21-05-14 VLSI Opposition To Intel's Rule 52 Motion (Unclean Hands)

Case 6:21-cv-00057-ADA Document 610 Filed 05/14/21 Page 1 of 27
IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS
WACO DIVISION
VLSI TECHNOLOGY LLC,

Plaintiff,
Cause No. 6:21-cv-00057-ADA

v.
INTEL CORPORATION,
Defendant.
VLSI'S OPPOSITION TO INTEL'S RULE 52 MOTION FOR JUDGMENT THAT

RECOVERY IS BARRED UNDER THE DOCTRINE OF UNCLEAN HANDS
10939359
TABLE OF AUTHORITIES
Page(s)
Cases
Abbott Point of Care Inc. v. Epocal, Inc.,

2012 WL 12897957 (N.D. Ala. 2012) .....................................................................................10
Advanced Magnetic Closures, Inc. v. Rome Fastener Corp.,

2006 WL 3342655 (S.D.N.Y. Nov. 16, 2006) ...........................................................................9
Advanced Processor Techs. LLC v. Analog Devices Inc.,

No. 2:11-CV-19-JRG-RSP, 2013 WL 12153769 (E.D. Tex. Mar. 20, 2013) ...................10, 11
Alliance Data Sys. Corp. v. Blackstone Capital P'rs V L.P.,

963 A.2d 746 (Del. Ch. 2009)..................................................................................................10
Branch Banking & Tr. Co. v. S & S Dev., Inc.,

620 F. App'x 698 (11th Cir. 2015) ...........................................................................................20
Bryant v. Mil. Dep't of Mississippi,

597 F.3d 678 (5th Cir. 2010) ...................................................................................................11
CompoSecure, L.L.C. v. CardUX, LLC,

206 A.3d 807 (Del. 2018) ........................................................................................................20
Dominant Semiconductors Sdn. Bhd. v. OSRAM GmbH,

524 F.3d 1254 (Fed. Cir. 2008)..................................................................................................8
Energy Intel. Grp., Inc. v. Kayne Anderson Cap. Advisors, L.P.,

948 F.3d 261 (5th Cir. 2020) ...............................................................................................8, 15
Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co.,

No. 2:15-CV-1202-WCB, 2017 WL 275465 (E.D. Tex. Jan. 20, 2017) ...................................6
Gilead Scis., Inc. v. Merck & Co.,

888 F.3d 1231 (Fed. Cir. 2018)........................................................................................7, 8, 11
Hazel-Atlas Glass Co. v. Hartford-Empire Co.,

322 U.S. 238 (1944) .................................................................................................................16
Hogan v. Raymond Corp.,

586 F. App'x 856 (3d Cir. 2014) ..............................................................................................17
Kaseberg v. Conaco, LLC,

360 F. Supp. 3d 1026 (S.D. Cal. 2018) ....................................................................................15
10939359 - ii -
Page
Keystone Driller Co. v. General Excavator Co.,

290 U.S. 240 (1933) ...........................................................................................................11, 16
In re Omeprazole Patent Litig.,

483 F.3d 1364 (Fed. Cir. 2007)..................................................................................................6
Orloff v. Saipem, Inc.,

280 F. Supp. 2d 620 (S.D. Tex. 2003), aff'd, 92 F. App'x 974 (5th Cir. 2004) .......................10
Oxbo Int'l Corp. v. H&S Mfg. Co., Inc.,

2017 WL 2272060 (W.D. Wis. May 23, 2017) .......................................................................13
Pharmacia Corp. v. Par Pharm., Inc.,

417 F.3d 1369 (Fed. Cir. 2005)................................................................................................20
Power Balance LLC v. Power Force LLC,

2010 WL 5174957 (C.D. Cal. Dec. 14, 2010) .........................................................................17
Precision Instrument v. Auto. Maint. Mach. Co.,

324 U.S. 806 (1945) .................................................................................................................16
Pro. Real Est. Invs., Inc. (PRE) v. Columbia Pictures Indus., Inc.,
508 U.S. 49 (1993) .....................................................................................................................8
SanDisk Corp. v. Memorex Prod., Inc.,

415 F.3d 1278 (Fed. Cir. 2005)................................................................................................13
Shockley v. Arcan, Inc.,

248 F.3d 1349 (Fed. Cir. 2001)................................................................................................17
Sumotext Corp. v. Zoove, Inc.,

2020 WL 4284823 (N.D. Cal. July 27, 2020) ............................................................................9
Synopsys, Inc. v. Magma Design Automation, Inc.,

2007 WL 420184 (N.D. Cal. Feb. 6, 2007) .............................................................................15
Therasense, Inc. v. Becton, Dickinson & Co.,

649 F.3d 1276 (Fed. Cir. 2011)............................................................................................6, 11
United States v. Bestfoods,

524 U.S. 51 (1998) ...................................................................................................................19
X-It Products, LLC v. Walter Kidde Portable Equipment, Inc.,

155 F.Supp.2d 577 (E.D. Va. 2001) ........................................................................................15
Xilinx, Inc. v. Altera Corp.,

