Reuters' reported today that "Marvell Technology wins cut in $1.54 billion Carnegie Mellon patent award." I read the Federal Circuit's opinion, and I'm not so sure it's time for Marvell to celebrate just yet.
There are three main themes to the opinion. First, the Federal Circuit really left most everything intact (e.g., findings of patent infringement, patent validity, direct and indirect infringement, lack of laches, and royalty rate). Second, willful infringement is difficult to prove. Third, particular attention is required when overseas sales occur to determine whether the sale is "inside" the U.S.
As to the first issue: Marvell's chips infringed Carnegie Mellon's patents. The Federal Circuit left this alone. This had no impact on the damages award though.
As to the second issue: The Federal Circuit picked a great case to explore this issue. The importance of willful infringement is that if you can prove it, you can get up to three times the damages award (35 U.S.C. § 284). From the summary of the facts, it looks like Marvell set up a magical story for Carnegie to tell. Marvell knew about the patents, analyzed the claims, copied some of the inventors' work – but not all, provided no evidence that Marvell developed a non-infringement defense before trial, and even named its chip development program after the Carnegie inventors (friendly tip: don't do that). The Federal Circuit held that Marvell did not willfully infringe because it came up with a reasonable argument that the patents were invalid (note that Marvell lost on its invalidity arguments at trial). It helped that the trial court even called the invalidity arguments a "close call." The damages award is reduced because the part of the award related to willful infringement damages was reversed (the damages award had been increased by 23% for willfulness), but that still leaves north of a billion dollars in damages.
As to the third issue: This represented the largest reversal on damages (about a billion dollars), but I'm not sure it will last. All the Federal Circuit says is that it affirms $278,406,045.50 on sales of all chips that actually entered the U.S. The rest of the award it sent back for a new trial specifically on whether the sales took place in the U.S.
Note: The general idea here is that U.S. patent laws are enforceable for activity in the U.S. only. If something infringes the patent laws of China, then China must be the government to provide a remedy, if any.
Turning back to the opinion, the Federal Circuit held that in order for patent damages to apply if the product did not physically enter the U.S., the "sale" must at least have occurred in the U.S. However, the opinion discusses that the facts suggest "a substantial level of sales activity by Marvell within the United States, even for chips manufactured, delivered, and used entirely abroad. That evidence is strengthened by the record details regarding Marvell's contracting process, and Marvell has not pointed us to significant evidence that would block an inference that sales commitments occurred in the United States."
So yes, it is clear that the damages award is reduced by removing the willfulness award. But, I'm not so sure we can call this one a major "win" for Marvell just yet. It could easily shape out to be more of a discount on damages.
~TechAttaché
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