Patent owner Intellectual Ventures cleared for trial vs. investor

By Dan Levine

SAN FRANCISCO (Reuters) - A U.S. judge on Monday ruled that patent owner Intellectual Ventures can go to trial next month against one of its investors even though IV will not be allowed to present key damages evidence to a jury, according to a court filing.

Chipmaker Xilinx invested in two Intellectual Ventures funds and licensed a portion of IV's patents, but resisted IV's entreaties to license more patents in 2010, court filings show. Xilinx Inc eventually asked a California federal judge to declare those IV patents invalid, while IV countersued in Delaware, accusing Xilinx of infringement.

The proceeding comes in the midst of a heated debate over whether it is too easy for patent owners to extract large royalty payments, and whether patent buying firms spur or stifle innovation. Advocates for patent reform point to the Xilinx litigation as a crucial source of information about the way patent aggregators like IV operate.

Three other chipmakers have settled patent lawsuits with IV on undisclosed terms. The trial in the Xilinx case is scheduled to begin in Delaware next month. Last week U.S. District Judge Leonard Stark found IV's expert witness on damages "unreliable and irrelevant," and excluded his testimony from trial.

Xilinx argued that the decision should end the entire case. However, in a ruling on Monday, Stark said IV could still use its investor agreements with Xilinx as a way to establish what licensing royalties Xilinx should pay.

An IV spokeswoman declined to comment on the ruling, while a

Xilinx representative could not immediately be reached.

Created in 2000, Intellectual Ventures has raised about $6 billion and acquired 70,000 patents and other intellectual property assets. IV is assembling a new patent acquisition fund with investors including Microsoft Corp and Sony Corp, while Apple Inc and Intel Corp declined to participate.

Over the years IV and other firms like it have faced criticism from some in the technology industry, who argue that firms like IV, which do not primarily make products, exploit the patent system by demanding royalties and threatening litigation.

IV argues that by buying patents from inventors, it creates a mechanism for them to capitalize on their ideas.

The case in U.S. District Court, District of Delaware is Intellectual Ventures I LLC et al vs. Xilinx Inc., 10-1065.

(Reporting by Dan Levine; editing by Andrew Hay)