CARNEGIE MELLON UNIVERSITY v. MARVELL TECHNOLOGY GROUP, LTD. et al

Filing 933

MEMORANDUM OPINION indicating that CMU's Motion for Prejudgment and Post-Judgment Interest, (Docket No. 788 ), Motion for a Permanent Injunction, Post-Judgment Royalties, and Supplemental Damages, (Docket No. 786 ), and Motion for a Finding of Willful Infringement and Enhanced Damages, (Docket No. 790 ) are granted, in part and denied, in part; CMU's Motion for Prejudgment and Post-Judgment Interest 788 is granted to the extent that CMU seeks post-judgment interest under 18 U.S.C. § 1961 but denied to the extent that CMU seeks prejudgment interest under 35 U.S.C. § 284; CMU's Motion for a Permanent Injunction, Post-Judgment Royalties, and Supplemental Damages 786 is granted to the extent that CMU will be awar ded supplemental damages in the amount of $79,550,288.00; denied to the extent that a permanent injunction is sought; and granted, in part, as the Court will order an on-going royalty of $0.50 per sale of Accused Chips by Marvell; and, CMU& #039;s Motion for a Finding of Willful Infringement and Enhanced Damages 790 is granted to the extent that the Court will award enhanced damages at a rate of 1.23 multiplied by the jury's award and supplemental damages, for a total enhancement of $287,198,828.60, but denied to the extent that CMU seeks enhanced damages at a higher rate (details more fully stated in said Memorandum Opinion). Signed by Judge Nora Barry Fischer on 3/31/2014. (bdk)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
CARNEGIE MELLON UNIVERSITY,
Plaintiff,
vs.
MARVELL TECHNOLOGY GROUP, LTD.
et al.,
Defendants.

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Civil Action No. 09-290
Judge Nora Barry Fischer

MEMORANDUM OPINION
I. INTRODUCTION/BACKGROUND
This is a patent infringement case brought by Plaintiff Carnegie Mellon University
(“CMU”), against Defendants Marvell Technology Group, Ltd. and Marvell Semiconductor, Inc.
(collectively “Marvell”), alleging that Marvell has infringed two of its patents, U.S. Patent Nos.
6,201,839 (the “‘839 Patent”) and 6,438,180 (the “‘180 Patent”) (collectively, the “CMU
Patents”), for which the Court conducted a four-week jury trial from November to December of
2012. (Docket No. 760). The jury rendered its verdict on December 26, 2012 in favor of CMU
on infringement, validity and willfulness, and awarded damages in the amount of
$1,169,140,271.00. (Docket No. 762).1 The Court has continued to preside over hotly contested
1

As the parties are well aware of the factual and procedural background of this case and the Court has
already written extensively on the facts of this case, (see Docket Nos. 900, 901, 920), the Court will limit its
discussion to the background necessary for the resolution of the current motions. For convenience, the Court cites to
the docket numbers associated with these previously issued opinions on its own docket throughout this decision but
notes that the opinions resolving post-trial motions are available at the following citations: (1) denying the mistrial,
see Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd., Civ. A. No. 09-290, 2013 WL 4511293 (W.D. Pa. Aug. 23,
2013); (2) resolving the parties’ motions for judgment as a matter of law (“JMOLs”), see Carnegie Mellon Univ. v.
Marvell Tech. Grp., Ltd., Civ. A. No. 09-290, --- F. Supp. 2d ----, 2013 WL 5332108, at *41-42 (W.D. Pa. Sept. 23,

post-trial proceedings in this case, which has included extensive briefing and post-trial
evidentiary submissions, a two-day motion hearing, supplemental briefing on disputed legal
points and periodic joint status reports from the parties as to Marvell’s continuing sales of the
infringing technology. The Court has moved sequentially through the post-trial motions and
issued a number of decisions, including: (1) denying Marvell’s motion for a mistrial, (Docket
No. 900); (2) resolving the parties’ challenges to the sufficiency of the evidence supporting the
jury’s verdict on liability, damages and willfulness but reserving ruling on the financial penalty
to be imposed as a result of Marvell’s willful infringement, (Docket No. 901); and (3) denying
Marvell’s equitable defense of laches, which could have substantially reduced the jury’s award,
(Docket No. 920). All of those decisions are incorporated by reference herein. (Docket Nos.
900, 901, 920).
At this juncture, the jury’s verdict of $1,169,140,271.00, which has been adopted as a
judgment filed on January 14, 2013, has been sustained. (Docket Nos. 762, 769, 901). The
jury’s verdict represents one hundred percent (100%) of the compensatory damages sought by
CMU at trial for Marvell’s infringement of the patented methods. (Id.). It also signifies that the
jury wholly adopted the testimony of CMU’s damages expert, Catharine Lawton, who opined
that a hypothetical negotiation between the parties would have resulted in a reasonable royalty of
$0.50 per Accused Chip sold by Marvell during the relevant time period (the royalty base) and
would result in the exact damages figure which was awarded by the jury. (Docket No. 686 at
61). Ms. Lawton’s opinions have been heavily scrutinized by the Court in prior decisions
(including Daubert challenges both before and during trial) and the decisions on those issues are

2013); and (3), denying the motion for judgment on laches, see Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd.,
Civ. A. No. 09-290, 2014 WL 183212 (W.D. Pa. Jan. 14, 2014).

2

likewise incorporated by reference herein. (Docket Nos. 451, 713, 901). Relevant here, Ms.
Lawton’s testified to the following damages computations:
Damages Period

Royalty Base

Royalty Rate

Damages

3/6/03-3/5/09

1,109,100,006

$0.50

$554,550,003

3/6/09-7/28/12

1,229,180,536

$0.50

$614,590,268

3/6/03-7/28/12

2,338,380,542

$0.50

$1,169,140,271

(Docket No. 633-1 at 7). While the post-trial motions were pending, the Court ordered a number
of post-trial accountings regarding Marvell’s continuing sales of Accused Chips2 and the parties
filed status reports providing such information. (Docket Nos. 885, 886, 904). Through this
process, the parties met and conferred and generally agreed3 that Marvell has made the following
sales of Accused Chips in the subsequent periods:
Period

Sales

7/29/12 – 1/14/13

159,100,576

1/15/13-8/3/13

204,652,009

8/4/13 – 11/2/13

94,390,559

(Docket Nos. 889, 907, 901 at n.136). The Court has not ordered additional status reports at this
time because the same are unnecessary to the Court’s present decisions. However, updated
accountings will be ordered in conjunction with the Court’s rulings set forth below.

2

As noted in the Court’s prior Opinions, “Accused Chips” refers to Marvell’s read channel and SOC chips
containing the infringing technology. (See Docket No. 901 at 16).
3
In the latest status report dated November 2, 2013, the parties dispute the amount of revenue generated for
this period of time and CMU objects to Marvell presenting the sales data in a form which breaks out international
and domestic sales of Marvell’s products. (Docket No. 907). These disputes have no bearing on the instant matters.

3

Turning back to the pending matters before the Court, all of the remaining post-trial
motions involve CMU’s efforts to seek to increase this substantial award and/or to seek a
reasonable royalty for ongoing infringement by Marvell or enjoin it from same.4 CMU seeks all
of the following in addition to its billion dollar jury verdict:


supplemental damages of $79,550,288;



prejudgment interest of up to $326,144,393.25;



enhanced damages of up to three times the jury’s verdict and
supplemental damages (i.e., for a total verdict of $3,746,071,677);



0.14% post-judgment interest on the jury’s verdict, and any
supplemental damages, attorneys’ fees (the issue of attorneys’ fees
has been deferred by the Court until any appeals are resolved),
and/or prejudgment interest which may be awarded, compounded
annually;



a permanent injunction preventing Marvell from further production
of any products which infringe CMU’s patented methods because
Marvell is allegedly a “collection risk,” and,



an on-going running royalty of up to $1.50 per chip on all of
Marvell’s post-judgment sales of chips containing the infringing
technology.

(Docket Nos. 786, 788, 790). Marvell essentially concedes that an award of supplemental
damages and post-judgment interest are appropriate in light of the jury’s verdict but opposes
4

However, before the Court was able to finalize its rulings on these remaining matters, all of which
potentially inure to CMU’s benefit, including the outstanding motion to treble the damages award, CMU saw fit to
bring a series of motions seeking to register the judgment, initiate execution of same, and sought guidance from the
Court on how to proceed as negotiations over Marvell’s acquisition of a supersedeas bond in advance of its appeal to
the Federal Circuit have not progressed as quickly as CMU would like. (Docket Nos. 908, 909). CMU also put
forth financial documents and other evidence which it claimed showed that Marvell was seeking to avoid its
financial obligations under the jury’s verdict, including an acquisition of approximately five percent (5%) of its
common stock by an investment firm and turnover of key members of its management team and Board of Directors.
Marvell countered with its own evidence showing that these were business decisions unconnected to the present
litigation. (Id.). These motions were extensively briefed by the parties, all of which the Court considered prior to
summarily denying such motions, holding that all of CMU’s requests were premature in light of the outstanding
matters. Undeterred by the Court’s Orders, CMU then filed additional papers wherein it essentially asked the Court
to supervise the parties’ negotiations on the bond issues. (Docket No. 919). After even more briefing was
submitted, and reviewed and considered, the Court appointed a Special Master to act in this capacity, so that the
Court could focus on the tasks at hand rather than mediate the parties’ ongoing negotiations. (Docket Nos. 928,
930).

4

CMU’s requests for prejudgment interest, enhanced damages, a permanent injunction and/or a
reasonable royalty on future sales of the Accused Chips. (Docket Nos. 824, 828, 833, 861-863).
CMU’s requests are framed as its Motion for Prejudgment and Post-Judgment Interest,
(Docket No. 788), Motion for a Permanent Injunction, Post-Judgment Royalties, and
Supplemental Damages, (Docket No. 786), and Motion for a Finding of Willful Infringement and
Enhanced Damages,5 (Docket No. 790). These matters have been completely briefed, (Docket
Nos. 787; 789; 790; 793; 834; 836; 837; 850; 852; 853; 861; 862; 863), and the Court heard
argument on same on May 1 and May 2, 2013. (Docket No. 873). The transcripts of these
proceedings were filed on May 15, 2013. (Docket Nos. 880; 881).6 The parties have also
submitted status reports and supplemental briefing on certain issues. (Docket No. 889, 891, 893,
896, 897, 898, 905, 906). Accordingly, these motions are now ripe for disposition. Upon careful
consideration of all of the parties’ submissions, oral argument, and for the following reasons,
CMU’s Motions [788], [786] and [790] are granted, in part, and denied, in part.

More

specifically,


CMU’s Motion for Prejudgment and Post-Judgment Interest [788]
is granted to the extent that CMU seeks post-judgment interest
under 18 U.S.C. § 1961 but denied to the extent that CMU seeks
prejudgment interest under 35 U.S.C. § 284;



CMU’s Motion for a Permanent Injunction, Post-Judgment
Royalties, and Supplemental Damages [786] is granted to the
extent that CMU will be awarded supplemental damages in the
amount of $79,550,288.00; denied to the extent that a permanent
injunction is sought; and granted, in part, as the Court will order an
on-going royalty of $0.50 per sale of Accused Chips by Marvell;
and,



CMU’s Motion for a Finding of Willful Infringement and
Enhanced Damages [790] is granted to the extent that the Court

5

The Court has already made a finding of willful infringement. (Docket No. 901 at 67-81). The Court has
also denied, without prejudice, CMU’s request for Attorney Fees. (Docket No. 884).
6
The parties likewise filed their hearing slides (Docket Nos. 874, 875).

5

will award enhanced damages at a rate of 1.23 multiplied by the
jury’s award and supplemental damages, for a total enhancement
of $287,198,828.60, but denied to the extent that CMU seeks
enhanced damages at a higher rate.
II. MOTIONS SEEKING RELIEF UNDER 35 U.S.C. § 284
CMU’s post-trial motions for supplemental damages, prejudgment interest and enhanced
damages seek relief under the patent damages statute, 35 U.S.C. § 284, which provides that:
[u]pon finding for the claimant the court shall award the claimant
damages adequate to compensate for the infringement, but in no
event less than a reasonable royalty for the use made of the
invention by the infringer, together with interest and costs as fixed
by the court.
When the damages are not found by a jury, the court shall assess
them. In either event the court may increase the damages up to
three times the amount found or assessed. …
The court may receive expert testimony as an aid to the
determination of damages or of what royalty would be reasonable
under the circumstances.
35 U.S.C. § 284. The decisions as to whether to award supplemental damages, prejudgment
interest and enhanced damages are respectively committed to the sound discretion of the trial
court, in light of the developing precedent of the Supreme Court and Federal Circuit on these
issues. “‘Although courts have broad discretion in determining appropriate relief for patent
infringement ... damages must be tailored to the circumstances and be correlatively determined.’”
Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197, 1212-13 (Fed. Cir. 2010) (quoting
Carborundum Co. v. Molten Metal Equip. Innovations, Inc., 72 F.3d 872, 881 (Fed. Cir. 1995)).
The Court will address these matters sequentially, starting with supplemental damages.
A. Supplemental Damages
CMU’s request for supplemental damages for all infringing sales of Accused Chips that
were not included in the jury’s verdict and accrued until the judgment was entered on January
6

14, 2013 is rather uncontroversial. (Docket No. 787 at 19; Docket No. 837 at 26). The parties
agree that the jury’s verdict of $1,169,140,271.00 included damages sustained by CMU during
the period of March 3, 2006 through July 29, 2012, a period which did not include the full
damages period which ended as of January 14, 2013. (Id.). The parties have likewise stipulated
that the accrued supplemental damages for this additional period (i.e., from July 29, 2012 to
January 14, 2013) is $79,550,288.00. (Docket No. 889 at 3). Such figure was calculated by
multiplying the reasonable royalty found by the jury of $0.50 per chip times the royalty base of
159,100,576 Accused Chips which Marvell sold during the supplemental damages period. (Id. at
3).
It is well settled that a prevailing patentee is due the damages for uncalculated pre-verdict
sales through the date of the entry of judgment. See Power Integrations, Inc. v. Fairchild
Semiconductor Int’l, Inc., 711 F.3d 1348, 1380-81 (Fed. Cir. 2013); see also Finjan, 626 F.3d at
1213. The Court finds that supplemental damages are properly awarded to CMU for the period
of July 29, 2012 through January 14, 2013 because the jury did not have the opportunity to
assess them due to a lack of financial information regarding Marvell’s ongoing sales of Accused
Chips at the time of trial. See 35 U.S.C. § 284 (“When the damages are not found by a jury, the
court shall assess them.”). Further, the parties’ stipulations are consistent with the jury’s verdict,
which awarded $0.50 per all of Marvell’s infringing sales of Accused Chips, during the relevant
period. Id. Accordingly, CMU’s Motion [786] is granted to the extent that it seeks supplemental
damages and CMU is awarded supplemental damages of $79,550,288.00.

