Intel has been ordered to pay more than $2 billion in damages after the semiconductor giant lost a patent infringement suit in federal court over technology allegedly used in its computer processors.
A federal jury ruled the Santa Clara, California-based company infringed on a pair of patents held by VLSI Technology, a semiconductor design firm. The jury ordered it to pay damages of $1.5 billion on the first patent and $675 million on the second patent, for a total of $2.175 billion. VLSI Technology accused Intel of willfully ignoring its patents and infringing on them in its central processing chips.
Intel said that it disagreed with the judgment by the federal court in Texas, and the company said it would challenge the verdict on appeal. “Intel strongly disagrees with today’s jury verdict. We intend to appeal and are confident that we will prevail,” the company said in a statement. If Intel is defeated, it would be one of the largest-ever patent infringment payouts in US history, according to Bloomberg.
If the verdict stands, Intel would be forced to cough up around 10% of its net income in 2020. Intel's profits increased to $5.9 billion in the final quarter of 2020, giving it a total of $20.9 billion for the year.
The patents that Intel allegedly ignored were transferred from NXP Semiconductors in 2019 to VLSI Technology, a subsidiary of Fortress Investment Group. The patents in question relate to reducing the power consumed by a computer processor and increasing its speed. NXP could get an unspecified portion of the $2 billion in damages on the patents, which originated with Freescale Semiconductor.
Intel argued in court that it was "outrageous" for the semiconductor firm to demand billions of dollars in damages since it does not sell a single product and only makes money through its patent litigation.
Intel has been forced to pay billions of dollars in fines for regulatory abuses and patent infringment before. Intel was ordered to pay $1.25 billion in fines a decade ago after the US accused it of unfairly hampering rivals, including AMD, and was charged $1.45 billion in 2014 for regulatory abuses in the EU. Intel surrendered $1.5 billion in damages to Nvidia to end a bitter patent infringement battle in 2011.