SoftBank’s Fortress Orchestrated Anticompetitive Patent Litigation, says Intel

Semiconductor manufacturer Intel filed suit against Fortress Investment Group, a subsidiary of SoftBank Group for violations of the Sherman Act and Clayton Act, as well as California antitrust law. (Intel Corporation v. Fortress Investment Group LLC et al, 3:19-cv-06856) The complaint alleged that Fortress has amassed a large portfolio of patents critical to the design and development of high-tech consumer electronics.  They argued that Fortress’ patent litigation campaign has caused billions of dollars in damages. 

Fortress Investment Group is a publicly-traded investment firm.  In recent years, Fortress has bought, licensed or otherwise acquired a wide variety of patents.  Also named in the suit are VLSI Technology and DSS Technology.  Other entities are mentioned in the suit as being a part of Fortress’ scheme, including IXI IP, Inventergy Global, KIP CR P1, and Uniloc. IXI was recently sued by Samsung and Apple, who sought a declaratory judgment preventing future litigation from IXI.

Intel recounted the rise of Patent Assertion Entities (PAEs), which exist to litigate patents and do not conduct any research, development or invention on their own.  PAEs combined with another trend; litigation finance, which views potential lawsuits as investment assets.  Fortress and SoftBank have assembled a portfolio of patents that Intel said are complimentary.  In aggregate, it is extremely difficult to “design around” all the patents owned by Fortress, resulting in a greater windfall in both licensure and litigation for Fortress. 

Intel laid out several ways in which Fortress’ conduct results in competitive harm.  Fortress’ portfolio prevented alternatives from being designed and entering the market without infringement, much like how a merger of competitors reduces the possibility of competition.  Second, Fortress is effectively creating a new cost for the entire electronics device industry with such a broad portfolio.  The conduct also abuses the purpose of patents and encourages patenting of weaker inventions.  The aggregation of patents, Intel argued, results in a much greater cost than the value of any of the constituent patents on their own. 

With this suit, Intel is firing back at so-called patent trolls, which have increased costs for the tech industry for years.  The government has monitored the rise of patent trolls, and Congress passed the America Invents Act in 2012 in part to combat frivolous patent litigation. 

Fortress Investment Group is owned by SoftBank, which recently bought out WeWork.  SoftBank’s Vision Funds have invested in some of the most successful tech startups of the 21st Century.  

Intel is represented by WilmerHale in the Northern District of California case.