Carnegie Mellon v. Marvell: District Court Enhances Damages to $1.5 Billion

by Jeffer Mangels Butler & Mitchell LLP

After a jury returned a verdict against Marvell for patent infringement, Carnegie Mellon ("CMU") filed several motions, including for prejudgment interest, for supplemental damages, for enhanced damages, for an ongoing, increased royalty rate triple what the jury found, and for a permanent injunction.

With respect to prejudgment interest, the district court noted that prejudgment interest is genrally awarded but found that CMU's delay in filing the case justified denying prejudgment interest in this case. "In this Court's estimation, the first factor, which requires a showing of diligence in prosecution of the action, plainly favors Marvell. To this end, the Court reiterates its prior holding that CMU unreasonably and inexcusably delayed filing this litigation for a period of five years and eleven months because it failed to timely conduct a sufficient investigation into infringement allegations brought to its attention by the inventors." As a result, the district court found that CMU was not entitled to prejudgment interest. "On balance, the Court believes that the pre-suit damages of approximately $545 million should be awarded to CMU given Marvell's willful infringement for the laches period, but an additional award of prejudgment interest added to the judgment award of $1.249 billion, at any rate, compounded or not, is unwarranted due to CMU's inexcusable and unreasonable delays in prosecuting this case and the prejudice to Marvell attendant to such delays."

Turning to enhanced damages, the district court concluded that such damages were appropriate in a limited amount:

"Overall, the Court believes that a penalty of enhanced damages should be assessed against Marvell given its:

• known willful infringement through its deliberate and extensive copying of the patented methods;

• failure to investigate the scope of the patents vis-à-vis its products and simulators at any time prior to the suit;

• failure to respond to the inquiries by CMU and Fujitsu; continued production of infringing products containing the patented methods and lack of any remedial action until after the verdict in this case; and,

• its concealment of its activities through its internal policies and its '585 Patent which claimed that it was operating a "suboptimal" method while Marvell and its engineers knew that the MNP detector was functionally equivalent to CMU's patented methods."

The district court then imposed "a penalty of 1.23 times the damages award (including the jury's verdict plus supplemental damages). In reaching this decision, the Court has considered all of the alternatives proposed by both parties, which range from no enhanced damages to twenty-percent of the verdict, as advocated by Marvell and CMU's suggested range of between $545 million to $2.48 billion, the latter figure which would treble damages. (Docket Nos. 793, 833, 850, 862). Having studied all of these proposals, the Court believes that each is flawed in some respect as they do not fully account for all of the circumstances which put the parties before the Court on these most contested issues. Therefore, the Court finds an intermediate sanction to be appropriate. This twenty-three percent (23%) award results in a penalty of $287,198,828.60 and increases the total damages figure to $1,535,889,387.60."

The district court then turned to the issue of the permanent injunction and denied CMU's request for a permanent injunction because CMU had not demonstrated that Marvell was unable to pay future royalties. "Based on the foregoing, CMU's motion for a permanent injunction [787] is denied as CMU has failed to demonstrate that Marvell is unable to pay the past and future damages resulting from its infringement. However, such denial is without prejudice, to CMU renewing its motion in the event that credible and significant evidence well beyond that which has already been presented demonstrates that Marvell's financial condition has worsened to such an extent that it cannot pay future damages."

After denying CMU's request for a permanent injunction, the district court addressed the issue of an ongoing royalty. The district court found that an ongoing royalty as appropriate but denied CMU's request to have the rate tripled, based in part on CMU's failure to pursue the action for several years and its apparent satisfaction with the jury award. "With these findings, and after weighing the relevant Georgia-Pacific factors, the Court holds that a post-trial hypothetical negotiation between CMU and Marvell would result in the parties agreeing to a reasonable ongoing royalty of $0.50 per Accused Chip."

Carnegie Mellon University v. Marvell Technology Group, LTD., Case No. 09-290 (W.D. Penn. March 31, 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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