not resolve the unpatentability issues pending before the
`Board.4
`
`
`3 The jury also found that Intel did not literally infringe U.S. Patent No.
`7,725,759 B2 (“the ’759 patent”), but did infringe claims 14, 17, 18 and 24
`of that patent under the doctrine of equivalents. Ex. 1031, 2–4. The jury
`further found that Intel had not proven by clear and convincing evidence that
`claims 14, 17, 18, and 24 of the ’759 patent were invalid as anticipated. Id.
`at 5. The jury awarded VLSI $675 million in damages for Intel’s
`infringement of the ’759 patent, bringing the total damages award to $2.175
`billion. Ex. 1031, 2–4. The ’759 patent is the subject of IPR2021-01064.
`4 As noted in footnote 3 above, the validity of the ’759 patent was tried to
`the same jury.
`
`
`
`3
`
`Controlled by: United States Patent and Trademark Office, OCAO, RICPO, 571-272-9990
`
`

`

`
`
`
`PUBLIC VERSION
`
`
`IPR2021-01229
`Patent 7,523,373 B2
`
`
`Intel’s Prior Petition
`B.
`Within one year of being sued for infringement by VLSI and over a
`year before the trial in the Western District of Texas, Intel filed an IPR
`petition challenging claims of the ’373 patent. IPR2020-00158, Paper 3.
`Considering the factors set forth in the Board’s precedential decision in
`Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020)
`(precedential) (“the Fintiv factors”), however, the Board exercised discretion
`to deny institution of the proceeding. IPR2020-00158, Paper 16, 14. In
`particular, the Board highlighted “the advanced stage of the Western District
`of Texas litigation, a currently scheduled trial date approximately seven
`months before the would-be deadline for a final written decision, and the
`overlap between the issues.” Id. The Board did not address the merits of the
`Petition, other than noting “that the merits of the Petition do not outweigh
`the other Fintiv factors.” Id. Notably, the Board issued this decision prior to
`the issuance of the June 21, 2022, Director’s Memorandum (“Guidance
`Memo”),5 which instructs the PTAB to “consider[] the merits of a
`petitioner’s challenge when determining whether to institute a post-grant
`proceeding in view of parallel district court litigation” and that “compelling,
`meritorious challenges will be allowed to proceed at the PTAB even where
`district court litigation is proceeding in parallel.” Guidance Memo at 4–5.
`
`
`5 Interim Procedure for Discretionary Denials in AIA Post-Grant
`Proceedings with Parallel District Court Litigation (USPTO June 21, 2022),
`available at
`www.uspto.gov/sites/default/files/documents/interim_proc_discretionary_de
`nials_aia_parallel_district_court_litigation_memo_20220621_.pdf.
`4
`
`
`
`Controlled by: United States Patent and Trademark Office, OCAO, RICPO, 571-272-9990
`
`

`

`
`
`
`PUBLIC VERSION
`
`
`IPR2021-01229
`Patent 7,523,373 B2
`
`
`C. OpenSky’s Petition
`On June 7, 2021, OpenSky filed a petition for inter partes review
`challenging claims 1–3, 5, 6, 9–11, and 13 of the ’373 patent in IPR2021-
`01056. IPR2021-01056, Paper 2. OpenSky copied extensively from Intel’s
`earlier petition. IPR2021-01056, Ex. 2016 (redline comparison of portions
`of the petition in IPR2021-01056 with portions of Intel’s petition in
`IPR2020-00158). OpenSky further refiled the declaration of Intel’s expert
`witness, Dr. Adit Singh, which Dr. Singh prepared for Intel in IPR2020-
`00158, without Dr. Singh’s knowledge and without engaging him as a
`witness for the OpenSky proceeding. See IPR2021-01056, Paper 2; Exs.
`1002, 2037.6 PQA filed its petition in this proceeding one month after
`OpenSky, and urged that the Board not deny its petition in favor of
`OpenSky’s. See infra.
`On December 23, 2021, the Board denied OpenSky’s petition
`challenging the claims of the ’373 patent. IPR2021-01056, Paper 18. The
`Board found “no indication that [OpenSky] ever spoke to Dr. Singh or
`attempted to retain him for this proceeding or secure his availability for
`cross examination before filing his declaration.” Id. at 8. Instead, based on
`PQA’s representations, see infra §§ I.D, III., the Board found that Dr. Singh
`
`
`6 OpenSky also filed an identical copy of the declaration of Intel’s other
`expert, Dr. Sylvia Hall-Ellis, without change. IPR2021-01056, Paper 17, 9;
`IPR2021-01056, Ex. 1027. Dr. Hall-Ellis is a librarian who had proffered
`testimony regarding the prior art status of certain references relied on in
`Intel’s previous petition. See IPR2021-01056, Ex. 1027.
`
`
`
`5
`
`Controlled by: United States Patent and Trademark Office, OCAO, RICPO, 571-272-9990
`
`

