3D XPoint patent suit against Micron and Intel is allowed to proceed

A US lawsuit filed two years ago by the liquidator of a bankrupt patent company against Intel and Micron has been allowed to proceed. The ruling issued on October 1 by Judge Thomas J. Tucker, exposes Intel to claims that its has no right to its core 3D XPoint technology.

ECDL Trust accuses Micron and Intel of colluding fraudulently in transferring intellectual property to Micron and arranging royalty free licenses with Intel. The plaintiff also alleges Intel has no right to certain technology used in its Optane 3D XPoint products.

In its filing, ECDL Trust said the technology, including non-volatile chalcongenide phase-change memory (PCM) and an Ovonic switch, was developed by Energy Conversion Devices (ECD, a company founded by Stan Ovshinsky to commercialise his inventions.

In 1998-1999, ECD signed a deal with Micron CTO Tyler Lowrey and Ovonyx, a newly-formed company that was set up to commercialise this IP. The royalty deal required Ovonyx to pay 0.5 per cent of its revenues on a quarterly basis to ECD. Lowrey subsequently became Ovonyx CEO.

Ovonyx earned $58m revenues from sub-licensing the ECD technology from the beginning of 2000 until 2012, when it stopped paying royalties to ECD.

Ovonyx stockholders included ECD, Lowrey, Intel, and former Micron CEO and chairman Ward Parkinson. He was also a VP and Director of Ovonyx.

ECD went bankrupt under Chapter 11 in February 2012. Energy Conversion Devices Liquidation Trust (ECDL Trust) was set up in the ECD liquidation plan and ECD subsequently sold its Ovonyx stock to Micron in August 2012. Micron owned 100 per cent of Ovonyx after July 2015.

In July 2015 the patents held by Ovonyx were transferred to a separate company, Ovonyx Memory Technology LLC (OMC), three days after Intel and Micron publicly launched 3D XPoint memory.

ECDL Trust argues the royalty payments to ECD should have continued after 2012 and is suing Lowrey, Ovonyx, OMC, Intel and Micron for the missing payments, in a Michigan bankruptcy court.

The defendants in the ECDL Trust lawsuit filed seven motions to dismiss ECDL Trust’s claims. Judge Tucker issued his judgement on October 1st, granting some motions and denying others. Tucker denied OMT’s motion to dismiss the fraudulent transfer complaint, and denied Intel’s motion to dismiss ECDL Trust’s claim it has no right to the Ovonyx IP used in 3D XPoint products.

The lawsuit is Case No. 12-43166 in the United States Bankruptcy Court, Eastern district of Michigan, Southern Division.