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A Virginia judge spent two tense hours Wednesday unraveling whether VLSI Technology LLC can move forward with its VLSI, PQA conspiracy claims, accusing Patent Quality Assurance LLC of fraud, extortion, and abusing the federal patent review system during its successful attack on a lucrative VLSI chip patent. The hearing marked the latest chapter in a sprawling patent war already tied to billions of dollars in litigation.

VLSI Says PQA's Patent Challenge Was Built on a “Scam”

VLSI alleges PQA manipulated the Patent Trial and Appeal Board (PTAB) process, claiming the South Dakota entity wasn’t properly incorporated and used its IPR petition as leverage to extort money. PQA fired back, insisting VLSI is improperly asking a Virginia state court to second-guess federal PTAB determinations and the corporate rules of another state.

Judge Rebecca J. Wade previously tossed VLSI's first lawsuit in August, ruling the initial claims — centered on misuse of inter partes reviews — lacked merit. Now she is scrutinizing an amended complaint alleging PQA fraudulently misused the IPR system, a twist VLSI argues should survive dismissal.

Debate Over Res Judicata and Judicial Overreach

PQA’s attorney Craig C. Reilly insisted the new complaint merely repackages old arguments and is barred by res judicata. VLSI’s counsel Ellen Marcus countered that the doctrine only applies to separate actions, not refined amendments, and emphasized they are not trying to revive claims dismissed previously with prejudice.

Reilly shot back sharply: “They’re asking for forgiveness for violating your order — and blaming me for calling it res judicata.”

A Billion-Dollar Patent Battle Looms in the Background

The dispute stems from PQA’s successful challenge to a VLSI patent tied to a blockbuster infringement case against Intel, in which VLSI once won a $2 billion judgment. Parts of that verdict have since been vacated or reversed, but the PTAB challenge — which Intel was later allowed to join despite being time-barred — remains a critical pressure point.

Former USPTO Director Kathi Vidal found that PQA filed its IPR to extract a payout and misrepresented its relationship with a key expert. She sanctioned PQA by letting Intel take over the challenge — a decision VLSI is fighting elsewhere. Although Vidal ultimately softened her extortion characterization, she upheld the misconduct finding.

VLSI now claims it recently discovered the person listed as PQA’s organizer doesn’t exist, undermining the legality of the entire IPR. But PQA argues the USPTO already determined it was the real party in interest, and VLSI chose not to appeal.

“They want a jury of Alexandria residents to decide whether the PTO director made a mistake,” Reilly said. “This court has no jurisdiction to do that.”