The Court will

analyze CMU’s companion requests for an ongoing royalty and periodic accountings resulting
from Marvell’s continuing post-judgment infringement in section IV.B., infra.7

7

The parties’ status reports reflect that an additional 299,042,568 Accused Chips have been sold as of
November 2, 2013, which consists of sales of 204,652,009 Accused Chips from January 15, 2013 to August 3, 2013

7

B. Prejudgment Interest
The Court next addresses CMU’s motion for prejudgment interest, which remains hotly
contested by Marvell. (Docket Nos. 788-89, 824, 852, 861). CMU has set forth three separate
proposals in support of its request for an award of prejudgment interest on the entirety of the
jury’s verdict and supplemental damages by applying either: (1) the Pennsylvania state statutory
rate of 6%, compounded quarterly, resulting in $326,144,393.25; (2) the rate of its investment
returns, compounded quarterly, resulting in $285,054,096.75; or, (3) the prime rate, compounded
quarterly, resulting in $211,538,112.38. (Docket Nos. 788; 898).

Marvell contends that

prejudgment interest should be denied in its entirety, or limited through the application of a
lower interest rate or by compounding the figures annually rather than quarterly. (Docket Nos.
824, 861).
In large measure, the parties have set forth positions akin to those advocated in the
context of Marvell’s assertion of the defense of laches, with CMU touting that prejudgment
interest is necessary to make it whole and provide compensation for its lost opportunity to invest
the reasonable royalties it is owed and Marvell countering that CMU’s delays in bringing this
case caused it prejudice, undermining the request for prejudgment interest. (Docket Nos. 78889, 824, 852, 861). As noted, the Court denied Marvell’s motion for judgment on laches in a
lengthy decision dated January 14, 2014. (Docket No. 920). There, the Court found that Marvell
met its burden to demonstrate by a preponderance of the evidence both that: (1) CMU’s delays in
prosecuting this lawsuit were unreasonable and inexcusable; and (2) Marvell was prejudiced, in
part, by the delays, because CMU did not take reasonable steps to preserve the full quantum of
potential evidence during the laches period. (Id.). However, the Court denied Marvell’s laches

($102,326,004.50) and 94,390,559 Accused Chips from August 4, 2013 to November 2, 2013 ($47,195,279.50).
(Docket Nos. 901 at n. 136; 907).

8

defense after weighing the equities between the parties, finding that Marvell’s willful
infringement outweighed CMU’s negligence in failing to reasonably protect its patent rights
through enforcement activities against Marvell. (Id.). The ultimate effect of this decision was to
sustain the jury’s award of approximately $545 million in pre-suit damages for the period of
March 6, 2003 through the date the lawsuit was filed March 6, 2009. (Id.).
The Court recognizes that the issue of prejudgment interest is analytically distinct from
its earlier laches inquiry; however, the Court views the parties’ arguments as to the
appropriateness of an award of prejudgment interest through the prism of its analysis and factual
findings on the laches defense and with due consideration of the financial impact of that
decision. (Docket No. 920). The Court likewise understands that its prior rejection of the laches
defense, on equitable grounds, is not dispositive on the issue of prejudgment interest. See e.g.,
Enzo Biochem, Inc. v. Applera Corp., Civ. A. No. 3:04-cv-929, 2014 WL 29126, at *2 (D. Conn.
Jan. 3, 2014); Humanscale Corp. v. CompX Int’l Inc., Civ. A. No. 09-cv-86, 2010 WL 3397455,
at *2 (E.D. Va. Aug. 23, 2010); Church & Dwight Co., Inc. v. Abbott Labs., No. 05–
2142(GEB)(LHG), 2009 WL 2230941, at *7 (D.N.J. 2009).
With that said, the parties do not dispute that the award of prejudgment interest under
section 284, including the rate of prejudgment interest to be applied and whether to compound
any prejudgment interest awarded, are discretionary matters for the Court. See Uniroyal, Inc. v.
Rudkin-Wiley Corp., 939 F.2d 1540, 1545 (Fed. Cir. 1991) (internal citations omitted) (“[a] trial
court is afforded wide latitude in the selection of interest rates, and may award interest at or
above the prime rate.”). The Supreme Court has held that an award of prejudgment interest is
ordinarily appropriate in patent cases, reasoning that:
[i]n the typical case an award of prejudgment interest is necessary
to ensure that the patent owner is placed in as good a position as he
9

would have been in had the infringer entered into a reasonable
royalty agreement. An award of interest from the time that the
royalty payments would have been received merely serves to make
the patent owner whole, since his damages consist not only of the
value of the royalty payments but also of the foregone use of the
money between the time of infringement and the date of the
judgment.
Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 655-56 (1983). Despite its pronouncement
that prejudgment interest is generally appropriate, the Supreme Court clarified that district courts
retain discretion to limit or deny prejudgment interest in certain circumstances, such as where the
patentee has been responsible for undue delays in prosecuting the lawsuit. Gen. Motors, 461 U.S.
at 657. Yet, the Federal Circuit has emphasized that “absent prejudice to the defendants, any
delay by [the patentee] does not support the denial of prejudgment interest.” Crystal
Semiconductor Corp. v. TriTech Microelectronics Int’l, Inc., 246 F.3d 1336, 1361-62 (Fed. Cir.
2001) (internal citations omitted). Because the award of prejudgment interest is not unique to
patent law, it is determined under the law of the regional circuit, prompting this Court to also
look to precedent from the Court of Appeals for the Third Circuit in deciding these issues.
Transmatic, Inc. v. Gulton Indus., Inc., 180 F.3d 1343, 1347 (Fed. Cir. 1999). The Third Circuit
advises that a district court should consider and balance the following factors before exercising
its discretion to award prejudgment interest:
(1) whether the claimant has been less than diligent in prosecuting
the action;
(2) whether the defendant has been unjustly enriched;
(3) whether an award would be compensatory; and,
(4) whether countervailing equitable considerations militate against
a surcharge.
Feather v. United Mine Workers of Am., 711 F.2d 530, 540 (3d Cir. 1983).

10

Having fully considered the totality of the circumstances in this case, in light of the
aforementioned precedent from the Supreme Court and Federal Circuit, demanding a showing of
delays by the patentee and prejudice to the infringer, see Gen. Motors Corp., 461 U.S. at 655-56
and Crystal Semiconductor Corp., 246 F.3d at 1361-62, each of which were found satisfied in
the context of the Court’s laches decision, (see Docket No. 920), and after weighing the factors
set forth by the Court of Appeals for the Third Circuit, see Feather, 711 F.2d at 540, the Court
finds that CMU’s exceptional delays in prosecuting this case and its corresponding failure to
timely investigate the infringement allegations fully justify denying CMU’s request for
prejudgment interest.
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, Drs. Aleksandar Kavcic and
Jose Moura. (Docket No. 920 at 34-54). CMU’s delays were also largely self-serving as the
evidence shows that it did not take the inventors’ initial allegations seriously and conducted only
a cursory investigation of infringement by contacting its Data Storage Systems Center (“DSSC”)
partner, Seagate, for a free opinion on the matter, without disclosing that it was Marvell –
Seagate’s own chip vendor – which was allegedly infringing.

See id.; see also Crystal

Semiconductor Corp., 246 F.3d at 1362 (holding that “self-serving” delays warranted denial of
prejudgment interest). The record further demonstrates that until November of 2008, CMU
chose not to invest the time and money it would take to investigate the alleged infringement,

11

even after the inventors provided significant information about the infringement to CMU many
years earlier, with continued updates throughout the laches period. For example,


CMU was notified in April of 2003 that Marvell was producing
chips “exactly” as the inventors set forth in their papers and
claimed in the patents;



CMU was told in July of 2004 that Marvell had a subroutine in its
detector named after Dr. Kavcic and was marketing new chips
designed to combat media noise and Dr. Kavcic demanded that a
lawsuit be initiated; and,



CMU was advised that Marvell had obtained its ‘585 Patent8 citing
CMU’s Patents as prior art in early 2006.

(Docket No. 920 (citing, at various points, Def. Exs. 212, 246, 266; Docket Nos. 816-1 at 4; 8164 at 10-12; 674 at 220-21)).

Additionally, CMU never followed up with Seagate, which

purchased millions of the Accused Chips from Marvell during this period of CMU’s inaction and
Seagate then incorporated the Accused Chips into its hard drives and sold them to third parties
down the stream of commerce. (Docket No. 920; Def. Ex. 213, 214). Indeed, CMU’s decision
to commence a full investigation of Marvell’s infringement only occurred in late 2008 after the
inventors attempted to obtain the patents from CMU through a release in order to pursue a
lawsuit without CMU and with financial support from Astro Teller of Cerebellum Capital and
potentially a hedge fund. (Id. (citing Def. Ex. 306)). This lack of timely action cannot suffice to
demonstrate diligence. See Feather, 711 F.2d at 540.
The Court believes that the second factor requiring unjust enrichment by Marvell is
neutral, when viewed in the context of the Court’s laches decision. Again, the Court determined
that Marvell was prejudiced by CMU’s delays because CMU failed to preserve all potentially
relevant evidence (including, among other things, emails and notebooks previously maintained
8

As noted in prior decisions, the ‘585 Patent refers to U.S. Patent Number 6,931,585, filed in 2002, with Dr.
Zinning Wu and Mr. Gregory Burd listed as inventors, related to MNP technology. (Def. Ex. 266).

12

by the inventors) during the laches period. (Docket No. 920 at 54-61). The Court adds that
although it found an insufficient nexus to demonstrate “economic prejudice” in the context of the
laches defense, (id. at 61-68), it is undisputed that Marvell’s sales of chips containing the
infringing technology increased dramatically during the period of CMU’s delays and thereafter,
causing CMU’s damages to escalate substantially into the billion dollar jury award.9 See id. at
68 (“At most, Marvell has shown that its exposure to a judgment for its infringement has grown
substantially (along with its sales and revenues from the infringing chips) during the laches
period and that it simultaneously made significant capital expenditures in order to support its
expanding business.”); see also Crystal Semiconductor Corp., 246 F.3d at 1362 (“Crystal’s two
year delay in initiating the present suit caused the damages owed by TriTech and OPTi to
escalate. The record contains sufficient evidence for the district court to determine that Crystal’s
delay was self-serving and resulted in prejudice to the defendants.”). Likewise, the requested
prejudgment interest on this award has increased significantly because of the lengthy period of
time wherein CMU took no affirmative action to protect its rights. See id. Despite these
findings, the Court denied the laches defense due to Marvell’s willful infringement of the
patented methods, sustaining approximately $545 million of the jury’s verdict and one hundred
9

As noted in Table 2A to the Second Update to Expert Report of Catharine Lawton, the annual breakdown
of royalties/damages is the following:
Year
Amt ($$)
2003
$8,263,072
2004
$41,515,659
2005
$91,265,925
2006
$117,234,916
2007
$131,913,050
2008
$145,030,763
2009
$155,954,794
2010
$181,314,415
2011
$189,142,443
2012 (1/1 – 7/28)
$107,505,236
Total
$1,169,140,271
(Docket No. 634-1 at 5).

13

percent (100%) of CMU’s claimed damages during the laches period. (Docket No. 920).
Accordingly, CMU has been sufficiently compensated for its losses of the reasonable royalties
through the jury’s verdict10 and the award of supplemental damages, without the imposition of
prejudgment interest as Marvell was prejudiced by CMU’s delays, rendering this factor neutral.
See Feather, 711 F.2d at 540.
The third factor examines whether the award would be compensatory in nature. The
Court recognizes that it retains discretion to adjust the rate of prejudgment interest and to award
same on all or part of the judgment award and to order that such interest be compounded or not.
See Uniroyal, 939 F.2d at 1545. However, the potential size of any prejudgment interest award,
e.g., those proffered by CMU, ranging from $211 million to $326 million, demonstrates that an
award of prejudgment interest would represent an unearned windfall to CMU. (See Docket Nos.
788, 789, 852). In this Court’s opinion, CMU’s suggestion that it should be awarded “lost
opportunity” damages it would have earned on royalties is undermined by evidence of its
inactivity in response to allegations which should have caused it to investigate infringement, all
of which the Court considered in the context of Marvell’s laches defense. (See Docket No. 920).
Again, CMU did not act like a reasonable patentee because it was unwilling to timely invest and
pursue infringement allegations.

The Court, thus, cannot conclude that it would have

aggressively invested the royalties where the record overwhelmingly establishes that CMU had
little interest in protecting the patents, despite repeated requests from the inventors. (Id. at 2022). Further, although the approximately $545 million in pre-suit damages are classified as
compensatory in nature; this award was sustained only because of Marvell’s willful
infringement. (Id. at 68-72). Otherwise, the well-supported laches defense would have barred
10

The inventors will share in their portions of this award through their agreements with CMU wherein they
are entitled to fifty percent (50%) of the damages obtained through this litigation, less costs and attorneys’ fees.
(Docket No. 671 at 194–195).

