Marvell fails to void $1.17 billion U.S. verdict, chipmaker may owe more

By Jonathan Stempel

(Reuters) - Marvell Technology Group Ltd failed to overturn a $1.17 billion jury verdict for infringing two hard disk drive patents held by Carnegie Mellon University, and a federal judge said the amount may grow because the infringement was willful.

U.S. District Judge Nora Barry Fischer in Pittsburgh, where Carnegie Mellon is based, denied Marvell's requests for a new trial or a reduction in damages, and by finding willful infringement subjected the chipmaker to possible triple damages. She said she would issue a decision on damages later.

Fischer faulted Marvell's "all or nothing" strategy of not offering evidence about its business or pricing strategies that could have led to lower damages, despite having for a decade produced technology it knew might been covered by the patents.

"While the court acknowledges this award is large, the facts show that the infringement was long and sustained," Fischer wrote in a 126-page decision. "CMU has shown by clear and convincing evidence that Marvell acted in disregard of an objectively high likelihood that its actions constituted infringement of a valid patent."

She added that "while Marvell may believe the court's purportedly flawed legal analysis precipitated its defeat, it is the undersigned's impression as a judge and former trial lawyer that Marvell's bad facts and even worse litigation strategy was fatal to its cause."

A jury in Pittsburgh awarded the damages in December. The initial award is the third-largest in U.S. patent litigation since 1995, PricewaterhouseCoopers said in a June study.

Marvell shares were down 2.5 percent at $12.14 on Monday afternoon on the Nasdaq.

A Marvell spokesman said the decision "is not a real surprise," and that the Hamilton, Bermuda-based company will appeal to the U.S. Court of Appeals for the Federal Circuit.

A Carnegie Mellon spokesman had no comment on the decision.

JURY IS ARBITER, COURT IS UMPIRE

The case concerned patents issued in 2001 and 2002, related to how accurately hard disk drive circuits read data from high-speed magnetic disks.

Carnegie Mellon sued Marvell in March 2009, saying at least nine Marvell circuit devices incorporated the patents, letting the company sell billions of chips without permission.

According to court papers, Marvell generated $10.34 billion of revenue and $5.05 billion of operating profit from its alleged infringing technology.

Fischer said it was only in July 2013 that Marvell began to "design around" the patents.

She also rejected Marvell's contention that the $1.17 billion damages award, equal to 50 cents per chip, was legally unsound. A Marvell damages expert had argued that a one-time $250,000 royalty payment would have sufficed.

"Just because a damages award is large does not mean the court's standard of review changes. At this stage of the case, the Court is only an 'umpire,'" Fischer wrote, quoting Chief Justice John Roberts of the U.S. Supreme Court from his 2005 confirmation hearing. "The nature and scope of the damages to be awarded was properly left to the jury."

PwC said the biggest patent damages award since 1995 was $1.85 billion against Abbott Laboratories in favor of Centocor Ortho Biotech Inc, now part of Johnson & Johnson, related to arthritis drugs.

In 2012, Samsung Electronics Co Ltd was ordered to pay Apple Inc $1.05 billion over smartphone software, but the sum has been reduced and the case remains in litigation.

The case is Carnegie Mellon University v. Marvell Technology Group Ltd et al, U.S. District Court, Western District of Pennsylvania, No. 09-00290.

(Reporting by Jonathan Stempel and Erin Geiger Smith in New York; editing by Nick Zieminski and Matthew Lewis)

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