Carnegie Mellon v. Marvell: District Court Denies Marvell's Equitable Defenses Finding That Marvell Has Not Acted Equitably Toward Carnegie Mellon

by Jeffer Mangels Butler & Mitchell LLP

In this patent infringement case brought by Carnegie Mellon University ("CMU"), against Marvell Technology Group, Ltd. and Marvell Semiconductor, Inc. (collectively "Marvell"), CMU alleged that Marvell has infringed two of its patents. After a four-week jury trial, the jury rendered its verdict in favor of CMU on infringement, validity, and willfulness, and awarded damages in the amount of $1,169,140,271.00.

Among many post-trial motions, Marvell file a motion for judgment in its favor on the equitable defense of laches. The district court noted that "[t]he first issue in dispute between the parties is whether Marvell has demonstrated by a preponderance of the evidence that CMU had actual or constructive knowledge of Marvell's infringement of the patents prior to March 6, 2003, which would raise a presumption in favor of Marvell. (Docket Nos. 804, 823). Marvell points to various events which occurred in 1998, 2001 and 2002 in support of its efforts to invoke the presumption. (Docket No. 804)."

The district court rejected Marvell's argument regarding the presumption of laches. "Marvell's arguments as to the applicability of the presumption are rejected by the Court because it has not pointed to any significant evidence of CMU's alleged knowledge of its infringement of the '180 Patent between August 20, 2002 and March 6, 2003. (See Docket No. 803). Marvell does not argue that CMU had actual knowledge of its infringement of either the '180 Patent or the '839 Patent (to the extent it remains relevant) but focuses on CMU's alleged constructive knowledge of infringement at that time. (See Docket No. 804 at 8). As to constructive knowledge, "[t]he plaintiff is chargeable with such knowledge as he might have obtained upon inquiry, provided the facts already known by him were such as to put upon a man of ordinary intelligence the duty of inquiry." Advanced Cardiovascular Sys., Inc. v. Scimed Life Sys., Inc., 988 F.2d 1157, 1162 (Fed. Cir. 1993). On this point, the only evidence presented by Marvell during the relevant period (from August 20, 2002 to March 6, 2003) consists of several entries contained in privilege logs dated in September and December of 2002. (Id. at ¶ 25). Upon review of same, the Court finds that none of the entries reference the '180 Patent or indicate that there was knowledge of possible infringement of the '180 Patent (or even the '839 Patent) at that time by any entity and there are no references to Marvell in any of the entries. (Docket No. 812-1 at 4-5). Indeed, the September 2002 entries reflect that CMU sought advice of outside counsel concerning possible infringement of the "B2 patent" which is not at issue in this litigation and the December 2002 entries concern its receipt of legal advice about the "disk drive market" and "data storage industry." (Id. at 5). Accordingly, the Court holds that Marvell has failed to demonstrate by a preponderance of the evidence that the presumption of laches applies in this case. See Aukerman, 960 F.2d at 1032."

After rejecting the presumption, the district court explained that "in order for Marvell to succeed in its laches defense, it must affirmatively prove that CMU: (1) unreasonably delayed the filing of this litigation after becoming aware of Marvell's infringement; and (2) that such delays caused Marvell material prejudice. See In re Katz Interactive Call Processing Patent Litigation, 882 F. Supp. 2d 1123 (N.D. Cal. 2010) (citing Hemstreet v. Computer Entry Sys. Corp., 972 F.2d 1290, 1293 (Fed. Cir. 1992), which cited Aukerman, 960 F.2d at 1032) ("once the presumption is burst, the defendant must affirmatively prove both elements of laches."). Naturally, the parties contest the sufficiency of Marvell's evidence as to both prongs of this test. (Docket Nos. 804, 823, 854, 858)."

The district then concluded that Marvell had met these standards. "In light of the applicable standard and after carefully considering all of the evidence presented by the parties, the Court finds that Marvell has demonstrated by a preponderance of the evidence that CMU should have known about Marvell's potential infringement of the patents as of April 5, 2003. Because CMU initiated this lawsuit on March 6, 2009, the period of delay in this case is approximately five years and eleven months."

The district court found that Marvell has proven by a preponderance of the evidence that CMU's delays in filing this lawsuit were unreasonable and inexcusable under the first prong of the laches analysis.

The district court then addressed the question of material prejudice. The district court then found that Marvell had sufficiently demonstrated by a preponderance of the evidence that CMU's delays in this case caused it evidentiary prejudice. The district court also looked at economic prejudice and found that Marvell had not suffered economic prejudice. "In short, Marvell's decision to continue production despite this infringement action demonstrates Marvell's apparent acceptance of the business and legal risks associated with same and further illustrates that it would not have changed its production schedule or declined to make the capital investments if the infringement lawsuit was initiated earlier."

Nonetheless, the district court held that "Marvell has presented sufficient evidence to prove the necessary elements of its laches defense by a preponderance of the evidence, i.e., that CMU unreasonably and inexcusably delayed filing this lawsuit for a period of five years and eleven months and that Marvell sustained evidentiary prejudice as a result."

Finally, the district court had to determine "whether the Court should decline to exercise its discretion to find laches and bar pre-suit damages for the infringement of the '180 Patent after weighing all of the equities between the parties. (Docket Nos. 804, 823, 854, 858). CMU argues that a finding of laches would be improper in this case because of Marvell's unclean hands resulting from its conscious and deliberate copying of the infringing technology for more than a decade. (Docket Nos. 823, 858). Marvell advocates that the finding of willful infringement in this case The last dispute for the Court to resolve is whether the Court should decline to exercise its discretion to find laches and bar pre-suit damages for the infringement of the '180 Patent after weighing all of the equities between the parties. (Docket Nos. 804, 823, 854, 858). CMU argues that a finding of laches would be improper in this case because of Marvell's unclean hands46 resulting from its conscious and deliberate copying of the infringing technology for more than a decade. (Docket Nos. 823, 858). Marvell advocates that the finding of willful infringement in this case is insufficient to defeat its laches defense. (Docket No. 854). is insufficient to defeat its laches defense. (Docket No. 854)."

The district court then ruled in favor of CMU on this issue given the totality of the evidence. "After carefully considering all of the parties' arguments and the evidence of record, the Court finds that the equities clearly favor CMU, which acted negligently in delaying to enforce its patents against Marvell, rather than Marvell, which copied CMU's patents consciously and deliberately for an entire decade. See Aukerman, 960 F.2d at 1033. Indeed, Marvell's knowing infringement of CMU's patents is precisely the type of egregious misconduct which the Federal Circuit has recognized should significantly tip the scales of justice in favor of a patentee and defeat an otherwise well-supported laches defense. See e.g., Gasser, 60 F.3d at 775; Bott, 807 F.2d at 1576; Aukerman, 960 F.2d at 1044."

In conclusion, the district court held that "He who seeks equity must do equity." Aukerman, 960 F.2d at 1038 (citation omitted). "Marvell has not acted equitably toward CMU and the Court declines to endorse its conscious copying of CMU's patented methods by sustaining its defense of laches and limiting the jury's pre-suit damages award for its infringement of the '180 Patent."

Accordingly, the district court denied Marvell's laches motion.

Carnegie Mellon University v. Marvell Technology Group, LTD., et al., case No. 09-290 (D. Penn. Jan. 14, 2014)

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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