14

the claim for pre-suit damages. (Id.). Given same, any prejudgment interest added to that
portion of the award (and the portion of prejudgment interest which is compounded against the
escalating damages throughout the pendency of the lawsuit) would be, at least in part, punitive in
nature. See Humanscale Corp., 2010 WL 3397455, at *1 (citing Gen. Motors Corp., 461 U.S. at
655). (Prejudgment interest is not punitive, thus “it must be applied only to the compensatory
damages, not enhanced or other punitive damages.”). Accordingly, this factor weighs against
awarding prejudgment interest.
The final factor for the Court’s consideration looks to the equities between the parties.
But, the equities have already been fully examined by the Court in the context of the laches
defense and such factors underlie the Court’s holdings above. (Docket No. 920). 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.
For these reasons, CMU’s Motion [788] is denied to the extent that it seeks an award of
prejudgment interest under 35 U.S.C. § 284.
C. Enhanced Damages
The Court now moves on to the issue of enhanced damages, which has become the
“elephant in the room” between the parties. It remains contested on all fronts. (Docket Nos.
790, 793, 833, 850, 862). CMU seeks an unprecedented financial penalty against Marvell
requesting that the Court impose a penalty of at least half a billion dollars and up to $2.5 billion.
(Docket No. 793). To this end, CMU advocates that the willful infringement by Marvell is

15

sufficient to justify a full trebling of damages in this case, (i.e., $3,746,071,677), but, recognizing
the scope of the damages award exceeding one billion dollars, alternatively contends that the
Court should award enhanced damages in any of the following amounts: (1) double damages,
(i.e., $2,497,381,118); (2) double pre-suit damages, (i.e., $1,803,240,562); or (3) double post-suit
damages, (i.e., $1,942,831,115).11 (Id.). In opposition, Marvell initially maintains that enhanced
damages are not appropriate but continues that if the Court should find its infringement willful
and exercise its discretion to award enhanced damages, any enhancement should not exceed
twenty percent (20%) of the damages award which would result in a total damages award of
$1,498,428,671. (Docket No. 834 at 24-25). Marvell suggests that such an award would be
more appropriately tied to its level of culpability in this case. (Id.).
Section 284 authorizes the Court to award up to treble damages to a prevailing patentee.
See 35 U.S.C. § 284 (“the court may increase the damages up to three times the amount found or
assessed.”). An award of enhanced damages under section 284 is punitive in nature and awarded
in the Court’s discretion. See Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 37 (Fed.
Cir. 2012) cert. denied, 133 S. Ct. 1291 (U.S. 2013) (“enhanced damages, however, are punitive,
not compensatory, and can be awarded only in the judge’s discretion.”). The Court has already
determined that Marvell wilfully infringed CMU’s patents in its prior decision of September 23,
2013, (see Docket No. 901), and this initial finding is sufficient to justify the imposition of a
penalty of enhanced damages against Marvell, as the willful infringer. See Whitserve, 694 F.3d
at 37 (quotation omitted) (“First, the fact-finder must determine whether an infringer is guilty of
conduct upon which increased damages may be based. …, an act of willful infringement satisfies
11

The Court notes that the specific penalty sought by CMU under each theory is:
 Treble Damages = $2,497,381,118.00
 Double Damages = $1,248,690,559.00
 Double Pre-suit Damages = $545,550,003.00
 Double Post-suit Damages = $694,140,556.00

16

th[e] culpability requirement and is, without doubt, sufficient to meet the first requirement to
increase a compensatory damages award.”). The remaining decision for the Court requires the
exercise of its sound discretion to determine “whether, and to what extent, to increase the
damages award given the totality of the circumstances.” Id. (quotation omitted). To be clear, a
finding of willful infringement does not necessitate the imposition of enhanced damages;
however, after such a finding is made, the Court must explain its reasons for declining to award
enhanced damages. See id. (“Upon a finding of willful infringement, a trial court should
provide reasons for not increasing a damages award.” (emphasis added)).
The Federal Circuit has held that the Read factors, established in Read Corp. v. Portec,
Inc., 970 F.2d 816 (Fed. Cir. 1992), should be evaluated and weighed in determining whether
damages should be enhanced under section 284. Spectralytics, Inc. v. Cordis Corp., 649 F.3d
1336, 1348 (Fed. Cir. 2011). The Read factors are:
(1) whether the infringer deliberately copied the ideas or design of
another;
(2) whether the infringer, when he knew of the other’s patent,
investigated the patent and formed a good faith belief that it was
invalid or that it was not infringed;
(3) the infringer’s behavior in the litigation;
(4) the infringer’s size and financial condition;
(5) the closeness of the case;
(6) the duration of the misconduct;
(7) the remedial action by the infringer;
(8) the infringer’s motivation for harm; and,
(9) whether the infringer attempted to conceal its misconduct.
Id. Further, the “paramount determination in deciding to grant [an] enhancement and the amount
thereof is the egregiousness of the defendant’s conduct based on all the facts and circumstances.”
Read, 970 F.2d at 826. Both parties have extensively considered the Read factors in their
submissions as well as during oral argument. (Docket Nos. 790, 793, 833, 850, 862). As the
parties have, the Court will address each factor, in turn. Whitserve, 694 F.3d at 37.
17

1.

Deliberate Copying

Although a patentee is not required to present evidence that an infringer deliberately
copied its invention in order to establish that its patent has been infringed, the first Read factor
counsels that evidence of deliberate or intentional copying is one of the primary factors which
must be considered by the Court to determine if damages should be enhanced under section 284.
See DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1336 (Fed. Cir. 2009)
(Although evidence of copying is “of no import on the question of whether the claims of an
issued patent are infringed,” it is a factor in determining enhanced damages). Evidence of
deliberate copying by an infringer, among other factors, may justify an award of enhanced
damages under section 284 because it demonstrates that the infringer had a culpable state of
mind by acting wilfully and/or in bad faith toward the patentee’s rights. See Jurgens v. CBK,
Ltd., 80 F.3d 1566, 1571 (Fed. Cir. 1996); see also nCube Corp. v. Seachange Intern., Inc., 436
F.3d 1317, 1325 (Fed. Cir. 2006) (affirming award of enhanced damages due, in part, to copying
of the invention). In meeting this burden to show deliberate copying, the patentee is not required
to prove that the infringer engaged in “slavish copying” or produced an infringing product which
is an “exact copy” of the patentee’s product or used the patentee’s product as a template. See
Stryker Corp. v. Intermedics Orthopedics, Inc., 96 F.3d 1409, 1414 (Fed. Cir. 1996).
The parties’ positions as to whether the evidence presented at trial is sufficient to
demonstrate conscious copying by Marvell were addressed by the Court in the context of its
decision finding that the evidence supported a finding of willful infringement. (Docket No. 901
at 25-26, 66-83). To reiterate, CMU relies heavily on Dr. Stephen McLaughlin’s opinions that
the technology was copied by Marvell in its simulators and chips and the jury’s finding that
Marvell had the subjective intent to infringe without an objectively reasonable defense to

18

infringement.

(Id.).

Marvell counters that its engineers merely used publicly available

information (i.e., the papers produced by Drs. Moura and Kavcic and the patents) in order to
develop a suboptimal version of the patented methods which were allegedly too complex to
implement in a detector and also claims that the simulators did not infringe the patents. (Id.).
After carefully considering the parties’ arguments, the Court holds that the credible
evidence presented at trial sufficiently establishes that Marvell deliberately copied CMU’s
Patents and such finding favors awarding enhanced damages to CMU.

Again, the jury found

that Marvell operated with the subjective intent to infringe CMU’s Patents, had no objectively
reasonable defense to the infringement, and as is explained in the following section, Marvell and
its engineers were aware of CMU’s Patents essentially upon their issuance. (Docket No. 762).
Further, the Court has already determined that:
CMU presented evidence at trial showing that Marvell’s engineers
duplicated the technology described in Dr. Kavcic and Dr. Moura's
papers in their chips and simulators, as testified to by Dr.
McLaughlin. (Docket No. 677 at 54–55). The evidence shows that
shortly after beginning work on the Kavcic model, Mr. [Gregory]
Burd prepared a preliminary write-up of the KavcicPP detector
which referenced the work of Dr. Kavcic and Dr. Moura. (Pl. Ex.
280). Again, Dr. McLaughlin testified that this KavcicPP write-up
became the MNP circuit. (Docket No. 677 at 66–67). Although Mr.
Burd stated that he was “generally following the papers,” not the
patents, and that he “left it at that,” (Id. at 77), Dr. McLaughlin
testified that the papers are virtually identical to what is described
in the patents. (Id. at 66–67).
(Docket No. 901 at 82-83). In fact, Dr. McLaughlin credibly testified that the drawing in
Gregory Burd’s lab notebook was a “cut and paste” of Figure 3B of CMU’s Patents. (Docket No.
677 at 106, Pl. Ex. 295).12

12

The Court agrees with CMU’s assessment that Dr. McLaughlin was not intensely cross examined on his
technical opinions.
(See Docket No. 793, n.20 (citing issues with Marvell’s cross-examination of Dr.
McLaughlin)).

19

The evidence also showed that when Kavcic’s name was
disassociated with the project, there was no functional difference
between the old and new computer codes. (Pl. Ex. 368; Docket No.
677 at 81). Dr. [Zinning] Wu informed Mr. [Toai] Doan that he
and Mr. Burd were working on a model that ended up being the
original structure that Kavcic proposed in his paper. (Pl. Ex. 366;
Docket No. 677 at 134–135). Dr. McLaughlin confirmed that the
NLD used the original structure proposed in Dr. Kavcic’s paper,
and subsequently in the CMU Patents. (Docket No. 677 at 136–
137).
(Docket No. 901 at 82-3). Thus, the record fully supports a finding that Marvell copied the
patented technology.
As to the simulators, Marvell acknowledged that the IP taught in CMU’s Patents is
implemented by its Kavcic Viterbi simulator, (Docket No. 677 at 167), and that its employees
considered this simulator to be the “gold standard” against which they continuously run tests, (id.
at 55). Dr. McLaughlin testified that the other simulators likewise infringed the patents. (Id.).
Considering this evidence, the jury decided affirmatively that Marvell deliberately and willfully
infringed the patents in all of its simulators (i.e., Kavcic Viterbi, Kavcicpp, MNP, EMNP and
NLD). (Docket No. 762). Given this admission and the jury’s findings, CMU has submitted more
than enough evidence of copying of the patents as exhibited through the operation of the
simulators.
Additionally, the Court has rejected Marvell’s argument that the alleged “sub optimality”
of its solution to the media-noise problem was relevant to the infringement inquiry. (Docket No.
901 at 70). For the same reasons, such defense is likewise of no help to Marvell to defend
against the claims that it copied CMU’s Patents. (Id.). To this end, both parties’ technical
experts testified that suboptimal detectors were capable of infringing the patented methods13;

13

The Court previously recounted that:
Dr. McLaughlin explained that the difference between an optimal and
suboptimal media detector relates to performance as measured by SNR [signal-

20

therefore, copying the methods for use in a suboptimal detector offers no defense to the charge of
copying. (Id. at 75-76, n.82). But, more importantly, the facts adduced at trial demonstrated that
Marvell knew that its MNP detector was not a suboptimal version of the patented methods,
which it had claimed in its provisional patent application in 2002 and its ‘585 Patent. Again, Dr.
Zining Wu wrote a year later in January 2003, that he and Mr. Burd had discussed the structure
of the MNP chip enhancement and concluded that it “turns out to be the original structure
that Kavcic proposed in his paper.” (Pl. Ex. 366 (emphasis added)).

As noted in prior

decisions, the MNP chip enhancement referred to in this email was later incorporated into all 2.3
billion of the MNP-type and NLD-type chips which the jury determined were infringed
throughout the sales cycle and the hundreds of millions of additional infringing chips it has
produced since the verdict. (Docket Nos. 762, 901, 920). In light of these facts, the evidence
clearly supports the finding that Marvell copied the patented methods and incorporated same into
its simulators and chips. Accordingly, such findings favor enhancing damages. See Read, 970
F.2d at 826.
2.

Knowledge/Good Faith Belief of Non-Infringement/Invalidity

The second Read factor directs the Court to consider whether the infringer had
knowledge of the patents, investigated same and developed a good faith belief that its activities
were not infringing and/or that the patents were invalid prior to proceeding with its own
products. See id. This factor is directly relevant to the underlying issue of willfulness and was
exhaustively discussed in the Court’s September 2013 decision. (See Docket No. 901). For the
to-noise ratio] gain rather than infringement. (Pl. Ex. 279; Docket No. 677 at
64–65). In fact, he specifically stated that the suboptimal detector “would be
using the same method” as the optimal noise detector, (Docket No. 677 at 65),
and he has testified that the sub-optimal versions do infringe on CMU's patents.
(Id.). Marvell's infringement expert, Dr. Proakis, similarly agreed that suboptimality is not part of the infringement analysis.
(Docket No. 901 at 75).

21

reasons that were fully expressed in that decision, (id.), and consistent with the jury’s verdict,
(see Docket No. 762), the Court finds that Marvell had actual knowledge of CMU’s Patents since
at least January of 2002, and such patents were brought to its attention at several different points
in time by a number of independent sources. Specifically,


In January 2002, Mr. Burd sent two separate emails to his thenboss, Toai Doan, advising him of his work on the Kavcic
method and pointing out that this work was patented by CMU,
(Pl. Exs. 280, 283);



In August 2003, CMU sent its “friendly letters” to high level
Marvell personnel, i.e., former Chief Technology Officer
Pantas Sutardja and former General Counsel Matthew Gloss,
advertising the patents and asking that Marvell contact CMU to
investigate a licensing agreement, (Pl. Exs. 422, 431); and,



In November 2004, Fujitsu sent a letter to Marvell requesting
an opinion on the scope of CMU’s patents as compared to the
read channel chips it was buying from Marvell at the time, (Pl.
Ex. 477).

There is no evidence in the record that anyone at Marvell investigated the scope of the patents
vis-à-vis its simulators or production of Accused Chips, including the simulators and detector (at
least for a period of time) bearing Kavcic’s name, in response to any of these communications.
(Docket No. 901 at 69-70). At most, the evidence shows that Marvell forwarded the patents to
its patent prosecution counsel and that the patents were cited as prior art in the provisional patent
application and the ‘585 Patent which later issued. (Id. at 74, n.80). Marvell did not raise advice
of counsel as a defense to CMU’s willful infringement. As such, it has presented no evidence as
to the scope of the investigation, if any, which was conducted by its attorneys and/or engineers
(including the inventors of the ‘585 Patent, Dr. Wu and Mr. Burd).