1994 WL 782236 (N.D. Cal. Feb. 8, 1994) .........................................................................9, 20
10939359 12 09 - iii -
Page
Statutes
35 U.S.C. § 271(d) .........................................................................................................................11
Rules
Fed. R. Civ. Proc. 11 ........................................................................................................................9
All emphasis is added unless stated otherwise.
Numbered exhibits are attached to the Declaration of Charlotte J. Wen, file concurrently
herewith.
10939359 12 09 - iv -
I. PRELIMINARY STATEMENT
The jury in this case found that Intel Corporation ("Intel") infringed two of VLSI
Technology LLC's ("VLSI") patents. Intel now claims that the Court should nullify this verdict
due to VLSI's supposed "unclean hands." D.I. 590, Intel's Rule 52 Unclean Hands Motion
("Mot."). To obtain such an extraordinary remedy, Intel would have to demonstrate by clear and
convincing evidence that VLSI engaged in particularly "egregious misconduct" that "shocks the
moral sensibilities of the judge," such as defrauding the PTO, destroying or manufacturing
evidence, bribing witnesses, or committing perjury. But Intel does not even allege any of those
things, let alone prove them. Instead, it attempts to turn allegations of routine and perfectly
appropriate business practices and litigation conduct—e.g., spreading risk among different entities
or developing infringement positions through discovery—into unclean hands.
The Court should reject this attempt. During the hearing on VLSI's motion for summary
judgment, the Court emphasized that it was "extremely skeptical" of Intel's unclean hands defense.
Ex. 35 at 102:10-11 ("I am extremely skeptical of your argument here. That would be mild for me
to say."); id. at 102:15 ("I disagree kind of as a matter of law with the argument . . . ."). The Court
nonetheless permitted Intel to put on its evidence for this defense, saying expressly that this was
only so that the Court could rule on its merits with the benefit of a full record. Id. at 102:16-19;
104:9-11. Nothing has changed since then: With a full record, Intel's unclean hands defense
remains legally deficient.
First, Intel claims that VLSI, Fortress Investment Group ("Fortress"), and NXP
Semiconductors ("NXP") conspired to bring lawsuits against Intel without regard for their merits
while limiting their own downside risk. Intel, however, cannot claim that the present suit was
somehow brought in bad faith given that VLSI prevailed at trial. Intel also has not even attempted
to show that any of VLSI's other suits were brought in bad faith either. Even if it could, these suits
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have no relevance to whether the jury's award in this case should be set aside. Similarly, it is not
unclean hands to structure business arrangements to limit downside risks. Indeed, VLSI, NXP,
and Fortress have fiduciary obligations to their investors to limit risk and increase profits.
Second, Intel claims that VLSI's infringement theories "evolved" over the course of this
litigation. But developing and refining one's infringement and non-infringement contentions is
precisely what parties are supposed to do. This is the entire point of discovery. To the extent that
Intel believed that VLSI's infringement theories were inconsistent or untimely disclosed (which
they were not), it could have objected at the appropriate time. Having failed to do so, Intel cannot
now to seek to nullify the jury's damages award based on those theories.
Third, Intel claims that VLSI engaged in "gamesmanship" by failing to produce evidence
about VLSI's investors during discovery, but then "selectively" revealing this evidence at trial. But
VLSI did not withhold any evidence, and, if Intel believed it had, it should have brought a motion
to compel or sought other appropriate relief. Moreover, VLSI did not introduce evidence regarding
VLSI's investors at trial; Intel did. As the Court emphasized at trial, it was Intel (not VLSI) that
opened the door by directly asking NXP's representative about this topic. Intel's claim that this
was somehow a sinister plot concocted by VLSI, NXP, and Fortress makes no sense.
Fourth, Intel claims that VLSI manipulated evidence to convince the Court to preclude
Intel from discussing Fortress's relationship to VLSI at trial. But this is just an attempt by Intel to
relitigate an issue that it previously lost.
Intel does not
identify any factual misrepresentation made by VLSI to the Court. Instead, Intel simply repeats
the same arguments that the Court previously rejected.
Finally, Intel claims that VLSI
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Even setting aside the fact that VLSI was never , VLSI
agreed that it would not use any of these materials at trial and fully abided by this agreement.
Regardless, these materials only pertained to the '357 patent, which was never tried to the jury.
This theory thus has no relation to the jury's verdict regarding the patents-in-suit.
If any of Intel's theories were viable, the unclean hands doctrine would no longer be limited
to exceptional circumstances: Virtually every infringement verdict could be set aside based on
nothing more than routine discovery disputes and ad hominem attacks against the plaintiff's
business model. The Court should accordingly deny Intel's motion and enter judgment in favor of
VLSI on Intel's unclean hands defense.
II. FACTUAL BACKGROUND
Much of Intel's motion focuses on the business relationships between NXP, VLSI, and
Fortress and the extent to which evidence regarding this relationship was or was not introduced at
trial. This section addresses the nature of this relationship and the Court's evidentiary rulings.
Intel's specific unclean hands theories are addressed in § III.
A. NXP, VLSI, and Fortress
Despite multiple attempts to portray the relationships between NXP, VLSI, and Fortress as
improper, Intel never argued at trial, and does not argue in this motion, that this relationship bears
any relevance to the questions that were at issue in this trial. For example, Intel has never alleged,
nor has VLSI or the Court ever suggested, that this relationship has any bearing on whether Intel
infringed the patents-in-suit, whether the patents-in-suit are valid, or what value Intel gained from
its use of the patented inventions.
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In June of 2016, VLSI entered into a Patent Purchase and Cooperation Agreement
("PPCA") with NXP, a semiconductor manufacturing company. FF5. NXP holds numerous
patents, but its business is focused on product manufacturing, not IP licensing. FF5. NXP thus
sought to partner with another company that specializes in patent licensing in order to obtain
greater value for its inventions. FF5. Under the agreement, VLSI obtained ownership of the
patents while NXP would be entitled to a share of any licensing returns that VLSI was able to
obtain. FF6. This arrangement was efficient and mutually beneficial for the parties.
In 2018, VLSI identified additional NXP patents that it believed had value, and the parties
entered into an amended purchase agreement. FF7. These patents included the patents-in-suit
here: the '373 and '759. VLSI filed the present action on April 11, 2019, and the case proceeded
to trial on February 22, 2021. FF8; FF10.
B. Intel's Trial Strategy
One of Intel's central strategies at trial was to paint VLSI as some type of shell company
1 FF refers to Plaintiff's concurrently-filed Findings of Fact and associated exhibits.
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that was actually controlled by a shadowy, multibillion-dollar, New York City "hedge fund" called
Fortress. FF40. In advance of the trial, it seemed to VLSI that Intel planned to use the "Fortress"
issue to distract the jury from the questions of infringement, validity, and damages and to prejudice
the jurors against VLSI. VLSI accordingly filed a motion in limine to bar Intel from introducing
evidence regarding Fortress at trial. FF40.
During trial, Intel repeatedly attempted to elicit testimony about VLSI's business
relationships from various witnesses. For example, Intel asked James Spehar, a third-party NXP
witness, the following questions during cross-examination:
Q. Do you know if anyone else other than NXP stands to benefit?
A. Yeah. I do.
Q. Who?
A. There's, like, teachers unions. It's like pension funds, I guess. You know, those it's
investors.
Q. Investors?
A. Yeah. And pension funds --
Q. All you know is investors?
A. Well, I know pension funds. I guess there's a -- Texas A&M has a vested stake in it too.