`

`
`
`
`PUBLIC VERSION
`
`
`IPR2021-01229
`Patent 7,523,373 B2
`
`had agreed to work exclusively for PQA in this proceeding, and OpenSky
`had not provided any factual support that Dr. Singh would be released from
`his obligation to PQA so that he could be cross-examined about the content
`of his declaration in the OpenSky proceeding. Id. at 9. The Board found
`that OpenSky “brought forth the testimony of an expert that [OpenSky]
`likely cannot produce for cross-examination and would likely be excluded.”
`Id. Accordingly, the Board concluded that OpenSky’s petition did not
`warrant institution. Id.
`
`PQA’s Petition
`D.
`On July 7, 2021, PQA filed the Petition for inter partes review in this
`proceeding, challenging claims 1–16 of the ’373 patent. Paper 1 (“Petition”
`or “Pet.”).7 Like OpenSky, PQA copied extensively from Intel’s earlier
`petition. Ex. 2016 (comparison of portions of the petition in this IPR with
`portions of Intel’s petition in IPR2020-00158). Again, like OpenSky, PQA
`refiled Intel’s supporting declaration of Dr. Singh with minor changes. See
`Exs. 1002, 2022.8 Unlike OpenSky, however, PQA contacted Dr. Singh
`prior to filing the Petition and retained Dr. Singh as an expert for this
`proceeding. See Exs. 1034; 2053, 9:5–9. According to Dr. Singh’s
`declaration in the case, he had been “exclusively retained by Petitioner
`
`
`7 Unless otherwise indicated, Papers enumerated herein refer to Papers filed
`in IPR2021-01229 and “Petition” or “Pet.” refer to PQA’s Petition in
`IPR2021-01229.
`8 PQA also filed a virtually identical copy of the declaration of Intel’s other
`expert, Dr. Hall-Ellis. Paper 7, 6; Ex. 1027.
`
`
`
`
`6
`
`Controlled by: United States Patent and Trademark Office, OCAO, RICPO, 571-272-9990
`
`

`

`PUBLIC VERSION
`
`
`IPR2021-01229
`Patent 7,523,373 B2
`
`Patent Quality Assurance LLC s:\ [sic] for the duration of th[e] case.”9 Ex.
`1002, ¶174; see also Ex. 1034, 2 (engagement agreement with PQA required
`that he “will not accept new consulting engagements related to the
`Challenged Patent without prior written consent.” (emphasis in original)).
`That agreement was executed just three days after OpenSky petitioned for
`review of the ’373 patent, which relied on Dr. Singh’s nearly identical
`declaration. Id. at 3 (signed June 10, 2021).
`In its Petition, PQA argued that the Board should not exercise
`discretion to deny institution of this proceeding under 35 U.S.C. §§ 314(a) or
`325(d). See Pet. 2–5. In addressing discretionary denial, PQA argued that:
`
`the integrity of the patent system is at issue, as a jury recently
`found a well-known U.S. company (Intel Corporation) liable
`for infringement of the ’373 patent and awarded $1.5 billion to
`Patent Owner—one of the top 5 largest infringement damage
`awards. . . . Because no examiner, court, or other tribunal has
`evaluated the ’373 patent’s validity in view of the grounds
`presented herein, review is necessary to instill confidence in the
`integrity of the patent system and to ensure that innovative U.S.
`companies (and their consumers) are not unfairly taxed by
`entities asserting invalid patents.
`Id. at 2–3.
`
`
`9 Even though PQA essentially copied verbatim Dr. Singh’s declaration from
`the Intel IPR, PQA made a point of adding this one sentence to his
`declaration including this typo. Compare Ex. 1002 ¶ 174 with IPR2020-
`00158, Ex. 1002 ¶ 17; see also Ex. 2022 (side-by-side comparison of
`substance of Singh declarations in Intel and PQA cases).
`7
`
`
`
`Controlled by: United States Patent and Trademark Office, OCAO, RICPO, 571-272-9990
`
`

