Sham Litigation, Noerr-Pennington, and the Boundary of “Extortion”
A core issue was whether PQA’s actions are protected under the Noerr-Pennington doctrine, which shields petitioning activity from liability — unless the petition is a sham.
Judge Wade pressed Reilly on the potential consequences: “Does it matter that the IPR succeeded if, without the fraud, the hearing never would have happened? Why would there not be damages for that?”
Reilly maintained a state court cannot unwind federal findings — and stressed that even if PQA’s IPR had been dismissed, OpenSky Industries had filed an identical challenge that Intel could have joined.
VLSI attorney Michael Schachter argued that Noerr-Pennington does not immunize fraudulent tactics: “They told the PTAB their mission was to safeguard the integrity of the patent system — while telling us, ‘We will continue pressing a fraudulent claim unless you give us what we know we’re not entitled to.’ That is extortion.”
Reilly dismissed that as “hyperbole,” saying it was nothing more than a standard settlement discussion: “We didn’t bring a baseless claim. We won on the merits.”