So those are the three that I know of.
FF26; Ex. 4, 2/22 Tr. [Spehar] 300:1-22.
Intel then designated deposition testimony regarding Fortress from three witnesses.
Ultimately, after the Court reviewed those disputed excerpts, the Court agreed that Fortress's role
was not relevant to the issues in dispute and excluded Intel's proffered testimony:
THE COURT: [W]ith respect to Fortress, the Court is going to not permit the issue
of Fortress to come into the trial. And so anything -- any reference to Fortress that
is in the depositions, those portions need to not appear in front of the jury. FF49;
Ex. 4, 2/26 Tr. 1030:5-1032:12.
The Court also rejected Intel's contention that VLSI had opened the door to this issue by
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somehow painting a misleading picture of VLSI's business model:
MR. LEE: Your Honor, we will make the written proffer, but I just want the record
to be clear this puts us in a very, very difficult position because from the outset,
there's been a suggestion that what VLSI does is generate revenues for NXP. It's
not true. It's not even the majority of the revenues that go to NXP. They go to other
people. And allowing them to make the argument that this is all fueling research
and development for NXP is prejudicial to us.
THE COURT: I understand. But I've said -- it may or may not appear to you all,
but I've actually been paying attention pretty carefully during the trial. I disagree.
I don't think that was the impression I got. I've gotten -- I've listened very carefully
to see if the plaintiff was going to open the door. That's not the impression I've
gotten is that all the money is going -- in fact, one of your attorneys questioned
someone about where the money was going, and the answer was generically: I
don't really know, but I think that some of it's going to universities, but I don't know
where else it's going. And I just -- I disagree on the relevance. FF50; Ex. 4, 2/26
Tr. 1030:5-1032:12.
After a six-day trial, the jury return a verdict in favor of VLSI on all counts. FF10.
III. ARGUMENT
A party asserting an unclean hands defense "bears the burden of proving by clear and
convincing evidence that [the patent holder] acted with unclean hands." In re Omeprazole Patent
Litig., 483 F.3d 1364, 1374 (Fed. Cir. 2007). This defense is "reserved for extreme circumstances."
Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co., 2017 WL 275465, at *7 (E.D. Tex. Jan. 20,
2017). It requires a showing that the patent holder has engaged in "egregious misconduct," such
as "perjury," "suppression of evidence," "manufacture . . . of evidence," or "bribery." Therasense,
Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1293 (Fed. Cir. 2011); see also
Erfindergemeinschaft, 2017 WL 275465, at *7 ("[T]he defendant 'must show that the patentee
conducted itself as to shock the moral sensibilities of the judge, or . . . that the patentee's conduct
was offensive to the dictates of natural justice.'"). Further, the alleged misconduct must have an
"immediate and necessary relation" to the patents-in-suit, i.e., it must "have enhanced the
claimant's legal position as to either the creation or enforcement of the legal right at issue." Gilead
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Scis., Inc. v. Merck & Co., 888 F.3d 1231, 1239-1240 (Fed. Cir. 2018).
Gilead—by far the primary authority Intel relies upon—provides an illustrative example of
the sort of egregious conduct that constitutes unclean hands. There, the patentee deliberately
"violat[ed] a clear 'firewall'" agreement when it improperly used information that one of its
scientists had obtained from another company to file narrowed patent claims. Id. at 1240. This
misconduct had the effect of "expediting patent issuance and for lowering certain invalidity risks."
Id. at 1241. At deposition, this scientist deliberately lied about his participation in the call and
then gave additional "intentionally false" testimony both at deposition and at trial in support of the
patentee's validity positions. Id. at 1244. Because the scientist's violation of the firewall played a
"significant role" (id. at 1243) in the patentee's acquisition of the patents at issue and his subsequent
false testimony had "significant potential to give [the patentee] an advantage in the litigation," the
court concluded that the patentee had acted with unclean hands. Id. at 1247.
Intel has not provided any evidence—let alone "clear and convincing evidence"—that such
"egregious" misconduct or anything even remotely close to it has occurred here. As explained
below, none of the conduct that Intel has accused VLSI of, whether taken in individually or
together, constitutes unclean hands.
A. VLSI's Alleged "Patent Monetization Scheme" Is Not Unclean Hands
Intel contends that VLSI, NXP, and Fortress have engaged in a "uniquely inequitable"
patent-enforcement scheme because "they have arranged themselves in a manner that permits
VLSI to pursue endless assertions, without regard to how meritorious they are and with limited
downside risk." Mot. at 14. As explained below, these allegations are baseless.2 But even if they
2
To the extent that Intel is complaining that VLSI has spread its infringement claims across
multiple different suits, this common practice does not amount to unclean hands either. Moreover,
Intel previously complained extensively about the difficulty of having just five patents in a single
trial. D.I. 41-9 at 34:19-22. Intel cannot have it both ways.
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were not, Intel does not cite a single case holding that a court can nullify a jury's damage award
because the plaintiff has filed successive infringement suits or because it took efforts to limit its
downside risk through business arrangements. Indeed, just recently, the Fifth Circuit rejected the
contention that a "litigious business strategy of . . . seeking outsized statutory damages" in the
context of a copyright suit could constitute unclean hands. See Energy Intel. Grp., Inc. v. Kayne
Anderson Cap. Advisors, L.P., 948 F.3d 261, 268 & n.4 (5th Cir. 2020). Intel's theory here is
equally contrary to law.
As an initial matter, unclean hands requires that the alleged misconduct have an "immediate
and necessary relation" to the specific patents-in-suit. Gilead, 888 F.3d at 1239-1240. Intel,
however, cannot possibly contend that VLSI's enforcement of the patents-in-suit was done in bad
faith because VLSI prevailed. See, e.g., Pro. Real Est. Invs., Inc. (PRE) v. Columbia Pictures
Indus., Inc., 508 U.S. 49, 60 n.5 (1993) ("A winning lawsuit is by definition a reasonable effort at
petitioning for redress."); Dominant Semiconductors Sdn. Bhd. v. OSRAM GmbH, 524 F.3d 1254,
1261 (Fed. Cir. 2008) ("[A] successful outcome of the underlying litigation refutes a conclusion
that the litigation was objectively baseless at the outset."). Indeed, the jury not only found in
VLSI's favor, it also awarded substantial damages. The fact that Intel believes that this award was
somehow "oversized" (Mot. at 3) is not a basis for an unclean hands defense. Nor is Intel's
unfounded insinuation that VLSI's patent assertions in other cases were somehow filed in bad faith
because such assertions lack the requisite "immediate and necessary relation" to this case.
Advanced Magnetic Closures, Inc. v. Rome Fastener Corp., 2006 WL 3342655, at *2 (S.D.N.Y.
Nov. 16, 2006) ("Even assuming Romag's contentions regarding the enforcement of [other] patents
are accurate . . . there is no 'immediate and necessary relation' between that enforcement and the
cause of action here.").
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Regardless, Intel has not provided any evidence—much less "clear and convincing"
evidence—that VLSI has filed suits against Intel without regard for their merits, nor can it. VLSI
has already obtained a favorable verdict in one of the only two cases to go to trial, and the other
cases that have not been tried remain pending. It makes no sense to nullify the jury's verdict in
this case, which VLSI won, based on Intel's blanket and unsupported assertion that VLSI filed
infringement suits in other cases lack merit before those cases have even been tried. VLSI may
prevail in those trials just as it did here. Intel also has not identified any court finding—such as
Rule 11 sanctions or an attorneys' fee award—that would show that VLSI's claims in any of these
cases are meritless. Moreover, the fact that VLSI has defeated multiple IPR challenges and
dispositive motions filed by Intel demonstrates that, at the very least, its claims had a good-faith
basis. FF11.3 Sumotext Corp. v. Zoove, Inc., 2020 WL 4284823, at *4 (N.D. Cal. July 27, 2020)