(Id.). In this Court’s

estimation, Marvell’s suggestion that this process – forwarding the patents to an internal
prosecution attorney and then adding a citation to same in its patent application – represents a

22

“public vetting” of the propriety of its activities is unreasonable and unsupported by the law.
The record before the Court is undisputed that Marvell simply did not explore the scope of
CMU’s Patents; proceeded to run simulators and sell 2.3 billion Accused Chips (and counting)
copying and/or closely modeling products after the inventors’ work.
Marvell’s inaction resulted in its failure to develop any infringement and/or invalidity
defenses until after this litigation was commenced and its litigation defenses were only mildly
successful. (See Docket Nos. 13, 116). It is true that the Court granted summary judgment in
Marvell’s favor on the Group II claims which were asserted by CMU, (Docket No. 443), and
commented that it was a “close call” in denying summary judgment on the Group I claims,
(Docket Nos. 306, 337), but two of the Group I claims were presented to the jury at trial, (i.e.,
claim 4 of the ‘839 Patent and claim 2 of ‘180 Patent), and the jury found in favor of CMU on all
issues of infringement, invalidity and damages, (Docket No. 762). In light of the jury’s verdict,
particularly the damages award which, as supplemented, is now in excess of $1.248 billion,
Marvell’s partial summary judgment victory can hardly be characterized as truly successful.
To conclude, analysis of this second Read factor weighs strongly in favor of awarding
enhanced damages to CMU.
3.

Infringer’s Behavior in the Litigation

The third Read factor involves an examination of whether the infringer engaged in
“litigation misconduct” during the pendency of the case. Read, 970 F.3d at 827. The Federal
Circuit has held that “[t]ypically, ‘litigation misconduct’ refers to bringing vexatious or
unjustified suits, discovery abuses, failure to obey orders of the court, […] acts that
unnecessarily prolong litigation,” or direct violations of court orders by counsel.

i4i Ltd.

Partnership v. Microsoft Corp., 598 F.3d 831, 859 (Fed. Cir. 2010) (citing Jurgens, 80 F.3d at

23

1570–71 & n. 3; Va. Panel Corp. v. MAC Panel Co., 133 F.3d 860, 866 (Fed. Cir. 1997)). While
“litigation misconduct” is properly considered as part of the analysis of the Read factors; such
misconduct is not sufficient to provide an independent basis to enhance damages under section
284. See i4i Ltd., 598 F.3d at 859.
CMU argues that Marvell has taken actions for the primary purpose of unnecessarily
increasing the burden of this litigation, by, among other things, presenting defenses at trial based
on contradictory testimony, disavowing its contemporaneous documents on its prior noninfringement and invalidity positions, and engaging in excessive motions practice on
unmeritorious issues. (Docket Nos. 792-93, 850).14 In opposition, Marvell counters CMU’s
individual arguments and points to instances of supposed litigation misconduct by CMU’s
counsel during the case. (Docket Nos. 832-33, 862). Marvell’s counsel further suggests that
their advocacy – like that provided by their opponents for CMU – was undertaken only in
zealous representation of their clients’ interests. (Id.).
Having presided over this matter from the outset, and after fully considering the conduct
of the parties and their attorneys throughout this case, the Court finds that the third Read factor is
neutral. It does not support an award of enhanced damages. This is “high stakes” litigation
involving two sophisticated parties represented ably by highly capable and qualified counsel.
The parties have steadfastly remained very far apart in their respective evaluations of the merits
of this case as to both liability and damages,15 (i.e., $250,000 v. in excess of $1 billion), causing

14

CMU makes similar arguments in support of its Motion for Attorney’s Fees, (Docket No. 791), which the
Court has denied, without prejudice, given Marvell’s expressed intent to appeal this matter. (See Docket No. 884).
15
The Court has repeatedly noted the parties’ inability to effectively mediate this case and the numerous
methods and professionals (including the undersigned, former Magistrate Judge Infante and others) who were
engaged in various attempts to have the parties bridge the gap and successfully negotiate the matter. (See Docket
Nos. 901 at n.124; 920 at n.48). While these efforts were unsuccessful, there has never been a motion from an
opposing party claiming bad faith mediation practices under § 2.4 of this Court’s ADR Practices and Procedures.
Hence, there has been no adjudication that either of the parties engaged in bad faith during this process. See ADR
Policies and Procedures of the United States District Court for the Western District of Pennsylvania, § 2.4 (effective

24

the litigation to be very contentious at times. Certainly, this case required an inordinate amount
of the Court’s time umpiring discovery disputes, deciding numerous pretrial motions brought by
both parties on dispositive and non-dispositive issues, refereeing countless evidentiary objections
and motions during the trial and now finally resolving the balance of the post-trial motions.16
(See Docket No. 901). But, neither the parties nor their counsel were sanctioned by the Court
during the case, perhaps because of the Court’s active case management and willingness to
engage the parties and resolve all of their aforementioned disputes. (See Docket Report, Civ. A.
No. 09-290). In any event, while the Court has questioned the methods of both sides on
occasion, rightly or wrongly, neither side crossed the proverbial line between zealous advocacy
and engaged in the types of litigation misconduct which the Federal Circuit counsels would be
properly considered in support of an award of enhanced damages under section 284.
Accordingly, the Court finds that this factor is neutral and does not serve as a basis for enhanced
damages.
4.

Infringer’s Size and Financial Condition

The next issue for discussion given the fourth Read factor is whether the infringer’s size
and financial condition are sufficient to support an award of enhanced damages. Read, 970 F.3d
at 827. While recognizing that enhanced damages are imposed to punish the infringer as well as
to deter infringing behavior, courts examine the infringer’s size and financial condition to
determine if an award of treble damages would “severely prejudice” its business. See Univ. of
Pittsburgh of Com. Sys. of Higher Educ. v. Varian Med. Sys., Inc., Civ. A. No. 08-1307, 2012
WL 1436569, at *7 (W.D. Pa. Apr. 25, 2012) (Schwab, J.). In some instances, an infringer’s

Feb. 1, 2012), available at: https://www.pawd.uscourts.gov/Applications/pawd_adr/Documents/ADRPolicies.pdf
(last visited 3/27/14).
16
Here the Court would note it has been hampered by the loss of three active District Judges in the past year,
resulting in a larger civil case load and the highest individual criminal case load in the Pittsburgh division.

25

financial condition is cited as a reason not to grant enhanced damages to the fullest extent if the
infringer is in a weak financial position. See, e.g., Funai Elec. Co., Ltd. v. Daewoo Elecs. Corp.,
593 F. Supp. 2d 1088, 1115 (N.D. Cal. 2009) (noting that infringer was in a weak financial
position and did not support award of damages), aff’d, 616 F.3d 1357, 1376–77 (Fed. Cir. 2010).
Other cases recognize that this factor supports the enhancement of damages against a financially
strong infringer which is easily able to withstand an award of treble damages. See e.g., i4i Ltd.,
598 F.3d at 858 (noting that the infringer, Microsoft, was undisputedly the world leader in
software business and computers, with more than $60 billion in revenues in 2008 and could
easily withstand a penalty of up to $600 million in damages, if trebled).
At the outset, the Court points out that CMU has set forth seemingly contradictory
positions vis-à-vis the strength of Marvell’s financial condition, undermining its arguments that
this factor supports an enhancement. As support for its requests for enhanced damages and an
ongoing reasonably royalty of $1.50 per Accused Chip, CMU claims that Marvell has a strong
financial position, as exhibited in financial statements which it has presented and the sales
information submitted at trial and adds that Marvell has made certain public comments that its
business will not be disrupted as a result of the verdict. (Docket No. 793 at 21). On the other
hand, in CMU’s pursuit of a preliminary injunction, and later motions to register and execute on
the judgment, it suggests that Marvell is a “collection risk” due to its business structure and
purported intentional dissipation of its liquid assets in order to avoid a judgment. (Docket Nos.
787, 853, 908-09). From its perspective, Marvell denies that it is a “collection risk” but also
maintains that its financial condition, while sound, could not support an award of trebling the
jury’s substantial verdict in this case. (Docket Nos. 833, 862).

26

The Court agrees with Marvell that its business appears to be doing very well at present.
The Court, however, does not believe that Marvell is sufficiently capitalized to withstand a
penalty of treble or even double damages creating an additional penalty of $2,497,381,118 or
$1,248,690,559, on top of the billion dollar award in this case. Marvell is a publicly traded
company with its shares traded daily on the NASDAQ Global Select Market under the symbol
“MRVL.”17 (See 10-K, Docket No. 909-3 at 52). One of the many ways to value a publicly
traded company is to look to its market capitalization, which “is measured by multiplying its
stock price by the total number of shares it has issued.”18 Alco Ind., Inc. v. Wachovia Corp., 527
F. Supp. 2d 399, n.4 (E.D. Pa. Nov. 5, 2007) (citation omitted). Market capitalization is often
used by courts to value businesses because, absent evidence to the contrary, the public markets
generally produce an impartial and unbiased valuation of a company. Cf. Iridium Operating LLC
v. Motorola, Inc., 373 B.R. 283, 293 (Bankr. S.D.N.Y. 2007) (recognizing that “the public
trading market constitutes an impartial gauge of investor confidence and remains the best and
most unbiased measure of fair market value and, when available to the Court, is the preferred
standard of valuation”). A company’s market capitalization fluctuates daily because it is tied to
the company’s stock price, which changes based on a substantial number of different factors,
including the financial performance of the business, trading volumes and prices, financial
forecasts by analysts, litigation risks and other external market forces. Id.
17

Like all publicly traded companies, Marvell is required to make periodic filings with the Securities and
Exchange Commission (“SEC”), and several of these SEC filings have been submitted for the Court’s review. (See
e.g., Docket No. 909-3).
18
The market valuation of a company is typically used to categorize it as a large-cap, mid-cap or small-cap
company, although the precise values for each category varies considerably between funds and other sources. See
Alco, Ind., Inc., 527 F. Supp. 2d at n.4. NASDAQ defines large-cap stocks as those companies with a market
capitalization of over $5 billion and mid-cap stocks as those companies with a market valuation between $1 billion
and $5 billion. See NASDAQ, large-cap definition, available at: http://www.nasdaq.com/investing/glossary/l/largecap and mid-cap definition, available at: http://www.nasdaq.com/investing/glossary/m/mid-cap (last visited
3/24/14). Other indexes and funds use different ranges to determine whether the companies are categorized as largecap, mid-cap or small-cap. See Alco, Ind., Inc., 527 F. Supp. 2d at n.4. As noted, during the pendency of this case,
Marvell’s market capitalization has fluctuated between the ranges for mid-cap and large-cap companies.

27

Here, the record evidence before the Court indicates that Marvell’s market capitalization
is presently in excess of seven billion dollars. (Docket No. 927 at 2). This valuation has,
however, fluctuated greatly during the pendency of this litigation, most notably via an immediate
decrease in value following the jury’s verdict in this case. (See Docket No. 908-4 at 2-3
(Marvell’s “[s]hares tumbled late in 2012, when a federal jury in Pittsburgh ordered the company
to pay a $1.17 billion award for infringing Carnegie Mellon patents covering integrated
circuits.”)). After the jury’s verdict on December 26, 2012, Marvell’s stock price fell to a low of
$6.98 per share at its lowest point resulting in an approximate market capitalization of around
$3.4 billion dollars. (See Docket No. 912-2 at 2). By November 2013, the market capitalization
had rebounded to approximately $5.9 billion. (Docket No. 908-4 at 2-3). On December 16,
2013, after the public announcement of a significant acquisition of Marvell stock by Kohlberg
Kravis Roberts & Co., LP., the market capitalization became $6.8 billion. (Docket No. 912-2).
Since then, Marvell’s market capitalization has steadily increased to the present valuation of over
seven billion dollars. (Docket No. 927 at 2).
The parties have additionally provided the Court with information concerning Marvell’s
liquid assets, including its cash, cash equivalents, restricted cash and short term investments, but
such figures are likewise dynamic, changing over time. (See Docket No. 909-2, Table titled,
“Marvell’s Cash v. “But for” Cash without SPR & Div”). In February of 2013, around the time
of the entry of judgment in this case, Marvell maintained approximately $2 billion in these liquid
assets, causing CMU to proclaim that it was “flush with cash” and able to pay an ongoing
running royalty of $1.50 per chip.

(Docket No. 787 at 3). But, Marvell’s liquid assets have

changed over time due to its ongoing business operations, including a share repurchase program,
through which Marvell has set out to repurchase up to $3 billion in stock over the past few years

28

while the litigation was pending. (See Docket No. 909-3).19 CMU roundly criticized Marvell’s
continuation of its share repurchase program after the verdict, but Marvell reports that such
program was instituted years before the award and has now substantially concluded. (See e.g.,
Docket No. 909). Even with these repurchases, the latest financial information provided to the
Court indicates that Marvell maintains around $1.8 billion in liquid assets and CMU’s own
expert forecasts that it will maintain around $2 billion in same throughout this fiscal year. (See
Docket No. 909-2 at 2).
The Court is also cognizant of the exceptional revenues generated by Marvell through its
sales of Accused Chips containing the infringing methods.

Before trial, this figure was

approximately $10.3 billion and due to continuing sales, (Docket No. 634-1 at 3, 8), the total
revenue figure now exceeds $12 billion, (Docket No. 907). Again, these figures grew because of
CMU’s failure to meaningfully investigate the infringement allegations asserted by the inventors
during the period of time where Marvell’s sales were not as robust.20 (See Docket No. 920).

19

Marvell’s 10-K Report explains this program, as follows:
In August 2010, our board of directors initially authorized our current share
repurchase program to repurchase up to $500 million of our outstanding
common shares. During fiscal 2012, our board of directors authorized an
additional $1.5 billion to be used to repurchase our common shares under the
share repurchase program. In May and December 2012, we announced
additional increases of $500 million to the share repurchase program. This
increases the total available under the repurchase program to $3.0 billion. We
intend to effect the repurchase program in accordance with the conditions of
Rule 10b-18 under the Exchange Act. The repurchase program will be subject to
market conditions and other factors and does not obligate us to repurchase any
dollar amount or number of our common shares. The repurchase program may
be extended, modified, suspended or discontinued at any time. We may make
repurchases in open market or privately negotiated transactions in order to effect
our repurchases.

(Docket No. 909-3 at 54).
20
For example, through 2005, when CMU had already been told by Dr. Kavcic that Marvell was making
chips “exactly” as claimed in the patents, had named a subroutine in the detector after him, and demanded that CMU
file a lawsuit, and Marvell’s ‘585 Patent, citing CMU’s Patents as prior art, had already issued, Marvell had sold
only 282 million chips resulting in $141 million in royalties. (See Docket Nos. 920; 634-1 at 5, Lawton, “Table
2A”; and n.9, supra).

