Broadcom and VMware’s troubles continue to go from bad to worse, with media giant Netflix suing the companies for alleged patent infringement.

Broadcom acquired VMware in November 2023 and immediately began hiking prices for existing customers, leading to AT&T suing the company for breach of contract. Broadcom has lost customers and distributors as a result of its practices, but it is now facing a patent infringement lawsuit.

Netflix is accusing Broadcom and VMware (via Reuters) of infringing five virtualization patents with its VMware vSphere Foundation and a host of other projects.

Broadcom and VMware, jointly and severally, have infringed, and continue to infringe, at least Claim 1 of the ’424 Patent, either literally or under the doctrine of equivalents, by making, using, selling, and/or offering for sale within the United States and/or importing into the United States products that are covered by at least Claim 1 of the ’424 Patent. These products include, but are not limited to VMware vSphere Foundation, VMware Cloud Foundation, VMware Cloud on AWS, Azure VMware Solution, Google Cloud VMware Engine, Oracle Cloud VMware Solution, IBM Cloud for VMware Solutions, Alibaba Cloud VMware Service, as well as any other vSphere-based products and/or services (collectively, the “’424 Accused Products”).

Willful Infringement

Netflix goes on to accuse Broadcom of willfully infringing its patents (specifically 424 Patent), saying the company has a “demonstrated culture of knowingly using patented technology.”

Further, VMware marked accused functionality with patents whose prosecution contains citations to or objections based on the Asserted Patents. That is, many of VMware’s patent applications that contain citations to or rejections based on the Asserted Patents, were later, after issuance, used to mark infringing functionality. Broadcom appears to have removed VMware’s virtual marking URL but, upon information and belief, Broadcom did so to review VMware’s virtual marking and can be imputed with knowledge thereof. Thus, Broadcom understands that the Asserted Patents cited in VMware’s prosecution histories overlap with the functionality in the ’424 Accused Products or is willfully blind to that fact. Given the close relationship between the subject of the Patents-in-Suit and the ’424 Accused Products, including that VMware marked accused functionality with patents that were objected to during prosecution based on the Asserted Patents, Broadcom knew or should have known of the substantial risk of infringement through use of their products.

Broadcom and VMware’s willfulness is further evidenced by VMware’s demonstrated culture of knowingly using patented technology.74 Copying other people’s patents is circumstantial evidence of willful infringement and it appears the Accused Products are copies of the Asserted Patents. Further, VMware’s former CEO, who served in that role for ten (10) years, from October 2013 to December 2023, allegedly testified in deposition that VMware has a culture of copying.75 Upon information and belief, Broadcom continues VMware’s culture of copying today.

Broadcom and VMware’s willfulness is further evidenced by VMware’s culture of willful blindness toward patents, including intentionally not reviewing third-party patents when any rational actor would understand—based on, for example, the application rejections in VMware’s patent applications—that a substantial risk of infringement exists.76 Upon information and belief, Broadcom continues that culture today.

Broadcom’s History of Infringement

Netflix points out that Broadcom has a history of losing willful patent infringement cases, with at least two juries finding the company guilty.

In fact, two separate juries have found VMware committed willful infringement, in part, because of VMware’s culture of copying and refusing to review third-party patents during a time period relevant to this matter.77 Indeed, the Accused Product in those matters is the same Accused Product here, demonstrating a pattern and practice of copying and willful blindness as to infringement when it comes to the Accused Product, vSphere, during the time at-issue here. Upon information and belief, Broadcom continues the pattern and practice of willful infringement today.

Thus, Broadcom and VMware have willfully infringed the ’424 Patent. Broadcom and VMware’s knowing and willful infringement has caused and continues to cause damage to Netflix, and Netflix is entitled to recover damages sustained as a result of Broadcom and VMware’s wrongful acts in an amount subject to proof at trial.

Conclusion

Netflix goes on to lay out its case regarding the remaining four patents, accusing Broadcom of willing infringing all of them.

Broadcom has stumbled from one PR disaster to another since its VMware acquisition. At the rate the company is going, one can’t help but wonder how long it will be before Broadcom manages to devalue its $69 billion purchase.