(Plaintiffs' "claims survived summary judgment and therefore cannot be characterized as
objectively baseless").4
Intel's contention that VLSI acted in concert with Fortress and NXP to "limit" their
collective "downside risk" is equally unavailing. Mot. at 14. As explained above, Intel's
description of VLSI, NXP and Fortress's relationship, including the claim that Fortress somehow
4
Intel relies on Abbott Point of Care Inc. v. Epocal, Inc., 2012 WL 12897957 (N.D. Ala.
Feb. 9, 2012), but, in that case, there was evidence, including a party admission, that the plaintiff
had brought its infringement claims for an improper purpose, specifically to "drain [defendant's]
resources and scare away potential customers." Id. at *9.
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controls VLSI, is incorrect. Section II.A., supra. But even aside from that, there is nothing
improper about business arrangements designed to limit risk.5 This is simply good business
practice. For example, "many businesses and academic institutions enforce their patent rights
through private companies" that do not practice the patents, and there is "not[hing] nefarious"
about such arrangements. Advanced Processor Techs. LLC v. Analog Devices Inc., 2013 WL
12153769, at *7 (E.D. Tex. Mar. 20, 2013). Similarly, companies routinely "cabin the amount of
risk they are undertaking by using distinct entities to carry out certain activities." Alliance Data
Sys. Corp. v. Blackstone Cap. Partners V L.P., 963 A.2d 746, 769 (Del. Ch. 2009). This practice
is also not nefarious. Rather, it maximizes efficiencies and is responsible for "[a] huge amount of
wealth generation." Id.
Even if limiting downsize risk was somehow improper (as opposed to economic common
sense), it is a far cry from the type of behavior that constitutes unclean hands in the patent context.
As noted above, such conduct must not only be egregious, but also play some role in "the creation
or enforcement of the legal right at issue." Gilead, 888 F.3d at 1240. Unlike in Gilead or the
Supreme Court cases that preceded it, Intel does not claim that the patents-in-suit have somehow
been tainted because they were acquired by fraud or deceit. Id. at 1239–41; see also Therasense,
649 F.3d at 1287 (noting that the Supreme Court's unclean hands cases "all involved deliberately
planned and carefully executed scheme[s] to defraud not only the PTO but also the courts")
(internal quotation marks omitted). Moreover, Intel's unsupported attempt to malign VLSI's
business model in general cannot serve as a basis for unclean hands because this lacks the requisite
"immediate and necessary relation" to this case specifically. Gilead, 888 F.3d at 1239–40; see
5 and
Intel's frustration that it cannot file retaliatory lawsuits against VLSI, as it apparently would have
against NXP, does not establish that VLSI has unclean hands.
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also Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933) (The doctrine of
unclean hands does "not make the quality of suitors the test.").
Indeed, if Intel's theory were correct, it would effectively preclude VLSI from ever
enforcing its patents. But the First Amendment "guarantees" VLSI's right to petition courts for
"redress of grievances," Bryant v. Mil. Dep't of Mississippi, 597 F.3d 678, 690 (5th Cir. 2010), and
the patent laws protect VLSI's right to enforce its constitutionally vested patent rights, 35 U.S.C.
§ 271(d) ("No patent owner otherwise entitled to relief for infringement . . . . shall be denied relief
or deemed guilty of misuse" for seeking "to enforce his patent rights against infringement"); see
also Advanced Processor Techs., 2013 WL 12153769, at *7 ("[I]t would be improper to "treat []
non-practicing entities as anything less than holders of constitutionally protected property rights.").
The Court should reject Intel's attempt to use the unclean hands doctrine to vitiate VLSI's
constitutional rights.
B. VLSI's Alleged "Changes" To Infringement Theories Is Not Unclean Hands
Intel next argues VLSI's infringement theories changed throughout the course of the
litigation. Mot. 15-16. Again, Intel does not cite any authority holding that such conduct
constitutes unclean hands. This is not surprising since developing and refining one's infringement
positions through discovery is exactly what parties are supposed to do.
Intel's contention that VLSI's infringement positions with respect to the '759 patent and the
'373 patent were a "moving target" is highly misleading. With respect to the '759 patent, VLSI's
infringement theory did not change. FF14. Rather this theory remained consistent throughout Dr.
Conte's expert report, his deposition, and his testimony at trial. FF14.
"
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. Contrary to Intel's assertions, nothing
about this trial testimony was inconsistent with Dr. Conte's deposition. Dr. Conte was never even
asked about Core_Active at his deposition.
To the extent that VSLI refined its infringement theory with respect to the '373 patent, this
was in no way improper or prejudicial to Intel. VLSI filed its pre-discovery, preliminary
infringement contentions on July 22, 2019, which relied solely on information that was publicly
available at that time. FF16. Merely a few months later, and well before the deadline to amend
infringement contentions on January 31, 2020 (FF17; D.I. 280), VLSI served its first supplement
to infringement contentions on October 9, 2019 (FF17), which focused on the C6 SRAM power
supply mux in numerous product families. Id. This theory was based on confidential, technical
information that VLSI previously did not have access to. Id. VLSI then timely moved for, and
the Court subsequently granted, leave to amend its preliminary infringement contentious without
opposition from Intel (FF18; D.I. 83). As the case developed, VLSI focused its infringement
theory on two product families: Haswell and Broadwell. FF19. This theory never changed.
He simply focused
on a narrower set of products and features at trial.
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Nothing about this was improper. As the Federal Circuit has stressed, "[a]fter discovery
the Court expects the parties to refine the disputed issues and learn more about the claim terms and
technology, at which point a more accurate claim construction can be attempted." SanDisk Corp.
v. Memorex Prod., Inc., 415 F.3d 1278, 1291 (Fed. Cir. 2005) (refusing to apply estoppel based
on plaintiff's "evolving" claim construction). Thus, Intel cannot plausibly claim that VLSI's
development of its infringement positions with respect to the '373 and '759 patents somehow
qualifies as unclean hands, especially since the jury found that Intel had in fact infringed these
patents. Oxbo Int'l Corp. v. H&S Mfg. Co., Inc., 2017 WL 2272060, at *8 (W.D. Wis. May 23,
2017) (rejecting the assertion that plaintiff's "'ever-changing' claim construction positions"
constituted unclean hands where plaintiff's claims were "substantially successful."). Intel's theory
would also have the perverse effect of discouraging parties from narrowing and refining their
infringement contentions for trial for fear that this could nullify any subsequent damage award.
See SanDisk Corp., 415 F.3d at 1292 (refusing to apply estoppel because it "would subvert the
useful function of pre-trial discovery and motion practice in focusing issues for trial"). Indeed,
Intel's invalidity contentions have likewise changed in the patent suits pending before this Court
(FF20; D.I. 117; 178), as has its unclean hands defense.6
Moreover, if Intel believed that VLSI's development of its infringement positions was
improper, it was not without recourse. It could have opposed VLSI's leave to amend its
infringement contentions, but it did not. FF18. It also could have objected to VLSI's attempt to
present these supposedly new theories at trial, but it did not do that either. Having sat on its hands,
6
For example, Intel previously claimed that VLSI engaged in unclean hands by supposedly
making "improper assertions of work product protection," FF20 (Ex. 16, Intel's ROG Resp. at 526-
527); by failing to timely address "deficiencies in its privilege log," FF20 (Ex. 16 at 532); and
because VLSI's infringement theories wholly lack support, FF20 (Ex. 16 at 541). Yet Intel has
now apparently abandoned each of these theories.
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Intel should not be permitted to seek the unprecedented and onerous remedy of nullifying the jury's
damage award based on supposed abuses that Intel could have brought to the Court's attention
earlier, but chose not to.
C. VLSI Did Not Engage In "Gamesmanship" With Evidence, Nor Is This