29

CMU likewise points to Marvell’s overall profits from the sales of the infringing chips, which it
values at over $6 billion. (Docket No. 907). However, its expert on damages, Ms. Lawton
valued the infringement in this case based on an “excess profits” analysis wherein she
specifically opined as to the added financial value of the patented methods to the Accused Chips
and priced the reasonable royalty at $0.50 per chip based on her belief that the parties would
negotiate a reasonable royalty at that rate.21 (See Docket No. 901 at 114-15). She also opined
that the total “excess profits” attributable to Marvell’s additions of the patented methods to its
chips was the ultimate damages figure of $1.169 billion based on the $0.50 royalty rate because
the patented methods were “must have” for Marvell and its customers. (Docket No. 634-1). So,
the damages award reflects the fact that Marvell has already been disgorged of the percentage of
profits that CMU’s own expert attributed to the inclusion of the patents in Marvell’s products.22
In all, the Court believes that a penalty of treble or double damages which would increase
the judgment to approximately $3.7 billion or $2.5 billion would “severely prejudice” Marvell’s
business. See Varian Med. Sys., Inc., 2012 WL 1436569, at *7. Such a significant penalty
would effectively value the infringement at a rate of nearly fifty percent (50%) or one-third
(33%) of the current market capitalization of the entire company. Based on the historical data of
the stock price and the decline of same when the jury’s verdict of $1.169 billion was announced,
the Court can logically infer that the stock price and market capitalization would again decrease
if such a significant penalty was imposed, and the judgment debt would then hold an even
greater percentage of the total value of the company. Indeed, if the stock price returned to its
low price in December 2012, trebling damages would exceed the market capitalization of the
company, which was then at approximately $3.4 billion. (See Docket No. 912-2 at 2). Further,
21

Again, Marvell did not specifically counter these opinions through a rebuttal expert.
The Court also considers this factor in imposing an ongoing royalty for the continuing infringement. See §
IV.B., infra.
22

30

the imposition of a penalty based on either trebling or doubling damages would place Marvell in
a financial position where the judgment debt owed to CMU would likely exceed its current liquid
assets of approximately $1.8 billion. (See Docket No. 909-2). While such an exceptional award
may lend credence to CMU’s “collection risk” theory, by possibly requiring Marvell to incur
debt, issue additional equities or engage in some type of other financial maneuvers in order to
satisfy the judgment, this type of penalty would likely “severely prejudice” Marvell’s ongoing
operations, including its many non-infringing business lines.
For these reasons, the Court finds that Marvell’s financial condition does not support an
enhancement and strongly counsels against enhancing damages to the degree requested by CMU.
5.

Closeness of the Case

The next Read factor is whether the case was “close,” on which of course the parties
disagree. Read, 970 F.3d at 827. The Court’s inquiry under this factor requires it to weigh the
strength of the parties’ evidence on the disputed issues in the case. See Mentor H/S, Inc. v.
Medical Device Alliance, Inc., 244 F.3d 1365, 1380 (Fed. Cir. 2001); see also Spectralytics, Inc.
v. Cordis Corp., 2011 WL 60003931, at *5-6 (D. Minn. 2011).

In evaluating this factor, the

Court looks to its prior rulings on dispositive motions, the strength of the evidence presented at
trial and the jury’s verdict. See e.g, id; SSL Servs., LLC v. Citrix Sys., Inc., 2:08-CV-158-JRG,
2012 WL 4092449 (E.D. Tex. Sept. 17, 2012) (Court held that the case was not a close call as the
jury had deliberated for 3 hours and awarded Plaintiffs the precise amount presented to the jury
by SSL’s damages expert and asked for by SSL in its closing arguments.); Wordtech Sys., Inc. v.
Integrated Network Solutions, Inc., 204-CV-01971-MCE-EFB, 2009 WL 113771 (E.D. Cal. Jan.
15, 2009) (“the evidence presented at trial overwhelmingly favored a finding for Plaintiff, as is

31

evidenced by the relatively short deliberations required for the jury to reach a unanimous verdict
on all causes of action.”).
At the outset, the Court agrees generally with CMU’s position that the jury’s verdict is
reflective of the jury’s view that the case was not close. Indeed, the jury found in favor of CMU
on every issue presented to it and awarded the precise amount of damages requested by CMU.
See id.; (Docket No. 762). Yet, the Court must also look beyond the jury’s verdict to determine
whether, and to what extent, the case presented close issues.
For all of the reasons that have been previously expressed, the Court does not believe that
the issues of infringement or willfulness were close as CMU’s trial presentation on these issues
was very strong and having addressed these matters at length, the Court will not belabor those
points. (See also Docket No. 901). The Court acknowledges that it stated in ruling on the
motion for summary judgment on invalidity issues that it was a “close call”; however, such
ruling merely denied a summary judgment motion and permitted that aspect of the case to be
decided by the jury. (Docket Nos. 306, 337). While the Court believes that the invalidity
defense was likely Marvell’s strongest, the jury disagreed and presumably found Dr.
McLaughlin’s opinions to be more credible than those put forth by the defense expert, Dr. John
Proakis. Having presided over the trial, and heard all of the parties’ evidence, the Court agrees
with that assessment. (See Docket No. 901 at 52-66). Accordingly, the invalidity issue was not
sufficiently close at trial to weigh in Marvell’s favor in the Court’s analysis of the Read factors.
On the other hand, Marvell’s challenges to the admission of non-U.S. sales as part of the
royalty base, its motions contesting pre-suit damages under both the marking statute and the
doctrine of laches were all close.

(Docket Nos. 595, 672, 920).

32

The Court also heavily

scrutinized the reasonable royalty opinion of CMU’s damages expert, Lawton, as has been
discussed at length above. (Docket Nos. 451, 713, 901).
Although the Court ruled in CMU’s favor on the balance of these issues and continues to
believe that those decisions are correct, the Court recognizes the significance of same on the
damages evidence CMU was permitted to present to the jury and the ultimate jury verdict. To
this end, the Court precluded CMU from recovering pre-suit damages as to the ‘839 Patent under
the marking statute, 35 U.S.C. § 287. (Docket No. 595). The Court carefully examined the presuit conduct of both parties as to the ‘180 Patent but ultimately upheld the jury’s award of $545
million in damages for this period of time. (Docket No. 920). The Court also acknowledged that
CMU’s “but for” causation theory permitting Marvell’s use of the infringing simulators during
the U.S.-based sales cycle to capture all of Marvell’s sales was “novel,” but permitted this theory
to be presented to the jury. (Docket No. 672). A ruling for Marvell on this issue would have
significantly lowered the royalty base presented to the jury (for the time period of March 6, 2003
to July 28, 2012) to 556,812,092 and consequently, reduced the recoverable damages available to
CMU to only $278,406,046. (Docket No. 633-1 at 7). With that said, the Court emphasizes that
its findings made in its September 2013 decision on the JMOLs that despite Marvell’s pretrial
posture, it did not factually prove at trial that its sales were made outside the United States.
(Docket No. 901 at 96-105). Further, as noted, Marvell offered no real counter evidence to
challenge Ms. Lawton’s carefully crafted damages opinion on the reasonable royalty. (Id. at 89).
Instead, Marvell put forth Creighton Hoffman and his rather cursory opinion that the royalty
agreement would have been a one-time, lump sum payment of $250,000.00. (Id. at 89 (citing
(Docket No. 709 at 242-245)). In light of all of these rulings, the jury was tasked with weighing

33

a $1.169 billion valuation versus a $250,000.00 valuation. (Id.). Although it was certainly
permitted to award an intermediate verdict, it chose not to do so.
To conclude, the evidence on liability strongly favored CMU’s positions but the case
certainly presented “close calls” for the Court on damages which appear to be ripe for decision
by an appellate court. As the present discussion concerns the extent of a financial penalty to be
imposed on top of the significant damages which have already been awarded, the Court does not
believe that the fifth Read factor favors an enhancement.
6.

Duration of the Misconduct

The sixth Read factor examines the duration of the misconduct by the infringer, which
may be weighed against any delays in prosecution by the patentee. Read, 970 F.3d at 827. It is
also well recognized that delays which are insufficient to demonstrate laches, may still be
relevant to this factor. Mass Engineered Design, Inc. v. Ergotron, Inc., 633 F. Supp. 2d 361, 391
(E.D. Tex. 2009). The Court has exhaustively discussed its evaluation of the evidence as to
CMU’s delays and Marvell’s long and sustained willful infringement of the patented methods in
the context of its laches decision, (Docket No. 920), and in § II above regarding the claim for
prejudgment interest.
On balance, after again weighing these facts, the Court holds that the sixth Read factor
does not support an enhancement to the extent advocated by CMU and further notes that an
appropriate adjustment will be made to the overall award of enhanced damages due to the fact
that CMU’s pre-suit damages claim was sustained only as a result of Marvell’s willfulness.
Further explanation of these calculations is set forth in § II.C.10 below.
7.

Remedial Action by the Infringer

34

The seventh Read factor requires the Court to evaluate the remedial action taken by the
infringer, if any. Read, 970 F.3d at 827. Courts look to any remedial action by the infringer in
determining whether to enhance damages because “patent infringement is a continuing tort, and
an action even if innocently begun does not automatically retain its purity as circumstances
change. The filing of a lawsuit does not stop the clock insofar as culpability may arise from
continuing disregard of the legal rights of the patentee.” Pall Corp. v. Micron Separations, Inc.,
66 F.3d 1211, 1221-22 (Fed. Cir. 1995). To this end, actions by the infringer to remediate the
alleged infringement may undermine a claim for willfulness and/or counsel against awarding
enhanced damages, through such activities as: discontinuation of product lines allegedly
infringing; investing in a redesign of the allegedly infringing products; and/or negotiating with
the patentee in good faith to avoid infringement. See e.g., Trading Technologies Intern., Inc. v.
eSpeed, Inc., 595 F.3d 1340, 1358 (Fed. Cir. 2010) (“Prompt redesign efforts and complete
removal of infringing products in a span of a few months suggest that eSpeed was not objectively
reckless.”); Amstar Corp. v. Envirotech Corp., 823 F.2d 1538, 1546-47 (Fed. Cir. 1987)
(infringer obtained an opinion of counsel and attempted to design around the product and also
negotiated with patentee in good faith during this process); Pall Corp., 66 F.3d at 1221-22. In
contrast, conduct by the infringer throughout the litigation which shows a disregard for the
patentee’s credible claims often is found to support enhancing damages, including: failing to
obtain an opinion of counsel; ramping up production of new products despite the allegations; and
continuing to infringe after a finding of willfulness. See e.g., SynQor, Inc. v. Artesyn Tech., Inc.,
709 F.3d 1365, 1385 (Fed Cir. 2013) (post-verdict infringing sales supported enhancement);
Power Intergrations, Inc. v. Fairchild Semiconductor Intern., Inc., 725 F. Supp. 2d 474, 480 (D.
Del. 2010), rev’d on other grounds, 711 F.3d 1348 (Fed. Cir. 2013).

35

The parties once again dispute the import of this Read factor. (Docket Nos. 793, 833,
850, 862). CMU suggests that Marvell’s lack of any remedial action to avoid infringement until
months after the billion dollar verdict in this case fully supports enhancing damages. (Docket
Nos. 793, 850). CMU further points out that Marvell not only continued to infringe during the
pendency of this lawsuit through known product lines but actually introduced at least 17 new
product lines containing the infringing technology. (Id.). Marvell challenges these assertions,
trumpets that its actions were reasonable and maintains that as of July, 2013, it had moved to
design around the patents. (Docket Nos. 833, 862).
After considering all of the evidence of record as well as the parties’ arguments, the
Court agrees with CMU that this seventh Read factor supports an award of enhanced damages
because Marvell has acted with a complete disregard for CMU’s patent rights throughout this
case. The Court initially looks to the numerous opportunities which Marvell had to conduct a
pre-suit investigation and evaluate whether its simulators and products infringed.

Instead,

Marvell simply ignored inquiries from CMU and its own customer, Fujitsu, to evaluate the
claims in CMU’s Patents. (Pl. Exs. 422, 431, 477). When CMU finally brought this suit in
2009, it affirmatively put Marvell on notice of its claims that Marvell was wilfully infringing its
Patents. (Docket No. 1). Moreover, the Court made a number of rulings that put Marvell on
notice of the potential scope of this case, when it construed the claims on October 1, 2010,
(Docket No. 176), and in numerous decisions on summary judgment motions in 2012. (Docket
Nos. 306, 337, 423, 441, 443, 445, 447, 449, 451). Yet, Marvell has continued to unabashedly
infringe the patented methods through its existing chip lines. And, as noted above, it also added
the challenged technology to new product lines which were not even created until after the
lawsuit was filed. (See Docket No. 850 at 7). Marvell further points to its lengthy sales cycle

36

and proffers that it was not cost effective to redesign the chips including the patented methods
which were in process. (Docket Nos. 833, 862). However, the length of the sales cycle provides
no explanation for the production of these additional lines of chips containing the infringing
technology which were later introduced. So, these arguments are granted little weight.
The Court recognizes that Marvell has consistently taken a “no liability” position
throughout this case but it also exhibited no interest in even attempting to design around the
patented methods until very recently. It took this position despite arguing to the jury that the
patents were essentially worthless and unnecessary to the success of the products.23 (Docket No.
707 at 59-62). Pursuant to a joint status report from the parties, Marvell only actively started to
attempt to design around the accused methods in July of 2013 – seven months after the verdict.
(Docket No. 898). According to Marvell, its redesign (of its C11000 chips) will not include the
NLD but will not be in volume production until the end of 2014, at the earliest. (Docket No. 833
at 23). It is, therefore, wholly unreasonable that Marvell took no remedial action until months
after the billion dollar verdict in this case and the jury’s finding of willful infringement. (Docket
No. 793 at 22).
Marvell’s complete disregard of CMU’s patent rights is best exemplified through its posttrial affidavit of Dr. Wu, who stated that Marvell would discontinue its inclusion of the
infringing technology in its MNP and NLD products but only after CMU obtained a judgment
against Marvell.

(Docket No. 802 at Ex. 2). As this Court has recognized, Marvell always

knew what it was doing and deliberately took on both the business and legal risk to continue
infringing until it was ordered by the Court to discontinue. (Docket No. 920). To Marvell, the

23

At trial, Marvell claimed to have several other technologies that could offer the same benefits as the MNP
and NLD (Docket No. 707 at 59-62), yet Marvell has not replaced the MNP or NLD with any of them in the past
four years. In fact, CMU identified 17 Marvell infringing chips that were developed at least a year after the lawsuit
was filed. (Docket No. 850 at 7).

