U.S. Patent and Trademark Office (“USPTO”) Director Vidal is initiating sua sponte review of the Patent Trial and Appeal Board’s (“PTAB”) decisions to institute inter partes review of two patents owned by VLSI Technology LLC, for which over $2 billion of infringement damages were recently awarded against Intel. See OpenSky Indus. v. VLSI Tech. LLC, IPR2021-01064, Paper 41 (June 7, 2022); Patent Quality Assurance LLC v. VLSI Tech. LLC, IPR2021-01229, Paper 31 (June 7, 2022). In March of 2021, a Western District of Texas jury found Intel to have infringed VLSI’s patents, and awarded VLSI $1.5 billion and $675 million for infringement of each respective patent. See VLSI Tech. LLC v. Intel Corp., 2022 U.S. Dist. LEXIS 83985 (2022). The $2.175 billion verdict is one of the highest patent damages awarded in U.S. history.

Following VLSI’s win, OpenSky Industries LLC and Patent Quality Assurance LLC (both formed after the verdict against Intel) challenged the validity of the two VLSI patents by filing petitions for inter partes review (“IPR”), which the PTAB granted. See IPR2021-01064, Paper 17 (December 23, 2021); IPR2021-01229, Paper 10 (January 26, 2022). In response, VLSI filed a request for rehearing and Precedential Opinion Panel (“POP”) review.

In its request for POP review, VLSI contended that both OpenSky and Patent Quality were effectively gaming the PTAB in an effort to subvert the Texas jury’s decision. In March 2022, VLSI additionally informed PTAB that it had been contacted by counsel for OpenSky to reach a settlement agreement that would effectively “sabotage” other challengers. VLSI alleged that under OpenSky’s offered “collusive framework,” the parties would settle while maintaining a public image of continuing litigation.

In two orders issued on June 7, 2022, Director Vidal announced that VLSI’s POP appeals were denied and that she would review the PTAB’s institution decisions sua sponte under the Director review process. Director Vidal explained that review of the institution decision was proper because “this case raises novel issues of law and policy.” IPR2021-01064, Paper 41 (June 7, 2022); IPR2021-01229, Paper 31 (June 7, 2022).

Director Vidal did not stay the PTAB’s review of the merits against VLSI’s patents, which may signal that her review will be confined to harassment allegations against OpenSky and Patent Quality. See IPR2021-01064, Paper 41 (June 7, 2022); IPR2021-01229, Paper 31 (June 7, 2022).

The PTAB has allowed Intel to join both Patent Quality Assurance and OpenSky Industries’ IPRs. IPR2022-00479, Paper 13 (June 6, 2022); IPR2022-00366, Paper 14 (June 8, 2022). The PTAB had already denied a 2019 IPR petition by Intel against one of the patents, but the denial was because of parallel district court litigation and not merit. See IPR2020-00158, Paper 16.

Takeaway: The USPTO Director has discretion to review PTAB institution decisions, especially in cases that raise novel legal and policy issues. Such issues may include allegations of harassment and gamesmanship abuses of the IPR process.