A federal judge ordered Marvell Technology Group Ltd to pay nearly $1.54 billion for infringing two hard disk drive patents held by Carnegie Mellon University, nearly one-third more than a jury had previously awarded.
Continue Reading Below
The award, however, was less than half the maximum $3.75 billion that Carnegie Mellon had sought, though Marvell still plans an appeal. Shares of Marvell rose 4.1 percent to $16.40 in pre-market trading.
In her decision late Monday, U.S. District Judge Nora Barry Fischer in Pittsburgh, where Carnegie Mellon is based, said "enhanced damages" were justified against Marvell and its Marvell Semiconductor unit because the university showed that they deliberately copied its patents through "known willful infringement."
The payout is equal to 1.23 times the sum of the original $1.17 billion jury verdict from December 2012, plus $79.6 million for alleged infringements that the jury did not consider because it had lacked recent financial information at the time.
"This award is sufficient to penalize Marvell for its egregious behavior and to deter future infringement activities," the judge wrote in a 72-page decision.
Fischer rejected the university's request to triple damages to $3.75 billion, saying this would "severely prejudice" Marvell and perhaps threaten its survival. She also denied Carnegie Mellon's request to stop further sales of the chips.
Continue Reading Below
"Fears were the damages would be even higher," Brean Capital analyst Mike Burton, who rates Marvell a "buy," wrote in a research note. He said Marvell may on appeal reduce the damages award by 80 percent, "if the case even stands to begin with."
Marvell said it intends in an appeal to the U.S. Federal Circuit Court of Appeals in Washington, D.C. to argue that the patents are invalid, that there was no infringement, and that the court erred in calculating a royalty rate of 50 cents per chip and applying it to chips made and sold abroad.
The company had previously argued that a one-time $250,000 royalty payment would have been enough.
Carnegie Mellon did not immediately respond to requests for comment.
The case concerned patents issued in 2001 and 2002, and related to how accurately hard disk drive circuits read data from high-speed magnetic disks. Carnegie Mellon claimed that at least nine Marvell circuit devices incorporated the patents, letting the company sell billions of chips without permission.
Marvell is based in Hamilton, Bermuda, and its main U.S. operating unit is based in Santa Clara, California.
The initial $1.17 billion award was the third-largest in U.S. patent litigation since 1995, PricewaterhouseCoopers said in a June 2013 study.
The case is Carnegie Mellon University v. Marvell Technology Group Ltd et al, U.S. District Court, Western District of Pennsylvania, No. 09-00290.