37

risk was worth the reward of billions of dollars of revenues and profit obtained throughout this
case and continuing through post-trial infringement. Marvell has also consistently maintained
that it will appeal every adverse decision this Court has rendered, along with the jury’s verdict
and the judgment. But “the Court is ‘not directed to evaluate defendant’s appellate position.
Instead, the Court is told to determine whether remedial actions have been taken.’” Varian, 2012
WL 1436569, at *7 (quoting Muniauction, Inc. v. Thomson Corp. and i-Deal, LLC, 502 F. Supp.
2d 477 (W.D.Pa.2007) (Lancaster, J.), rev'd on other grounds, 532 F.3d 1318 (Fed. Cir. 2008)).
The remedial actions taken by Marvell here are simply “too little, too late” in order to avoid the
penalty of enhanced damages.
For these reasons, the Court finds that Marvell’s lack of any remedial action prior to July
2013 supports an enhancement under section 284.
8.

Infringer’s Motivation for Harm

The Court next looks to evidence of the infringer’s motivation for harm toward the
patentee. Read, 970 F.3d at 827. This eighth Read factor typically favors enhanced damages
when the patentee is a direct competitor of the infringer and the infringement is used and
designed to harm the competition. See e.g., Odetics, Inc. v. Storage Tech. Corp., 14 F. Supp. 2d
800, 804 (E.D. Va. 1998) aff’d, 185 F.3d 1259 (Fed. Cir. 1999); Parker-Hannifin Corp. v. Wix
Filtration Corp., Civ. A. Nos. 1:07-cv-1374, 1:07-cv-1375, 2011 WL 976559, at *17 (N.D. Oh.
Mar. 17, 2011) (noting that patentee and infringer were fierce competitors and each were vying
for GM’s business); K-TEC v. Vita-Mix, Civ. A. No. 2:06-cv-108-TC, 2011 WL 285699, at *4-6
(D. Utah Jan. 26, 2011) (patentee and infringer were direct competitors and infringer was
seeking to prevent customers from purchasing products from patentee). Absent such direct

38

competition between the parties, this eighth Read factor does not support enhancing damages.
Id.; see also Varian, 2012 WL 1436569, at *7.
The evidence is uncontested that Marvell and CMU are not competitors as CMU is a
university that does not practice the methods of the patents or manufacture any products while
Marvell is arguably the market leader in its chip manufacturing business. See Varian, 2012 WL
1436569, at *7 (“The parties in this case were not direct business competitors, because Pitt, as an
educational and research institution, has not made or marketed products resulting from its
efforts.”). Further, the evidence is clear that CMU has not entered into an affirmative license for
the patents-in-suit with any of Marvell’s competitors such that it could be reasonably argued that
its willful infringement was designed to harm CMU’s licensees.

Indeed, at least one of

Marvell’s customers, Seagate, has a royalty-free license to use the patents through its DSSC
partnership with CMU and it has purchased millions of infringing chips from Marvell. (See
Docket No. 920). Additionally, Dr. Kavcic advised CMU that he was told that several other chip
manufacturers (e.g., Hitachi, Agere, and ST Microelectronics) were likewise infringing the
methods, yet CMU has not pursued those entities for patent infringement, to this Court’s
knowledge. (Def. Ex. 212). In all, the record demonstrates that Marvell’s motivation for its
willful infringement of the patented methods is the singular pursuit of profit rather than to
directly harm CMU. See Varian, 2012 WL 1436569, at *7. Accordingly, this factor is neutral in
regards to enhanced damages.
9.

Attempt to Conceal Misconduct

The last Read factor for the Court’s consideration is whether there is evidence that the
infringer attempted to conceal its misconduct. Read, 970 F.3d at 827. In evaluating this factor,
courts look to a number of facts, including: misleading communications to the patentee about the

39

scope of the products; advertising or selling the products covertly; or concealing evidence of
misconduct. See e.g., Minks v. Polaris Industries, Inc., No. 6:05-cv-1894-Orl-31KRS, 2007 WL
788418, at *1 (M.D. Fl. Mar. 14, 2007), aff’d, in part, rev’d in part, on other grounds, 546 F.3d
1364 (Fed. Cir. 2008); Varian, 2012 WL 1436569, at *7; PACT XPP Technologies, AG v. Xilinx,
Inc., Civ. A. No. 2:07-CV-563-RSP, 2013 WL 4801885, at *3 (E.D. Tex. Aug. 30, 2013). In
contrast, open activities by the infringer may counsel against the award of enhanced damages.
See Odetics, Inc., 185 F.3d at 1274 (noting that infringer did not attempt to conceal its activities).
The parties’ disputes as to this factor raise similar points which have been addressed by
the Court in other contexts.

CMU suggests that this factor favors its position because of

Marvell’s “policy of secrecy” enveloping its confidential circuitry designs and failure to respond
to communications about the patents from its Technology Transfer Office and Fujitsu. Marvell
counters that confidentiality is necessary to protect its trade secrets and proprietary technology
and once again, relies on its ‘585 Patent to demonstrate its claimed open and good faith actions.
In this Court’s estimation, this factor slightly favors an enhancement because the
evidence is somewhat mixed. To this end, although there is certainly evidence of Marvell’s
secrecy, CMU was aware of the willful infringement from very early on but failed to
meaningfully investigate the inventors’ allegations and despite its communications to Marvell in
August of 2003, it never followed up on alleged infringement. (See Docket No. 920). It is true
that there is robust evidence in the record demonstrating that Marvell is extremely secretive with
both its business practices and chip circuitry designs and essentially sells all of its products in a
manner to avoid them being reverse-engineered. (See e.g., Docket No. 707 at 55 (Dr. Sutardja
testifying that Marvell and its employees are “extremely paranoid people”); (Docket No. 709 at
61–64) (Dr. Wu testifying that “[j]ust like Coca–Cola keeps its formula as a secret ... For you to

40

understand how the circuits implemented, the implementation detail, yes, you do need to talk to
our people.”)). But, there is no evidence that Marvell’s policies kept CMU from learning of the
infringing activities. (See Docket No. 920). Indeed, Dr. Kavcic learned in 2003 that Marvell
was infringing the patented methods and in 2004, that Marvell had products named after him.
(Def. Exs. 212, 246, 266; Docket Nos. 816-1 at 4; 816-4 at 10-12). He also became aware of
Marvell’s ‘585 Patent in early 2006. (Docket No. 674 at 220-21). He then promptly and timely
provided all of the information he gathered to CMU. (Id. at 108-110).

If anything, CMU was

dissuaded from investigating infringement by Dr. Mark Kryder and Seagate and it never changed
its position until 2008. (Def. Ex. 213).
The Court has also discussed the import of the “friendly letters” ad naseum. (Docket
Nos. 901, 920, § II.B., supra). Again, there is no evidence that Marvell mislead CMU because it
simply did not respond to the letters or the inquiry from Fujitsu. (Pl. Exs. 422, 431, 477). But,
there is also no evidence that anyone at Marvell considered the import of the letters when its
executive team, engineers and in-house counsel clearly should have read, considered and
thoughtfully responded to the letters after investigating whether its products were infringing the
patented methods or not.
Finally, while Marvell suggests that its ‘585 Patent citing CMU’s Patents as prior art
represents a “public vetting” of its activities, the Court disagrees. (Docket Nos. 833, 862). In
this Court’s view, Marvell’s ‘585 Patent claiming a suboptimal method to CMU’s patents was
merely a “smoke screen” designed to mask its true infringing conduct from the outside world,
i.e., its use of “the original structure that Kavcic proposed” in the MNP enhancement and all of
its other infringing products. (Pl. Ex. 366; see also Docket No. 920 at 71). Marvell was fully
aware of CMU’s Patents at all times and proceeded to develop such technology, without

41

changing its behavior in any way after being notified of the patented methods by Mr. Burd,
CMU, and Fujitsu. (Pl. Exs. 280, 283, 368, 366, 422, 431, 477, 823; Def. Exs. 373, 1086).
Marvell also named the products after Dr. Kavcic but “disassociated” his name with the project
in favor of the MNP moniker around the same time (January of 2003) when Dr. Wu
acknowledged that there was no functional difference between the MNP and Dr. Kavcic’s
detector. (Pl. Ex. 368; Docket No. 677 at 81). In light of same, the Court views the ‘585 Patent
as an effort by Marvell to conceal its activities and this factor favors enhancement of damages.
10.

Enhanced Damages Award

After carefully considering all of the parties’ arguments and the evidence of record, the
Court believes that four of the Read factors support an award of enhanced damages (factors 1, 2,
7 and 9), four of the factors are neutral (3, 5, 6, 8), and one of the factors weighs against an
award of enhanced damages (4). 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.

42

But, even with these findings which strongly support an award of enhanced damages, the Court
does not believe that the size of the unprecedented penalty sought by CMU is warranted upon
weighing the other Read factors, particularly:


the fact that CMU has been awarded one-hundred percent (100%)
of the compensatory damages it sought at trial, which with the
assessment of supplemental damages, is approximately $1.248
billion;



Marvell’s size and financial condition, which the Court does not
believe could sustain a penalty doubling or tripling this outstanding
award;



CMU’s inexcusable and unreasonable delays in prosecuting this
case despite the credible allegations it received of Marvell’s
infringement;



the evidentiary prejudice sustained by Marvell due to these delays;



the exponential increase in sales during this time period; and,



the “closeness” of the damages issues which strongly affect the
calculation of any enhancement.

(See Docket No. 920). The amount of the penalty awarded under section 284 is committed to the
discretion of the Court. Read, 970 F.3d at 826. Based on this Court’s research, there is no
consensus providing a precise calculation of how to arrive at an appropriate penalty. This lack of
consensus exists simply because no two cases are alike and the inquiry is fact intensive, focusing
on the egregiousness of the conduct of the infringer in light of the totality of the circumstances.
Id. at 827. Indeed, some courts finding willful infringement have denied enhancements and
others have awarded penalties in varying amounts:



denied enhanced damages, Crystal Semiconductor, 246 F.3d at
1352;
twenty-percent (20%) of damages, Powell v. Home Depot U.S.A.,
Inc., 663 F.3d 1221, 1236-37 (Fed. Cir. 2011); i4i, 598 F.3d at
858-59;
43







twenty-five percent (25%) of damages, Applied Medical Resources
Corp. v. U.S. Surgical Corp., 435 F.3d 1356, 1365 (Fed. Cir.
2006);
fifty-percent (50%) of damages, Acumed LLC v. Stryker, 483 F.3d
800, 810-11 (Fed. Cir. 2007);
seventy-five percent (75%) of damages, SynQor, 709 F.3d at 1385;
double damages, Metabolite Laboratories, Inc. v. Laboratory
Corp. of America Holdings, 370 F3d 1354, 1370-71 (Fed. Cir.
2004); Varian, 2012 WL 1436569, at *7; and,
treble damages, Golden Blount, Inc. v. Robert H. Peterson Co.,
438 F.3d 1354, 1365-70 (Fed. Cir. 2006).

Other courts have awarded different amounts based on pre- and post-verdict activities of the
infringer. See e.g., Stryker Corp. v. Davol, Inc., 234 F.3d 1252, 1260 (Fed. Cir. 2000) (affirmed
award of fifty percent (50%) award on pre-suit damages but double damages for post-verdict
damages until entry of permanent injunction.). All told, this Court has considerable discretion in
arriving at the appropriate figure. Read, 970 F.3d at 826.
After much deliberation, the Court will impose 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.

44

The Court believes that this award is sufficient to penalize Marvell for its egregious
behavior and to deter future infringement activities. The Court also finds that this award is
sufficiently tied to the level of culpability that Marvell exhibited throughout this case,
appropriately accounts for all of the considerations set forth in Read and is consistent with the
Court’s prior decisions, (see Docket Nos. 900, 901, 920). The twenty-three percent (23%)
penalty was not arrived at casually as the Court once again reviewed all of the damages evidence
and set this amount with full consideration of its prior decision on the issue of laches, which
upheld an award of approximately $545 million in pre-suit damages only because the equities
substantially weighed in CMU’s favor due to Marvell’s willful infringement. (Docket No. 920).
As noted with reference to its discussion of the fourth Read factor above, the Court does
not believe that Marvell is sufficiently capitalized to sustain an award of double or treble the
current damages award of $1,248,690,559.00. The Court also believes that CMU’s suggestion
that the Court double either the portion of this award for pre-suit ($545 million) or post-suit
($694 million) infringement does not properly account for its prior findings on the issues of
laches. (Docket No. 920). As a consequence, the Court has determined that any penalty could
best be tied to Marvell’s level of culpability and set an amount its business is able to sustain with
its ongoing operations, by starting with the post-suit damages figure ($694 million), crediting the
pre-suit damages figure ($545 million) which has been sustained only as a result of Marvell’s
willful infringement and doubling the result. The Court’s initial calculations are as follows:
Total Post-Suit
Damages
Less Presuit Damages
Subtotal *2
Total Enhanced
Damages
Percentage of Verdict
45

$694,140,556
$554,550,003
139,590,553
$279,181,106.00
22.3579%

As a next step, the Court “rounded up” the percentage of the verdict to arrive at twenty-three
(23%), which results in a penalty of $287,198,828.60 and increases the total damages figure to
$1,535,889,387.60. In terms of the reasonable royalty calculation, this enhancement results in a
total royalty of $0.615 per Accused Chip. Hence, the penalty assessed equates to $0.115 per chip
in addition to the $0.50 per chip in compensatory damages awarded by the jury. The Court
believes that this penalty is sufficiently supported by the record and warranted by the
egregiousness of Marvell’s conduct. See Read, 970 F.2d at 826 (the “paramount determination
in deciding to grant [an] enhancement and the amount thereof is the egregiousness of the
defendant’s conduct based on all the facts and circumstances.”). It is also within a range that
Marvell can financially support without severely damaging its business. Accordingly, the Court
will impose this penalty, as stated.
D. Conclusion
Based on the foregoing, CMU’s motion for supplemental damages is granted; its motion
for prejudgment interest is denied, and its motion for enhanced damages is granted, in part. In
accordance with these rulings, the Court’s damages calculations are, as follows:
Type of Damages

