Ninth Circuit Rejects Intel’s Patent-Based Antitrust Arguments in Appeal Against Fortress Investment Group

An unpublished opinion issued Tuesday by the Ninth Circuit affirmed a lower court ruling that despite multiple pleading attempts, Intel Corporation failed to state antitrust claims against Fortress Investment Group LLC and two related entities (collectively, Fortress).

The suit dates to 2019 when digital technology and microprocessor developer Intel sued Fortress, “a multi-billion-dollar investment group that has invested in intellectual property, including patent portfolios.” Intel contended that Fortress controls various “patent assertion entities” (PAEs), and that through those PAEs, amassed “weak” substitute patents that are “easily designed around” by acquiring them from entities that rarely enforced them. 

Intel asserted that Fortress’s patent aggregation allowed it to gain control of four different patent technology markets and further enabled it to extract large settlements from and threaten meritless suits against potential infringers. 

One of Fortress’s corporate relatives initiated several patent suits against Intel alleging that its microprocessors infringed 21 Fortress patents. In response, the opinion says, Intel challenged Fortress’s patent aggregation scheme and attendant litigation as an unfair restraint of trade under federal and state competition law.

This week’s decision by a Ninth Circuit panel in Honolulu, Haw. opined that without resolving the larger question of whether this type of lawsuit “reflects a proper invocation of the antitrust laws,” Intel failed to plead that Fortress’s conduct resulted in anticompetitive effects.

“Intel points to no instance in which it has actually paid higher royalties post-aggregation; it merely cites Fortress’s litigation demands as evidence that licensing prices have increased,” the decision said. Instead, the panel explained that a plaintiff must show that a price increase is traceable to a restraint of trade, yet Intel failed to plead facts showing that the alleged price increases were attributable to Fortress’s patent aggregation.

The court also faulted Intel for failing to plead that Fortress’s conduct restricted output in the relevant patent markets, labeling the plaintiff-appellant’s allegations “conclusory” and “unsupported by any facts.”

Intel is represented by Wilmer Cutler Pickering Hale and Dorr LLP and Fortress by Irell & Manella and Mololamken LLP.