Unclean Hands
Intel next accuses NXP, Fortress, and VLSI of engaging in so-called "gamesmanship" by
supposedly "shield[ing] evidence" from discovery and then "selectively disclos[ing] information
when it might help them" at trial. Mot. at 16. None of this is true.
Mot. at 17. This is false.
Notably, Intel does not identify any procedural rule or discovery order that VLSI, NXP, or
Fortress violated, and, even if it could, mere discovery misconduct does not constitute unclean
hands. Synopsys, Inc. v. Magma Design Automation, Inc., 2007 WL 420184, at *5 (N.D. Cal. Feb.
6, 2007) ("Magma's contention that Synopsys concealed IBM's ownership interest in the subject
patents from the Court . . .based on Synopsys's withholding of documents during discovery" did
not constitute unclean hands); see also Kaseberg v. Conaco, LLC, 360 F. Supp. 3d 1026, 1038
(S.D. Cal. 2018) ("[G]enerally speaking, 'a defense of unclean hands may not be based on
discovery misconduct.'"). If Intel believed that VLSI, NXP, or Fortress had improperly failed to
10939359 - 14 -
provide discoverable information (which they did not), it should have moved to compel or sought
other appropriate relief. See, e.g., X-It Products, LLC v. Walter Kidde Portable Equipment, Inc.,
155 F.Supp.2d 577, 601 (E.D. Va. 2001) (striking unclean hands defense because the "appropriate
remedy is . . . a motion to compel and/or a motion for sanctions").
Intel's accusation that VLSI "selectively" disclosed withheld information at trial is equally
false. Specifically, Intel claims that James Spehar, who is a third-party witness affiliated with
NXP and not VLSI, to identify various stakeholders in VLSI during his trial testimony when he
had previously stated at the time of his deposition that he did not know this information. Mot. at
7, 17. Remarkably, however, Intel fails to mention that it was Intel, not VLSI, that solicited this
information from Mr. Spehar. As noted above, Intel's counsel repeatedly asked Mr. Spehar on
cross if he knew whether anyone else stood to benefit from VLSI's infringement suit, and Mr.
Spehar simply responded. FF26; Ex. 4, 2/22 Tr. [Spehar] 300:1-22.
To the extent this testimony prejudiced Intel, this was entirely a problem of its own making,
not some plot orchestrated by VLSI, NXP, and Fortress. As the Court explained when Intel raised
this issue at trial, "your person invited it. . . . I think he was trying to get something out of a
witness, and he got an answer that was unfavorable to Intel." FF27; Ex. 4, 3/1 Tr. 1630:16-25.
Similarly, as noted above when Intel tried to introduce evidence regarding Fortress's relationship
to VLSI at trial, the Court rejected Intel's contention that VLSI had somehow opened the door to
this issue. FF50; Ex. 4, 2/26 Tr. 1030:5-1032:12 ("I've listened very carefully to see if the plaintiff
was going to open the door. That's not the impression I've gotten . . . .").7 Intel's attempt to
analogize VLSI's conduct here to cases in which a party tried to conceal evidence that a patent was
7
It was not improper for VLSI to mention Mr. Spehar's testimony in closing given that
Intel had opened the door, and Intel failed to object to this in any event. FF28; Ex. 4, 3/1 Tr.
1631:12-19. None of Mr. Spehar's other testimony was in any way improper either, but, to the
extent that Intel contends otherwise, it had every opportunity to object or impeach him on cross.
10939359 - 15 -
either invalid or acquired by fraud—through means such as bribing witnesses—is accordingly
absurd. Mot. at 18 (citing Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806,
816 (1945); Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 240–45 (1944)
Keystone, 290 U.S. at 243).
Indeed, if any party has "suppressed" evidence in this case, it is Intel. Throughout this
litigation,
This simulator would have allowed VLSI to perform certain tests that
were material to VLSI's damages analysis for these server products. FF32.
At the second trial, however, Intel's witnesses testified
that Intel does in fact possess Fox2 for server products after all (and even faulted VLSI's
infringement expert for not using this software in his analysis). FF37.
Thus, if anything, Intel—not VLSI—suppressed and manipulated evidence to advantage
itself at trial. Moreover, the Fox2 information that Intel withheld was directly material to the case
. Given that Intel's own hands are dirty, it cannot invoke
the unclean hands doctrine against VLSI even if its theory had any merit to begin with, which it
does not. See Power Balance LLC v. Power Force LLC, 2010 WL 5174957, at *7 (C.D. Cal. Dec.
14, 2010) ("Defendants cannot raise [an unclean hands] defense when their own hands are
unclean."); see also Shockley v. Arcan, Inc., 248 F.3d 1349, 1361 (Fed. Cir. 2001) ("Equity's
10939359 - 16 -
'unclean hands' doctrine demands that '[one] who seeks equity must do equity.'").
D. The Court's Precluding Intel From Introducing Irrelevant Information About

