Litigation Blackmail: Sanctions for Gaming IPR System

by Dennis Crouch

OpenSky Indus v. VLSI, IPR 2021-1064 (Before Dir. Vidal)

Stepping-in like a court of equity, Dir. Vidal today issued a Precedential Order finding that OpenSky had abused the IPR process.  OpenSky filed its IPR petition soon after VLSI won a $2 billion judgment against Intel.  At that point though, OpenSky offered to work on behalf of either VLSI or Intel. Essentially, asking for some pay-off to either continue its challenger or to bow-out. Dir. Vidal writes:

I determine that OpenSky, through its counsel, abused the IPR process by filing this IPR in an attempt to extract payment from VLSI and … Intel, and expressed a willingness to abuse the process in order to extract the payment. OpenSky’s behavior in this proceeding is entirely distinguishable from conventional settlement negotiations that take place in an adversarial proceeding. I also find that OpenSky engaged in abuse of process and unethical conduct by offering to undermine and/or not vigorously pursue this matter in exchange for a monetary payment. Taken together, the behavior warrants sanctions to the fullest extent of my power.  . . . The conduct of the individual attorneys in this case might also rise to the level of an ethical violation under the rules of their respective bars

Vidal Precedential Order.  As a sanction, the order excludes OpenSky from participating and also demands that OpenSky “show cause” as to why it should not be ordered to pay damages and attorney fees to VLSI.

Great work Dir. Vidal.