`

`
`
`
`PUBLIC VERSION
`
`
`IPR2021-01229
`Patent 7,523,373 B2
`
`
`As to OpenSky’s earlier-filed petition, PQA asserted that PQA
`“exclusively engaged Dr. Singh and Dr. Hall-Ellis to challenge the ’373
`patent. Thus, OpenSky cannot present either expert for cross-examination as
`required.” Id. at 4 (emphasis in original). PQA thus argued that the Board
`should not discretionarily deny its Petition in favor of OpenSky’s defective
`petition, and that “OpenSky must either dismiss its petition to refile with a
`new expert or risk exclusion of its expert declaration as mere hearsay.” See
`id. at 4–5.
`In this proceeding, the Board reviewed the evidence and arguments in
`the Petition, Patent Owner Preliminary Response, Preliminary Reply, and
`Preliminary Sur-reply, and instituted the requested IPR on January 26, 2022.
`Institution Decision 24. Specifically, the Board found that the Fintiv factors
`did not weigh in favor of discretionary denial in large part because neither
`the Board in Intel’s IPRs nor the district court jury trial considered the merits
`of the unpatentability issues presented in this proceeding. Id. at 6–7.
`On February 8, 2022, VLSI sought to challenge the Institution
`Decision, filing requests for rehearing and for review by the Precedential
`Opinion Panel (“POP”). Paper 13. In the rehearing request, VLSI argued
`that “[t]he Board should not permit entities formed after the verdict and
`facing no infringement threat to treat these proceedings as leverage to extract
`ransom payments in exchange for withdrawing abusive attacks.” Id. at 1, 6–
`8. VLSI argued that such a proceeding advances no valid public interest and
`“fail[s] to weigh the overarching interests of fairness to the parties and the
`integrity of the patent system.” Id. at 1–2, 9–10.
`
`
`
`8
`
`Controlled by: United States Patent and Trademark Office, OCAO, RICPO, 571-272-9990
`
`

`

`
`
`
`PUBLIC VERSION
`
`
`IPR2021-01229
`Patent 7,523,373 B2
`
`
`Intel’s Motion for Joinder
`E.
`Within one month of the Board’s institution of this proceeding, Intel
`timely filed its own second petition for IPR with a Motion for Joinder to this
`proceeding. Paper 30; IPR2022-00479, Papers 3 and 4. The Board joined
`Intel to this proceeding on June 6, 2022, determining that Intel’s petition
`warranted institution and declining to discretionarily deny institution under
`35 U.S.C. §§ 314(a) and 325(d). Paper 30. In considering discretionary
`denial, the Board determined that:
`[a]lthough Petitioner has directed this Petition to the same
`claims and relies on the same art as in its first petition, that the
`Board did not substantively address the merits of the prior Intel
`petition, in our view, weighs against discretionary denial here.
`The district-court trial that led to the denial of its initial
`petitions is over and did not resolve the challenges presented
`here. Allowing Petitioner the opportunity to pursue a decision
`on the merits from the Board at this time—by joining PQA’s
`substantially identical petition—best balances the desires to
`improve patent quality and patent-system efficiency against the
`potential for abuse of the review process by repeated attacks on
`patents.
`Id. at 9–10 (citing General Plastic Industrial Co., Ltd. v. Canon Kabushiki
`Kaisha, IPR2016-01357 et al., Paper 19 (PTAB Sept. 6, 2017) at 16–17
`(“General Plastic”)). The Board correctly identified that the statute
`expressly provides an exception to the one-year time bar (set forth in 35
`U.S.C. § 315(b)) for a request for joinder. Paper 30 at 7 n.7, 18 (citing 35
`U.S.C. § 315(b) (“The time limitation set forth . . . shall not apply to a
`request for joinder under subsection (c)”)). VLSI requested POP review of
`
`
`
`9
`
`Controlled by: United States Patent and Trademark Office, OCAO, RICPO, 571-272-9990
`
`

`

`
`PUBLIC VERS