Fortress Does Not Establish Unclean Hands
Intel next accuses VLSI's counsel of misrepresenting the relationship between Fortress and
VLSI to convince the Court to exclude evidence regarding this topic. Mot. at 18-19. This is
blatantly false. Despite Intel's incendiary language, it does not point to any misrepresentations
(material or otherwise) that VLSI's counsel made to the Court. Instead, Intel essentially repeats
the exact same arguments based on the exact same evidence that this Court has already heard for
why it should have been able to present evidence regarding Fortress's relationship to VLSI at trial.
The Court previously rejected this argument after (correctly) concluding that the proffered
deposition excerpts were irrelevant. FF48-49; Ex. 29, 2/22 Pre-Trial Tr. 46:1-24; Ex. 4, 2/26 Tr.
1030:5-1032:12. In short, Intel is seeking reconsideration of the Court's prior evidentiary ruling
under the guise of an unclean hands motion. This is plainly improper. See Hogan v. Raymond
Corp., 586 F. App'x 856, 860 (3d Cir. 2014) (rejecting unclean hand defense as an "attempt to
relitigate issues that were resolved in an earlier stage of the litigation").
10939359 - 17 -
Everything VLSI's counsel said to the Court was true.
Because Intel cannot identify any actual misrepresentations made by VLSI's counsel, it
simply repeats all the same arguments that it made before.
But the Court already
considered and rejected these exact arguments when Intel raised them prior to trial. FF40-42, 48-
50; Ex. 27, VLSI's Suppl. MIL Re Fortress at 3-4; Ex. 29, 2/22 Pre-Trial Tr. 43:17-44:6. In doing
so, the Court was in no way misled by VLSI's counsel. For example, VLSI's counsel readily
acknowledged that the majority of VLSI's board was made up of Fortress employees, but, as
VLSI's counsel correctly pointed out, this does not change the fact that VLSI and Fortress are two
entirely distinct legal entities. FF44; Ex. 29, 2/22 Pre-Trial Tr. 45:4-11 ("The fact that there are
members of the board who also work at Fortress, I think under a variety of legal authorities, does
not in any way suggest that Fortress controls, or runs, or directs, or what have you, VLSI.").
10939359 - 18 -
Indeed, it is a "well established principle [of corporate law] that directors and officers . . . can and
do 'change hats' to represent [] two corporations separately . . . ." United States v. Bestfoods, 524
U.S. 51, 69 (1998) (first alteration in original).
Intel's brief thus presents a highly misleading account of the record, and its contention that
VLSI's conduct was somehow akin to "fabricat[ing] evidence" or "present[ing] false testimony" is
itself egregious. Mot. at 19. As this Court noted at the conclusion of trial, the "professionalism"
and "quality" of counsel for both parties in this case was "exceptional." Ex. 4, 3/1 Tr. 1650:21-24.
It is unfortunate that Intel has chosen to use its unclean hands motion to level misleading, baseless,
and disparaging accusations against VLSI's counsel who litigated this case professionally and in
good faith. The Court should reject this tactic.
E. VLSI Did Not , Nor Is This Unclean

