Marvell Loses Bid to Halve $1.2 Billion Patent Verdict

Marvell Technology Group Ltd. (MRVL), a mobile-phone chipmaker, lost its bid to cut $620 million from the $1.17 billion patent-infringement verdict awarded to Carnegie Mellon University over computer disk-drives.

U.S. District Judge Nora Barry Fischer in Pittsburgh rejected Marvell’s arguments that the school shouldn’t collect damages for the time before it filed the lawsuit because it waited too long to complain. The judge still has to consider whether the damage award should be increased based on the jury’s finding that the infringement was intentional.

A federal jury issued the fourth-biggest verdict in U.S. history Dec. 26, 2012, after finding Marvell infringed two Carnegie Mellon patents for a way to more accurately detect data from-disk drives. Carnegie Mellon said Marvell had falling sales in the late 1990s so needed the school’s inventions to maintain and expand its customer base.

Fischer said Carnegie Mellon had an “unreasonable and inexcusable” five-year delay in filing the lawsuit after it first suspected its patents were being infringed. Still, she said, Marvell knew about the patents and was obligated to avoid the technology or reach a licensing deal.

“Marvell’s decision to continue production despite this infringement action demonstrates Marvell’s apparent acceptance of the business and legal risks,” Fischer said.

50 Cents

Marvell argued the university waited until the Hamilton, Bermuda-based company’s sales took off before filing suit to maximize its royalties. Chief Executive Officer Sehat Sutardja, in a Feb. 11 court filing, said Marvell’s revenue jumped to $2.95 billion in 2009, when the suit was filed, from $143.9 million in 2001, when the first of the patents was issued.

Had Carnegie Mellon contacted Marvell in 2001 and demanded a royalty of 50 cents a chip, as the jury awarded, the company would have developed its products differently, he said.

Fischer said Marvell has started to integrate different technology, though sales of infringing products will continue through this year.

Carnegie Mellon “could be best described as naïve, timid, or ‘gun shy’ and apparently avoided raising the specter of litigation with Marvell in its initial correspondence and lack of follow-up, possibly because it viewed Marvell as a potential supporter of its research efforts or employer for its students rather than litigation target,” Fischer said.

She rejected Marvell’s contention that the university waited to file suit on purpose.

‘Consciously Copied’

Carnegie Mellon said in a March filing it had made Marvell aware of the patents and had sought over the years to learn more about whether any chipmakers were using its technology. It also said Marvell didn’t have a right to complain since it “consciously copied” the university’s invention.

The Pittsburgh school argued it’s entitled to more than what the jury awarded. In addition to more than $200 million in interest, Carnegie Mellon said it’s owed for continuing infringement since July 29, 2012, the date used by the jury. It also wants an order that Marvell pay continuing royalties or stop using the technology.

In a September opinion denying Marvell’s bid to overturn the verdict, Fischer said the period of July 2012 to August 2013 alone would mean an additional $181.9 million in damages.

Carnegie Mellon also asked the judge to triple the damage award because of the jury’s finding that the infringement was intentional. Rather than 50 cents for every chip, the school should get $1.50, it said. Fischer hasn’t ruled on those requests.

The case is Carnegie Mellon University v. Marvell Technology Group Ltd., 09cv290, U.S. District Court for the Western District of Pennsylvania (Pittsburgh).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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