PublishedNovember 10, 2022

OpenSky’s Sanction and Continued VLSI Patent Review are Both Warranted

Over the past few weeks there have been major developments in the much-discussed dispute related to patents held by the non-practicing entity VLSI Technology. On Patent Progress we have previously written about the events leading up to the U.S. Patent and Trademark Office’s recent moves, and CCIA filed an amicus brief at the Office. The questions at stake in these decisions were whether OpenSky should face any repercussions for its questionable activities related to its Patent Trial and Appeal Board petition, and whether review of VLSI’s patents should proceed, regardless of OpenSky’s behavior.

Director Vidal sanctioned OpenSky for its transgressions, and instructed the Board to consider whether the petition presented a compelling, meritorious challenge based only on the merits of the petition prior to the OpenSky controversy.  The Board has done just that, determining “the Petition and supporting evidence, if unrebutted at trial, would plainly lead to a conclusion that one or more challenged claims are unpatentable.” Director Vidal is now undergoing a final review of the Board’s determination. 

This case is seen by many as a bellwether, and thus far Director Vidal and the PTAB have acted prudently. I was encouraged to find that, as CCIA suggested in our amicus brief, Director Vidal has consistently differentiated between what needs to be done to discipline one particular bad actor and what steps need to be taken to uphold the USPTO and PTAB’s mission. As Director Vidal wrote: “Going back to first principles, to further the objectives of this Office in promoting and protecting innovation for the greater good of the public, I must advance the goals of securing reliable patent rights and removing patents that do not support innovation.”

Vidal was both correct to sanction OpenSky and to have the proceeding’s continuation be decided by the petition’s merits. The PTAB then rightly put OpenSky’s behavior aside and decided to proceed with review based on the petition having presented a “compelling, meritorious challenge.” 

The best way to prevent future abuses and ensure fair, consistent patent quality review is to hold accountable the parties responsible for attempting to game the system, while ensuring the petition’s merits are prioritized over the behavior of petitioners in any individual, outlier case. 

Sanctioning OpenSky

Director Vidal, in no uncertain terms, reprimanded OpenSky for its actions, writing: “The totality of OpenSky’s conduct evinces a singular focus on using an AIA proceeding to extort money, from any party willing to pay, and at the expense of the adversarial nature of AIA proceedings,” and that: “Each aspect of OpenSky’s conduct—discovery misconduct, violation of an express order, abuse of the IPR process, and unethical conduct—taken alone, constitutes sanctionable conduct. Taken together, the behavior warrants sanctions to the fullest extent of my power. Not only are such sanctions proportional to the conduct here, but they are necessary to deter such conduct by OpenSky or others in the future.”

Vidal removed OpenSky from its lead role, preventing them from actively participating in the ongoing proceedings, and ordered that they show cause as to why they should not be mandated to compensate VLSI for its time and efforts—a first for the Patent Office. Vidal also noted that OpenSky’s attorneys may have committed ethical violations under the rules of their respective bars.

Vidal was right to ensure that sanctions on OpenSky would not compromise the USPTO’s mission to promote patent quality. 

Reviewing VLSI’s Patents on Their Merits

Among the criticisms of the Director’s actions in this case is the assertion that Intel is somehow getting a second bite at the apple to have VLSI’s patents invalidated. This contention completely misrepresents the dispute’s history. As Vidal’s decision makes clear, Intel was prevented from having a first bite at the apple, not because of its petition’s merits, but because review was discretionarily denied due to the illegitimate NHK–Fintiv rule.  Under Director Vidal’s more recent guidance, the denial would not have occurred.

Vidal wrote that the “Board did not reach the merits of the prior Intel petitions” and that the “petitioner has shown a reasonable likelihood it will prevail with respect to unpatentability.” Beyond this, the Board has determined that the petition made a compelling case of invalidity, a higher standard than a reasonable likelihood.  

In other words, Intel never received a fair shot at presenting its case and the Board has since determined that Intel’s petition shows that there is not just a reasonable likelihood that VLSI’s claims are invalid but in fact a compelling case that those claims should never have been issued. 

It is also important to remember, despite how VLSI may try to frame the decision, that OpenSky was not acting as a surrogate for Intel. OpenSky sought to extract payments from both VLSI and Intel – offers that Intel refused – and Vidal found that “there no evidence that Intel was complicit in OpenSky’s abuse.” 

Director Vidal wisely chose to sanction parties, not petitions.  This allows the USPTO to “focus on a principled, replicable approach that is in the best interest of the public,” an approach which prioritizes the merits of each petition and the public interest.  Reviewing likely invalid patents while also eliminating bad actors from AIA trials is the best way to prevent future abuses while still fulfilling the USPTO’s mission. 

The OpenSky case, despite the twists and turns and series of decisions it has gone through, has ultimately come to the right place. Patents that are likely invalid will finally face full review and OpenSky has been properly punished. It sends a strong signal that the USPTO is committed to a fair and equitable system that will improve patent quality.

Josh Landau

Patent Counsel, CCIA

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

Follow @PatentJosh on Twitter.

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