Hands
10939359 - 19 -
Second, the '357 patent is irrelevant because the Court granted Intel's motion for summary
judgment as to this patent. Mot. at 6. Thus, even if VLSI's conduct with respect to the '357 patent
was somehow improper (which it was not), this conduct in no way taints the jury's infringement
verdict with respect to the '373 and '759 patents. Xilinx, Inc. v. Altera Corp., 1994 WL 782236, at
*4 (N.D. Cal. Feb. 8, 1994) (rejecting argument that "alleged bad faith regarding the other patent-
in-suit might prevent this court from ordering an injunction on the valid patent"); see also
Pharmacia Corp. v. Par Pharm., Inc., 417 F.3d 1369, 1375 (Fed. Cir. 2005) ("[I]nequitable
conduct in one patent" does not extend "to another patent that was not acquired through culpable
conduct.").
See CompoSecure, L.L.C.
v. CardUX, LLC, 206 A.3d 807, 811, n.6 (Del. 2018) (It is "not the job of a court to relieve
sophisticated parties of the burdens of contracts they wish they had drafted differently but in fact
did not.").
See,
e.g., Branch Banking & Tr. Co. v. S & S Dev., Inc., 620 F. App'x 698, 701 (11th Cir. 2015) ("[A]
breach of contract . . . does not amount to unclean hands.").
IV. CONCLUSION
As demonstrated above, none of Intel's allegations comes close to unclean hands. Intel's
motion should be denied, and judgment on this issue should be entered in VLSI's favor.
10939359 - 20 -
Dated: May 7, 2021 By: /s/ Andy Tindel
Morgan Chu (pro hac vice) J. Mark Mann (Texas Bar No. 12926150)
Benjamin W. Hattenbach (pro hac vice) mark@themannfirm.com
Iian D. Jablon (pro hac vice) G. Blake Thompson (Texas Bar No.
Alan J. Heinrich (pro hac vice) 24042033)
Ian Robert Washburn (pro hac vice) blake@themannfirm.com
Amy E. Proctor (pro hac vice) MANN | TINDEL | THOMPSON
Elizabeth C. Tuan (pro hac vice) 300 W. Main Street
Dominik Slusarczyk (pro hac vice) Henderson, TX 75652
Charlotte J. Wen (pro hac vice) Telephone: (903) 657-8540
Brian Weissenberg (pro hac vice) Facsimile: (903) 657-6003
Benjamin Monnin (pro hac vice)
Jordan Nafekh (pro hac vice) Andy Tindel (Texas Bar No. 20054500)
IRELL & MANELLA LLP atindel@andytindel.com
1800 Avenue of the Stars, Suite 900 MANN | TINDEL | THOMPSON
Los Angeles, California 90067 112 E. Line Street, Suite 304
Telephone: (310) 277-1010 Tyler, Texas 75702
Facsimile: (310) 203-7199 Telephone: (903) 596-0900
mchu@irell.com Facsimile: (903) 596-0909
bhattenbach@irell.com
ijablon@irell.com Craig D. Cherry (Texas Bar No. 24012419)
aheinrich@irell.com craig@swclaw.com
iwashburn@irell.com STECKLER, WAYNE, COCHRAN,
aproctor@irell.com CHERRY, PLLC
etuan@irell.com 100 N. Ritchie Road, Suite 200
dslusarczyk@irell.com Waco, Texas 76701
cwen@irell.com Telephone: (254) 776-3336
bweissenberg@irell.com Facsimile: (254) 776-6823
bmonnin@irell.com
jnafekh@irell.com Attorneys for VLSI Technology LLC
Babak Redjaian (pro hac vice)

