Fed Circuit Slashes $1.2B From Patent Award

WASHINGTON (CN) - Marvell Technology must pay Carnegie Mellon University $278 million for patent violations, after the Federal Circuit whacked $1.2 billion from a jury award, based on where the infringing hard chips were sold.

Carnegie Mellon sued Marvell Technology Group and Marvell Semiconductor in 2009 for infringing two sequence-detection patents in high-density magnetic recording devices.

As the case went to trial, U.S. District Judge Nora Barry Fischer refused on Nov. 7, 2012, to let the university preclude evidence on dropped or changed claims or accused products.

Later that month, Fischer rejected Marvell's attempt to procure a jury instruction on the doctrine of laches, which penalizes inexcusable delays in filing suit.

A jury awarded Carnegie Mellon nearly $1.17 billion on Dec. 26, 2012, using a rate of 50 cents for each semiconductor chip Marvell sold for hard-disk drives.

On Feb. 28, 2013, Fischer denied Marvell's motion for in camera review of laches-related documents withheld by Carnegie Mellon, chiding Marvell for taking such action nearly three years after receiving privilege logs and two years after close of discovery.

On June 26, 2013, Carnegie Mellon lost its bid for $17.2 million in attorneys' fees.

Fischer declined two months later to award Marvell judgment as a matter of law or a new trial on non-damages issues, and denied its motion for a mistrial based on alleged misconduct by the university's counsel during closing arguments and throughout the trial.

To extend Carnegie Mellon's award to the date of judgment, the court on March 31, 2014 awarded a 23 percent enhancement for Marvell's willfulness, and entered a judgment of roughly $1.54 billion for past infringement and a continuing royalty at 50 cents per chip.

Marvell appealed, and the Federal Circuit on Aug. 4 affirmed in part, reversed in part and vacated and remanded in part, in a 46-page ruling. It affirmed the judgment on patent infringement and rejected Marvell's invalidity defenses. It affirmed denial of Marvell's laches defense, but reversed the enhancement of damages. It affirmed in part the past and continuing royalty awards, but vacated and remanded them in part.

Writing for the three-judge panel, Judge Richard Taranto rejected Marvell's claim that it never used Carnegie Mellon's methods, but developed a different, "suboptimal" solution.

"The jury could find that Marvell's work differed from a particular embodiment of CMU's [Carnegie Mellon's] claims but came within the limitations set forth in the language of the claims, which define the scope of the protected invention," Taranto wrote. "In other words, the jury could find that the claims are located at the spot on the breadth spectrum occupied by any valid, infringed claim: they are broad enough to encompass the accused processes but not so broad as to encompass the old or obvious."

The panel affirmed the rejection of Marvell's laches defense to pre-suit damages.

"The district court went beyond the mere conclusion of conscious copying," Taranto wrote. "It considered the extent and egregiousness of Marvell's copying, the culpability on the part of CMU in delaying suit, and the ramifications for public policy of allowing a laches claim. It did not abuse its discretion in concluding that the equities favored CMU and defeated Marvell's defense."

But the panel agreed with Marvell's challenge to the enhanced damages.

"The enhancement of damages must be reversed because the invalidity defense it presented in this litigation was objectively reasonable," Taranto wrote.

The court held that a partial new trial is needed on chips that never entered the United States, to determine whether their "sale" can be said to have occurred here.

K&L Gates LLP, representing Carnegie Mellon, said it was "pleased" by the ruling.

"Research universities such as CMU drive innovation and scientific progress," the law firm said. "The protection of intellectual property rights arising from the cutting-edge work of faculty and students is vital to their mission and enables CMU, other universities and their commercial partners to obtain a return on the significant resources invested in that research. We are reviewing the decision carefully to determine the appropriate next steps."

Marvell said it was "pleased that the Federal Circuit has vacated the $1.54 billion judgment in favor of Carnegie Mellon University, reducing the award by more than $1.25 billion and ordering a partial retrial on the location of sales of chips made and shipped abroad. The company is studying the specifics of the opinion carefully to determine its future options."

Shareholders filed a class action against Marvell last year, alleging that unjust enrichment through fraud and waste of corporate assets jeopardized their dividends. That case was dismissed without prejudice in February.

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