Marvell, critics decry huge award in CMU patent case

Brian Bowling
| Saturday, Dec. 29, 2012, 12:01 a.m.

A monster verdict in Western Pennsylvania this week highlighted growing industry unease with a patent system that critics say is stifling innovation instead of encouraging it.

A nine-member federal jury on Wednesday awarded Carnegie Mellon University $1.17 billion on its claim that Bermuda-based Marvell Technology Group Ltd. infringed on two patents the university holds for noise-detection technology used in computer hard drives. It's the largest standing verdict in a technology patent case, observers said.

Critics of the verdict decry both the size of the award and the fact that the university doesn't produce computer chips and, therefore, wasn't protecting a patent against a competitor.

“It's not like Carnegie Mellon was losing sales or being put out of business,” said Mark Lemley, a Stanford University law professor who tracks patent lawsuits.

The jury found that Marvell sold about 2.34 billion chips between 2003 and 2012, and the $1.17 billion comes out to about 50 cents per chip.

Patrick McElhinny, the lead attorney for CMU in the case, declined comment.

Marvell has a pending request for a mistrial based on statements made by CMU's attorney in closing arguments before the jury. It also has pending motions on how CMU calculated the $1.2 billion in damages, and whether CMU waited too long to make its claims.

“Marvell was aware of the theoretical work done by academics at CMU, but knew that CMU's approach could not be incorporated into real-world products,” the company said Friday. “Marvell developed its own unique technology which was patentably distinct from CMU's approach, and moreover Marvell's design actually worked in silicon chips.”

Researchers developed the patents through CMU's Data Storage Systems Center, a collaborative venture in which industries pay to support research in return for licenses for the patented technologies.

CMU said in a statement released Wednesday that it's obligated to protect the interests of both its inventor and its industry partners.

“If they've got a valid patent, they've got a right to be paid for it,” Lemley said. The question is whether the $1.17 billion award is out of proportion to the value of the patents and, if so, how that will encourage others to file similar lawsuits.

“It doesn't take many $1.2 billion awards before it's not economical to be a technology manufacturer,” he said.

The number of patent lawsuits filed in the United States increased from 2,725 filings in 2010 to 5,385 in 2012, Lemley said.

The granting of more patents is largely driving that increase, said Q. Todd Dickinson, a Pitt law school graduate who is former director of the U.S. Patent and Trademark Office and current executive director of the American Intellectual Property Law Association.

His group's annual survey shows that the cost of the lawsuits doubled between 2001 and 2009, which each side paying an average of $3 million by the time a lawsuit involving a claim of $25 million or more in damages is ready to go to trial.

Michael Madison, a University of Pittsburgh law professor who focuses on patent law, said lawsuits like CMU's are unusual.

“CMU isn't the first university to sue to enforce one of its patents. Pitt did the same thing last year,” he said. “But it's a relatively new phenomenon. Most universities prefer to license their patents but leave the lawsuits to others.”

Brian Love, a Santa Clara University professor who focuses on patents, said the entry of universities into patent lawsuits has raised questions of whether they're acting like “patent trolls,” companies that don't produce anything but buy up a lot of patents so they can demand royalties from companies that make products.

“What Carnegie Mellon is doing is far from that,” he said. On the other hand, it's questionable whether universities should hold patents since the intent of the patent system is to encourage innovation.

“They're not in this game to create companies and become the next Bill Gates,” Love said. “They're in it because they're interested in the field. They're not incentivized by getting a patent that would then be used by the university.”

Most universities lose money on patents because they spend more obtaining them than they ever receive in royalties, he said.

Brian Bowling is a staff writer for Trib Total Media. He can be reached at 412-325-4301 or bbowling@tribweb.com.

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