IRELL & MANELLA LLP
840 Newport Center Drive, Suite 400
Newport Beach, California 92660
Telephone: (949) 760-0991
Facsimile: (949) 760-5200
bredjaian@irell.com
10939359 - 21 -
CERTIFICATE OF SERVICE
A true and correct copy of the foregoing instrument was served or delivered electronically
via email, to all counsel of record, on May 7, 2021.
/s/__Andy Tindel___________________________
10939359 - 22 -

21-05-14 VLSI Opposition To Intel's Rule 52 Motion (Unclean Hands)

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21-05-14 VLSI Opposition To Intel's Rule 52 Motion (Unclean Hands)

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Case 6:21-cv-00057-ADA Document 610 Filed 05/14/21 Page 1 of 27

IN THE UNITED STATES DISTRICT COURT

VLSI TECHNOLOGY LLC,

Cause No. 6:21-cv-00057-ADA

VLSI'S OPPOSITION TO INTEL'S RULE 52 MOTION FOR JUDGMENT THAT

Abbott Point of Care Inc. v. Epocal, Inc.,

Advanced Magnetic Closures, Inc. v. Rome Fastener Corp.,

Advanced Processor Techs. LLC v. Analog Devices Inc.,

Alliance Data Sys. Corp. v. Blackstone Capital P'rs V L.P.,

Branch Banking & Tr. Co. v. S & S Dev., Inc.,

Bryant v. Mil. Dep't of Mississippi,

CompoSecure, L.L.C. v. CardUX, LLC,

Dominant Semiconductors Sdn. Bhd. v. OSRAM GmbH,

Energy Intel. Grp., Inc. v. Kayne Anderson Cap. Advisors, L.P.,

Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co.,

Gilead Scis., Inc. v. Merck & Co.,

Hazel-Atlas Glass Co. v. Hartford-Empire Co.,

Hogan v. Raymond Corp.,

Kaseberg v. Conaco, LLC,

Keystone Driller Co. v. General Excavator Co.,

In re Omeprazole Patent Litig.,

Orloff v. Saipem, Inc.,

Oxbo Int'l Corp. v. H&S Mfg. Co., Inc.,

Pharmacia Corp. v. Par Pharm., Inc.,

Power Balance LLC v. Power Force LLC,

Precision Instrument v. Auto. Maint. Mach. Co.,

SanDisk Corp. v. Memorex Prod., Inc.,

Shockley v. Arcan, Inc.,

Sumotext Corp. v. Zoove, Inc.,

Synopsys, Inc. v. Magma Design Automation, Inc.,

Therasense, Inc. v. Becton, Dickinson & Co.,

United States v. Bestfoods,

X-It Products, LLC v. Walter Kidde Portable Equipment, Inc.,

Xilinx, Inc. v. Altera Corp.,

35 U.S.C. § 271(d) .........................................................................................................................11

Fed. R. Civ. Proc. 11 ........................................................................................................................9

All emphasis is added unless stated otherwise.

or developing infringement positions through discovery—into unclean hands.

remains legally deficient.

relitigate an issue that it previously lost.

Intel does not

the same arguments that the Court previously rejected.

Finally, Intel claims that VLSI

VLSI on Intel's unclean hands defense.

II. FACTUAL BACKGROUND

Intel's specific unclean hands theories are addressed in § III.

A. NXP, VLSI, and Fortress

its use of the patented inventions.

to trial on February 22, 2021. FF8; FF10.

B. Intel's Trial Strategy

1 FF refers to Plaintiff's concurrently-filed Findings of Fact and associated exhibits.

evidence regarding Fortress at trial. FF40.

witness, the following questions during cross-examination:

Q. Do you know if anyone else other than NXP stands to benefit?

A. Yeah. And pension funds --

Q. All you know is investors?

FF26; Ex. 4, 2/22 Tr. [Spehar] 300:1-22.

somehow painting a misleading picture of VLSI's business model: