Intel Corporation presented key arguments today in its ongoing federal trial to demonstrate that Fortress Investment Group exerts decisive financial control over VLSI Technology LLC, underscoring Fortress’ power to override financial decisions and maintain strict financial control limits within VLSI.

During the trial before a federal jury in Austin, Intel argued that Fortress’ authority to approve or deny funding requests from VLSI establishes clear control over the company’s finances, even if Fortress has never exercised its veto power. This issue lies at the heart of determining whether Fortress holds effective control over both VLSI and Finjan Holdings—two entities owned by investment funds managed by Fortress.

Intel contends that establishing common control under Fortress would enable the extension of a crucial 2012 patent license agreement with Finjan to VLSI, potentially impacting significant patent infringement claims. Previous Texas federal juries have issued some of the largest patent verdicts against Intel for infringing VLSI’s semiconductor patents, making this licensing issue pivotal.

Intel’s case included testimony from VLSI’s current CEO, its own economics expert, and video depositions from former CEOs and Fortress executives. Key testimony focused on Fortress’ role in approving financial transactions, reviewing expenses, and maintaining access to VLSI’s bank accounts—highlighting Fortress’ financial oversight and control limits.

Among the witnesses, Fortress executives confirmed that while they review and monitor expenses, the control structure allows Fortress to oversee VLSI’s funds closely. Intel’s economics expert testified that Fortress clearly controls VLSI and Finjan based on its financial powers and the governance structure of the investment funds.

VLSI’s defense questioned the extent of Fortress’ control, emphasizing that VLSI’s CEO and board members maintain operational independence. However, testimony confirmed that Fortress acts as the general partner for the funds owning VLSI, reinforcing Intel’s position on Fortress’ dominant financial authority.

The trial continues as both parties present additional expert testimony addressing corporate governance and financial control limits.

Case: VLSI Technology LLC v. Intel Corp., Case No. 1:19-cv-00977
Court: U.S. District Court for the Western District of Texas

Intel Counsel: Joseph J. Mueller, Mary V. Sooter, Dominic E. Massa (WilmerHale), Harry Lee Gillam Jr. (Gillam & Smith LLP), Gemma Suh (Intel in-house)
VLSI Counsel: Morgan Chu, Benjamin W. Hattenbach, Alan J. Heinrich, Amy E. Proctor, Elizabeth C. Tuan, Charlotte J. Wen (Irell & Manella LLP), Andy Tindel (Mann Tindel Thompson)