Amount

1

Jury Verdict

$1,169,140,271.00

2

Supplemental Damages

$79,550,288.00

3

Prejudgment Interest

$0.00

4

Total Damages

$1,248,690,559.00

5

Enhanced Damages Factor

1.23

6

Total with Enhancement

$1,535,889,387.60

46

III. POST-JUDGMENT INTEREST UNDER 28 U.S.C. § 1961
The next request by CMU for an award of post-judgment interest under 28 U.S.C. § 1961
is rather straightforward and largely uncontested by Marvell. (Docket Nos. 789, 836, 852, 861).
CMU requests annually compounded post-judgment interest on its entire money judgment at the
statutory rate. (Docket No. 788). Marvell does not oppose, but maintains that such calculations
are premature before the damage award is upheld. (Docket No. 836).
Unlike, prejudgment interest, post-judgment interest on a district court judgment is
mandatory. Air Separation, Inc. v. Underwriters at Lloyd’s of London, 45 F.3d 288, 290 (9th Cir.
1995). 28 U.S.C. § 1961 states that post-judgment interest “shall be allowed on any money
judgment in a civil case recovered in a district court ....“ and that “[s]uch interest shall be
calculated from the date of the entry of the judgment, at a rate equal to the weekly average 1–
year constant maturity Treasury yield, as published by the Board of Governors of the Federal
Reserve System, for the calendar week preceding the date of the judgment.” 28 U.S.C. § 1961.
The Supreme Court has stated that “[t]he purpose of post-judgment interest is to compensate the
successful plaintiff for being deprived of compensation for the loss from the time between the
ascertainment of the damage and the payment by the defendant.” Kaiser Aluminum & Chem.
Corp. v. Bonjorno, 494 U.S. 827, 835-36 (1990). The Third Circuit holds that post-judgment
interest under 28 U.S.C. § 1961 applies to the prejudgment interest component of a monetary
award. Sun Ship, Inc. v. Matson Navigation Co., 785 F.2d 59, 63 (3d Cir.1986).
According to CMU, the applicable treasury rate was 0.14% for the week before the
Court’s judgment on January 14, 2013. (Docket No. 789 at 14). Given the clear law and the lack
of true opposition, the Court finds that CMU is due post judgment interest on the total money
judgment of $1,169,140,271.00 plus supplemental damages of $79,550,288.00 for a total of

47

$1,248,690,559.00. 28 U.S.C. § 1961. CMU’s motion is thus granted and post judgment interest
at the rate of 0.14% is awarded on $1,248,690,559.00, compounded annually.
IV. PERMANENT INJUNCTION/ONGOING ROYALTY
The Court’s final deliberations focus on CMU’s alternative requests for a permanent
injunction barring Marvell’s continued use of the patented methods and/or an ongoing royalty for
any continued infringement by Marvell. (Docket Nos. 787, 853, 905). CMU’s theory supporting
the permanent injunction is that Marvell is allegedly a “collection risk” and it may be irreparably
harmed by any continuing infringement because it will be unable to collect on the judgment,
purportedly making money damages inadequate in this case. (Id.) In the event that an injunction
is denied and/or delayed, CMU further requests that an ongoing royalty be imposed for any
continuing infringement by Marvell at a rate of $1.50 or treble the jury’s award (consistent with
Ms. Lawton’s testimony) of $0.50 per Accused Chip. (Id.). Marvell opposes the motion for a
permanent injunction, strongly denying that it is a “collection risk” and further arguing that an
injunction is inappropriate in light of eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391
(2006) and more recent Federal Circuit precedent, primarily Apple v. Samsung Electronics Co.,
Ltd., “Apple III”, 735 F.3d 1352 (2013),24 analyzing the propriety of permanent injunctions of
multi-feature products such as the instant read channel and SOC chips. (Docket Nos. 828, 863,
906). Marvell also suggests that any ongoing royalty should be lower than the jury’s allegedly
excessive award of $0.50 per Accused Chip. (Id.).
Having fully considered these matters, and all of the pertinent evidence of record, the
Court finds that CMU has not met its burden to demonstrate that the extraordinary relief of a
24

In deciding these issues, the Court has carefully considered the entire series of decisions by the Federal
Circuit in the Apple v. Samsung litigation. See e.g., Apple, Inc. v. Samsung Elecs. Co. (“Apple I”), 678, F.3d 1314,
1423 (Fed. Cir. 2012); Apple, Inc. v. Samsung Elecs. Co. (“Apple II”), 695 F.3d 1370 (Fed. Cir. 2012). The Court
also reviewed and considered the more recent decision by Judge Lucy H. Koh denying Apple’s final request for
permanent injunction after the case was remanded. See Apple, Inc. v. Samsung Electronics Co., Ltd., Civ. A. No.
11-cv-01846, 2014 WL 976898 (N.D. Cal. Mar. 6, 2014).

48

permanent injunction is warranted and, as the parties’ efforts at negotiating an ongoing royalty
have failed, the Court will impose an ongoing royalty of $0.50 per chip sold by Marvell for its
continuing infringement of the patented methods.
A. Permanent Injunction
CMU’s request for a permanent injunction seeks relief under 35 U.S.C. § 283, which
provides that courts “may grant injunctions in accordance with the principles of equity to prevent
the violation of any right secured by patent, on such terms as the court deems reasonable.” 35
U.S.C. § 283. For a permanent injunction to issue, CMU “must demonstrate that: (1) it has
suffered an irreparable injury; (2) legal remedies, such as money damages, are inadequate
compensation; (3) the balance of hardships warrants an injunction; and (4) the public interest
would not be disserved by an injunction.” ActiveVideo Networks, Inc. v. Verizon Commn’cs.,
Inc., 694 F.3d 1312, 1337 (Fed. Cir. 2012) (citing eBay Inc., 547 U.S. at 391).
The Supreme Court has cautioned that “[a]n injunction is a drastic
and extraordinary remedy, which should not be granted as a matter
of course.” Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139,
130 S.Ct. 2743, 2761, 177 L.Ed.2d 461 (2010) (citing Weinberger
v. Romero–Barcelo, 456 U.S. 305, 311–12, 102 S.Ct. 1798, 72
L.Ed.2d 91 (1982)). Rather, “[i]f a less drastic remedy ... [is]
sufficient to redress [a plaintiff's] injury, no recourse to the
additional and extraordinary relief of an injunction [is] warranted.”
Id.
Apple II, 735 F.3d at 1359. “The decision to grant or deny permanent injunctive relief is an act
of equitable discretion, reviewable on appeal for abuse of discretion.” Id. (quoting eBay, 547
U.S. at 391). The Court next considers the parties’ arguments and the facts of record in light of
each of the considerations set forth in eBay Inc., 547 U.S. at 391, in turn.
1.

Irreparable Injury

49

It is now well settled that “there is no presumption of irreparable harm upon a finding of
patent infringement.” Apple III, 735 F.3d at 1359 (citing Robert Bosch LLC v. Pylon Mfg. Corp.,
659 F. 3d 1142, 1148 (Fed. Cir. 2011)). “[T]o satisfy the irreparable harm factor in a patent
infringement suit, a patentee must establish both of the following requirements: 1) that absent an
injunction, it will suffer irreparable harm, and 2) that a sufficiently strong causal nexus relates
the alleged harm to the alleged infringement.” Id. (citing “Apple II”, 695 F.3d at 1374). The
Federal Circuit has clarified that:
“the causal nexus inquiry is ... part of the irreparable harm
calculus,” and that “although the irreparable harm and the causal
nexus inquiries may be separated for the ease of analysis, they are
inextricably related concepts.” Apple II, 695 F.3d at 1374–75. Put
another way, the causal nexus requirement is simply a way of
distinguishing between irreparable harm caused by patent
infringement and irreparable harm caused by otherwise lawful
competition—e.g., “sales [that] would be lost even if the offending
feature were absent from the accused product.” Apple I, 678 F.3d
at 1324. The former type of harm may weigh in favor of an
injunction, whereas the latter does not.
Apple III, 735 F.3d at 1359-60. A lack of commercial activity in the practicing patents does not
by itself establish that the holder would not suffer irreparable harm if a permanent injunction is
not issued. eBay Inc., 547 U.S. 388. And even “without practicing the claimed invention, the
patentee can suffer irreparable injury.” Presidio Components, Inc. v. Am. Technical Ceramics
Corp., 702 F.3d 1351, 1363 (Fed. Cir. 2012). However, Courts have more commonly found
irreparable injury warranting an injunction in cases between direct competitors. See e.g. Praxair,
Inc. v. ATMI, Inc., 479 F. Supp. 2d 440, 444 (D. Del. 2007); LaserDynamics, Inc. v. Quanta
Computer, Inc., No. 2:06-cv-348, 2010 WL 2574059, at *2 (E.D. Tex. June 22, 2010).
It is CMU’s burden to demonstrate that it will sustain an irreparable injury absent the
issuance of a permanent injunction barring continuing infringement of the patented methods by

50

Marvell. See Apple III, 735 F.3d at 1359. To meet its burden, CMU argues that it is likely to
sustain irreparable injury because of “concerns” about its ability to collect the judgment against
Marvell in light of Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1154-55 (Fed. Cir.
2011). CMU specifies that “[t]he factual predicate underlying [its] request for injunctive relief is
the risk that [it] will not be able to collect monetary damages awarded against Marvell, and
therefore CMU will be denied any remedy whatsoever for Marvell’s future (and even its past)
infringement.” (Docket Nos. 787 at 2; 905 at 4). CMU supports its “collection risk” theory with
all of the following: (1) Defendant Marvell Technology Group, Ltd. (“MTGL”) is incorporated
in Bermuda, such entity may hold the majority of Marvell’s assets and its SEC filings state that a
civil judgment “would not be automatically enforceable” in Bermuda courts; (2) Marvell has
recently dissipated significant liquid assets through its share repurchase program and issuance of
dividends; (3) Marvell’s SEC filings state that it has not set aside any assets to satisfy the
judgment; and (4) media reports in late 2013 suggested that Kohlberg, Kravis, Roberts & Co.
(“KKR”) may be considering a leveraged buyout of Marvell. (Id.).
Marvell objects to the entry of a permanent injunction on any of the bases set forth by
CMU and maintains that the “collection risk” theory is both legally and factually unsupported.
(Docket Nos. 828, 863, 906). Marvell counters CMU’s evidence with declarations from its Chief
Executive Officer affirming that Marvell will pay any judgment awarded in this case which is
affirmed by the higher courts, (see Docket No. 828 at Ex. 2), and another from its current Chief
Financial Officer that it is not engaged in any negotiations with any entity as to a leveraged
buyout or other extraordinary corporation transaction, (see Docket No. 922-3 at ¶ 2). Marvell
further advocates that the proposed injunction is legally unsound under the Apple III decision

51

because CMU has failed to demonstrate a sufficient casual nexus between the alleged
infringement and the asserted irreparable harm. (Docket Nos. 828, 863, 906).
The Court agrees with Marvell that CMU has failed to demonstrate irreparable harm in
this case. CMU’s “collection risk” theory relies heavily on the Federal Circuit’s discussion of
the financial instability of the defendant in Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d at
1153-56. Yet, a careful reading of that decision clearly demonstrates that it is distinguishable
from the instant matter for a number of reasons. Id. First, unlike CMU, which is proceeding
solely under the “collection risk” theory, Bosch claimed that it was irreparably harmed because
it: practiced the infringed patents and was a direct competitor of Pylon; had lost market share and
customers to Pylon as a result of the infringement; and Pylon lacked the financial ability to pay a
judgment. Id. Second, the court found that irreparable harm was established as a result of the
direct competition with the practicing patentee, lost market share and lost customers, none of
which are present here. Id. Third, the evidence of Pylon’s financial instability was uncontested
and even its own attorneys could not provide any assurances to the court that a monetary
judgment could be satisfied. Id. To this end, Bosch presented uncontested evidence of Pylon’s
financial instability including a financial report stating that it was a “moderate risk of severe
financial stress, such as bankruptcy, over the next 12 months,” and had a risk factor in the 49th
percentile of all companies nationally and also presented evidence that its parent company which
held 100% of the company’s stock had “obtained a five million dollar loan at a rate of 8.46%.”
Id. (emphasis added). In reaching its decision to enter a permanent injunction, the Federal Circuit
emphasized that Pylon did not contest such evidence and found it “troublesome” that it had
“fail[ed] to submit rebuttal evidence regarding its ability to satisfy an award of money damages.”
Id. The Federal Circuit went so far as to point out that even during oral argument on appeal,

52

Pylon’s counsel could not “offer express assurances” that it was financially able to pay the
judgment. Id. at n.6. In contrast, both Marvell and its counsel have stated, on the record, that it
will pay the judgment in this case, rebutting the evidence presented by CMU.25 (See Docket
Nos. 828 at Ex. 2; 912 at 15).
The other cases relied upon by CMU for the proposition that a patentee may sustain
irreparable injury based on an asserted inability of an infringer to pay a judgment are likewise
distinguishable as each of the infringers in those cases faced severe financial distress, including:
an infringer that could not afford to pay its former attorneys or hire new counsel to respond to a
summary judgment motion, see Custom Designs of Nashville, Inc. v. Alsa Corp., 727 F. Supp. 2d
719, 726-27 (M.D. Tenn. 2010); an infringer which admitted the infringement litigation was a
“make or break event” for the company and two weeks after the jury’s verdict entered into the
Australian equivalent of bankruptcy, see Retractable Technologies, Inc. v. Occupational & Med.
Innovations, Ltd., 6:08-CV-120, 2010 WL 3199624, at *5 (E.D. Tex. Aug. 11, 2010); and an
infringer which was deemed to be insolvent by the court, see Sundance, Inc. v. Demonte
Fabricating Ltd., 2007 WL 3053662, at *1 (E.D. Mich. 2007), rev on other grounds, 550 F.3d
1356 (Fed. Cir. 2008). Marvell simply does not face any of these types of dire financial
circumstances as the company is doing well financially, remains able to pay its many attorneys
and is neither insolvent nor a risk for bankruptcy.26

25

Specifically, Marvell’s attorneys state, as officers of the court, that the evidence they has presented
regarding Marvell’s financial condition “confirms that Marvell is positioned to follow through” on Dr. Sutardja’s
“commitment to pay any final damages award that survives appeal.” (Docket No. 912 at 15). Such statements are
made by counsel pursuant to its obligations under Rule 11(b)(3), which requires a certification by the attorney that
such “factual contentions have evidentiary support.” FED. R. CIV. P. 11(b)(3).
26
The Court notes that the above discussion concerning Marvell’s size and ability to pay focused on whether
it was sufficiently capitalized to withstand a penalty of treble or double damages without severely damaging its
business. See § II.C.4., supra. That discussion does not undermine the Court’s belief that Marvell is financially able
to meet the current obligations to CMU, with the enhancement imposed by the Court, and the payment of any
ongoing royalty.

