Intel Corporation et al. v. Fortress Investment Group LLC et al.

Antitrust

Northern District

U.S. District Judge Edward M. Chen

Defense Attorneys: Irell & Manella Llp, Matt Ashley, Morgan Chu, Benjamin W. Hattenbach, Michael D. Harbour, Olivia L. Weber And Lucas S. Oxenford; Robins Kaplan Llp, Christopher A. Seidl, John K. Harting

Plaintiffs Attorneys: Wilmer Cutler Pickering Hale And Dorr Llp, Mark D. Selwyn, William F. Lee,, Amanda L. Major, Joseph J. Mueller, Leon Greenfield, Liv L. Herriot, Timothy D. Syrett

Matt Ashley

Irell & Manella LLP, led by Newport Beach partner A. Matthew Ashley, won a defense victory for Fortress Investment Group in a closely-watched antitrust lawsuit brought by Intel Corp.

The complaint, originally filed by both Intel and Apple Inc., accused Fortress and its co-defendants of engaging in an anticompetitive patent aggregation scheme. Intel Corp. et al. v. Fortress Investment Group LLC et al., 19-CV-07651 (N.D. Cal., filed Nov. 20, 2019).

Apple dropped its claims in June 2021, leaving Intel as the sole plaintiff.

The chipmaker claimed Fortress invested in large patent portfolios of weak, overbroad patents with the express goal of charging excessive licensing fees and suing technology companies. U.S. District Judge Edward M. Chen dismissed the case with prejudice in September.

"We took issue with the premise that there was aggregation and also that there's something wrong with owning a lot of patents," Ashley said. "There's nothing unlawful about that."

Irell attorneys took the position that Intel hadn't shown aggregation, in part by comparing the alleged size of Fortress' portfolio in various submarkets to Intel's own patent portfolio in those same alleged markets.

They also demonstrated that Fortress in some cases obtained patents from an entity with an even larger portfolio, effectively achieving deaggregation, Ashley said.

Chen wrote that Intel had not alleged facts "establishing it has been subject to the unreasonable restraint of trade in the form of serial suits strategically brought to extract compensation not reflective of the merits or that it has been faced with the dilemma of being confronted with an aggregated portfolio of patents leaving it with no viable alternatives in a particular market."

Ashley said Intel failed to show the alleged aggregation "led to an actual increase in prices."

From Fortress' perspective, Intel's complaint was less about antitrust than about another entity having the financial means to take them on in a lawsuit, Ashley said.

The case drew participation from the U.S. Department of Justice as well as amicus briefs from more than a dozen third-party groups.

Interest in the case was high because Intel was testing a novel patent aggregation theory that, if successful, could have subjected patentees to expanded antitrust liability for attempting to license or litigate their patents.

"Some of the theories sparked a lot of philosophical debate about what the proper balance is when dealing with the juncture of patent and antitrust law," Ashley said.

"What's the definition of a market in a case like this? ... What does it mean to engage in anti-competitive behavior when you're a patentee just trying to license your patent? What would make that anticompetitive? What does it mean to have antitrust injury in the context of somebody asserting patents?"

While there was no specific damages amount claimed at the pleading stage, the original complaint challenged dozens of patent lawsuits, implicating "hundreds of millions [of dollars], if not more, in terms of the breadth of damages they were likely asserting," Ashley said.

"They also sought very broad injunctive relief, including essentially to undo scores of lawful transactions that had already occurred, acquisitions of patents or financing," he said. "The breadth of injunctive relief they sought was breathtaking in scope, how many companies and transactions it could have affected."

Mark D. Selwyn, a Palo Alto partner with Wilmer Cutler Pickering Hale and Dorr LLP, appealed Chen's decision to the 9th U.S. Circuit Court of Appeals. The case is pending.

Attorneys at WilmerHale did not respond to requests for comment on the case.

- Jennifer Chung Klam

Michael D. Harbour