53

CMU next argues that it will suffer irreparable harm without the entry of an injunction
because MTGL is a foreign corporation registered in Bermuda and a civil judgment is not
automatically enforceable against it in that country. (Docket No. 787 at 9). CMU relies on O2
Micro Intern. Ltd. v. Beyond Innovation Tech. Co., Ltd., Civ. Action No. 2-04-CV-32 (TJW),
2007 WL 869576, at *2 (E.D. Tex. Marc. 21, 2007), vacated and remanded on other grounds,
521 F.3d 1351 (Fed. Cir. 2008), for the proposition that a permanent injunction should issue
when a foreign infringer is unable to provide assurance to the patentee that it will be able to
collect monetary damages. (Docket No. 787 at 9). But, the irreparable injury set forth by
patentee in that case was the loss of market share to the directly competing patentee rather than
the fact that the defendants were foreign corporations. Id. Also, the District Court pointed out
that all three of the infringing entities were foreign corporations. Id. Thus, the facts of this case
are very different from O2 Micro because: the instant parties do not compete; CMU does not
practice the patents and has no portion of the market; the only irreparable harm claimed by CMU
is based on the alleged “collection risk” of Marvell; and only MTGL is a foreign corporation
while MSI is incorporated in the United States.
In this Court’s estimation, Marvell has also sufficiently rebutted CMU’s reliance on the
passage from MTGL’s 10-K reports and other SEC filings concerning the non-automatic
enforceability of the judgment in Bermuda courts. CMU suggests that the situs of MTGL’s
incorporation is a “self-imposed obstacle to enforcement.” (Docket No. 787 at 9). However,
Marvell has presented an affidavit of Dr. Sehat Sutardja, the Chief Executive Officer of the
Bermuda corporation, MTGL, which expressly states that it will pay any judgment awarded in
this case which is upheld on appeal. (See Docket No. 828 at Ex. 2). Even if CMU is correct that
it will have some difficulty collecting the judgment in Bermuda, because the courts in that

54

country may not automatically reduce this Court’s judgment in order to immediately effectuate
collection, it has not demonstrated that it would be unable to enforce Dr. Sutardja’s subsequent
promise to pay the judgment in Bermuda.

(Docket Nos. 787, 853, 905). In light of the

uncontested affidavit, it appears that Marvell has largely removed any “self-imposed obstacle” to
collection in Bermuda. At most, CMU has established that collection may not be “automatic”
such that some legal proceedings may need to be initiated against MGTL in Bermuda in order to
collect the entirety of the judgment. The potential need to initiate some type of legal proceedings
in Bermuda is not sufficient to show that CMU may be irreparably harmed. Apple III, 735 F.3d
at 1359 (“a patentee must establish … that absent an injunction, it will suffer irreparable harm”).
Additionally, on this Court’s record, CMU has not demonstrated that Marvell maintains
insufficient assets in the United States to satisfy the judgment, possibly making the need to
pursue MTGL in Bermuda unnecessary, if Dr. Sutardja does not own up to his promise. In fact,
CMU has expressly argued that both MTGL and MSI own substantial assets in the Northern
District of California which may be sufficient to satisfy all of the judgment, which, at the time,
was “in excess of $1.16 billion.” Specifically, CMU’s counsel averred the following:
MTGL and MSI own substantial assets located in the Northern
District of California that could satisfy a significant portion or
all of the Judgment. MTGL’s U.S. headquarters, which houses
research and design functions as well as substantially all of its
sales, marketing, administration, and operations, is located in Santa
Clara, California, which lies within the Northern District of
California. See Ex. I. According to MTGL’s SEC filings, it (likely
through subsidiaries) owns the company’s Santa Clara facility,
which consists of approximately 993,000 square feet on 33.8 acres
of land. Id. MSI, which is MTGL’s operating subsidiary, maintains
its headquarters and principal place of business at the Santa Clara
facility. See Dkt. 25-7; Dkt. 26, at 4-7; Ex. J (Marvell website
description of company). Given that both MTGL and MSI have a
very significant presence in the Northern District of California,
CMU states on information and belief that additional and

55

substantial assets will likely be found in that judicial district and in
other districts in California.
(Docket No. 909 at 8). CMU further points out in the same brief that MTGL “owns or leases
real property in several U.S. states.” (Id.). It also repeatedly references the amount of liquid
assets held by Marvell but never describes where those assets are located. (See Docket No. 9092). Accordingly, the Court dismisses CMU’s “Bermuda incorporation theory” as speculative and
sufficiently rebutted by the evidence advanced by Marvell.
The Court also disagrees with CMU’s other theories making Marvell a “collection risk”
including: the share repurchase program and issuance of dividends; the failure to set aside
reserves for the judgment; and/or the supposed KKR leveraged buyout transaction. (Docket Nos.
787 at 2; 905 at 4). All of these claims are likewise rebutted by the affidavit of Dr. Sutardja.
(See Docket No. 828 at Ex. 2). Further, each remains unproven for additional reasons. With
respect to the share repurchase program and dividends, CMU has presented no evidence that
such program was initiated in order to avoid judgment and its own expert continues to estimate
that even with such program Marvell will have around $2 billion in liquid assets throughout
fiscal 2014. (See Docket Nos. 909-2, 909-3). The Court fully expects that the asserted failure to
set aside reserves to pay the judgment will be resolved in the context of the parties’ ongoing
bond negotiations which are being supervised by the Special Master. 27 In this regard, the prior
filings related to the parties’ bond disputes indicate that Marvell would likely be qualified for a
bond in an amount of $1.5 billion, an amount which will cover the current judgment. (Docket
No. 915-1 at ¶ 3). Finally, the supposed KKR deal was affirmatively countered by Marvell’s
statement that it was not involved in that type of an extraordinary corporate transaction

27

The Court notes that, with the parties’ consent, the Honorable Thomas T. Frampton has been appointed to
serve as a Special Master in this case. (Docket No. 930). Judge Frampton is presently a shareholder at the law firm
of Goehring Rutter & Boehm and previously served as a Judge for the Mercer County Court of Common Pleas.

56

demonstrating that the media reports relied upon by CMU were pure speculation. (Docket No.
922-3 at ¶ 2).
For all of these reasons, the Court finds that CMU’s “collection risk” theories are
unproven and do not support a finding that it will be irreparably harmed without the imposition
of a permanent injunction. See Robert Bosch, 659 F.3d at 1153-56. CMU has presented no
direct evidence that Marvell will not pay the judgment or that Marvell has a history of
dilatoriness in paying its debts and the Court has already determined that it is sufficiently
capitalized to withstand the current judgment (including the enhancement).

The Court is

likewise not persuaded that Marvell will be unable to meet its future obligations to pay an
ongoing royalty such that CMU will be unable to collect additional monies stemming from the
continuing infringement.28 As such, CMU has therefore failed to meet its burden to demonstrate
that it will be irreparably harmed without the imposition of a permanent injunction due to the
alleged inability of Marvell to pay a money judgment. Apple III, 735 F.3d at 1359.
With this holding, the Court need not specifically address Marvell’s well-taken
arguments that an injunction should not issue to bar its continued production of its multi-feature
read channel chips given Apple III and the other reasons proffered by Marvell. Cf. Apple III, 735
F.3d at 1363 (“[T]his argument seems to be premised on the mistaken notion that the causal
nexus is a separate factor from irreparable harm. As we have explained, however, the causal
nexus requirement is part of the irreparable harm factor. Without a showing of causal nexus,
there is no relevant irreparable harm. In other words, there cannot be one without the other.”).
28

The Court notes that the ongoing post-judgment infringement, which is considered in the context of the
ongoing royalty discussion in the following section, includes additional sales of 299,042,568 chips from January 15,
2013 until November 2, 2013. (Docket No. 907). Additional accountings have not yet been made but quarterly
accountings will be required by the Court’s corresponding Order to be issued with this Opinion. Commensurate
sales of chips developed using the infringing simulators and containing the infringing technology are expected to
continue until the proposed design around is completed and into the future. So, Marvell’s continuing infringement
will likely result in significant continuing royalties due to CMU.

57

The Court acknowledges that the parties have presented interesting arguments regarding the
reach of Apple III and whether CMU should be able to avoid the import of its discussion of the
nature of the products by couching its irreparable harm arguments to challenge only the alleged
collection issues. (Docket Nos. 905, 906). The Court also notes that the nature of the read
channel chips, when coupled with the other evidence that CMU does not practice the patents, has
exhibited a willingness to license same to Marvell specifically, and has failed to demonstrate that
Marvell is a “collection risk,” certainly counsels against the issuance of a permanent injunction
in this case.
Marvell’s read channel chips are multi-feature products, covered by many patents owned
by Marvell, and supplemented by numerous unpatented features. Cf. Apple IV, 2014 WL 976898
at *19 (“Smartphones and tablets are complex devices embodying hundreds of features,
inventions, and components.”). The infringed methods essentially operate within the read
channel chips to reduce media noise and improve the performance of the chips. Id. The Apple v.
Samsung line of cases has made clear that a patentee seeking an injunction of such a multifeature product is required to “show that the infringing feature drives consumer demand for the
accused product … [and] this inquiry should focus on the importance of the claimed invention in
the context of the accused product, and not just the importance, in general, of features of the
same type as the claimed invention.”

Apple III, 735 F.3d at 1364.

The patentee must

demonstrate:
some connection between the patented feature and demand for [the
infringer’s] products. There might be a variety of ways to make
this required showing, for example, with evidence that a patented
feature is one of several features that cause consumers to make
their purchasing decisions. It might also be shown with evidence
that the inclusion of a patented feature makes a product
significantly more desirable. Conversely, it might be shown with

58

evidence that the absence of a patented feature would make a
product significantly less desirable.
Id. Yet, the Federal Circuit has held that the weight and credibility of the evidence presented on
these issues are discretionary for the Court such that a patentee presenting some evidence
showing that the patented feature drives demand does not, by itself, demonstrate irreparable
harm. Id. Again, this is just one of many factors which must be weighed by the Court. Id.
While CMU has continually and repeatedly touted its invention as “must have” for
Marvell and its customers, the Court need not look much farther than the damages evidence to
conclude that these are multi-feature products which have many valuable non-infringing aspects.
On the other hand, as the Court recounted in its JMOL opinion, Marvell did not introduce
evidence at trial valuing these other components of its read channel chips, for reasons unknown
to the Court. (See Docket No. 901). In any event, Ms. Lawton engaged in an “excess profits”
analysis to value the patented methods in this case, resulting in her opinion at trial that the
infringement was worth $1.16 billion. (Docket No. 713 at 11). Her “excess profits” analysis
started with calculating the price-per-chip ($4.42) and operating profit-per-chip ($2.16) based on
Marvell’s internal sales data. (Id.). She then compared the sales of Marvell’s chips to certain
customers (Maxtor and Toshiba) for which she had information from the same time period
(2003) where products were sold with and without the addition of the allegedly infringing MNP
detector, resulting in a range of between $0.06 and $0.72 per chip. (Id.). She ultimately opined
that the reasonable royalty would be near the high end of this range, $0.50, based on the opinion
of Dr. Christopher Bajorek that the patented methods were “must have” for Marvell and its
customers because of the increased performance of the chips. (Id.). But, Ms. Lawton’s opinions
make clear that Marvell otherwise met its profit margin goal of fifty percent of the total revenue
generated by the sales of the Accused Chips, even with paying its “excess profits” attributable
59

solely to the inclusion of the patented methods to CMU. So, while there is evidence that the
patented methods made the Accused Chips “more desirable,” it cannot be said that there is no
value to the numerous other features in the chips which are not addressed by the patented
methods and those features have collectively generated more profit for Marvell, (i.e., $1.66 per
chip), than the addition of the patented methods, (i.e., $0.50 per chip), even with the “must have”
valuation of the patents by Ms. Lawton.
Based on the Apple v. Samsung line of cases, the sufficiency of the “casual nexus”
evidence is a matter of degree to be determined by the District Court in its discretion. See Apple
III, 735 F.3d at 1364. Given same, while CMU has presented evidence that the patented methods
added value to the read channel chips, in the absence of a showing as to how customers and/or
the market valued the other numerous features in the read channel chips vis-à-vis the features of
the patented methods, the “must have” evidence is not as strong as CMU suggests. Indeed, the
record is not sufficiently developed for the Court to conclude definitively that the patented
methods outweighed the significance of the other features to customers given the obvious value
of the Accused Chips, even without the patented methods. Cf. Apple IV, 2014 WL 976898 at
*19 (“The various consumer surveys presented to the Court, including Dr. Hauser's survey, do no
more than confound the Court’s efforts to determine whether—of the many smartphone and
tablet features such as the camera, screen quality, operating system, and screen size—the three
patented features at issue here drive consumer demand. Put another way, the evidence shows that
the three patented features may add to a device's appeal, but Apple has not shown that these
specific features are among several that ‘cause consumers to make their purchasing decisions’ or
otherwise drive consumer demand”). As a consequence, this Court would likely require a more
specific showing from CMU prior to enjoining these types of products but further proceedings on

60

these issues are unnecessary in light of the Court’s determination that CMU has not
demonstrated that it will be irreparably harmed by Marvell’s financial condition and it has
repeatedly asserted that this is the sole basis for the permanent injunction it seeks. (See e.g.,
Docket Nos. 787, 905).
For these reasons, the Court concludes that CMU has failed to meet its burden to
establish irreparable harm and such finding weighs strongly against the imposition of a
permanent injunction.
2.

Adequacy of Legal Remedies

“This factor requires a patentee to demonstrate that ‘remedies available at law, such as
monetary damages, are inadequate to compensate’ the patentee for the irreparable harm it has
suffered.” Apple III, 735 F.3d at 1368 (citing eBay, 547 U.S. at 391). This Court is directed to
“assess whether a damage remedy is a meaningful one in light of the financial condition of the
infringer before the alternative of money damages can be deemed adequate.” Robert Bosch LLC,
659 F.3d at 1155. Further, “unlike an infringer’s inability to pay a judgment, which may
demonstrate the inadequacy of damages, a defendant’s ability to pay a judgment does not defeat
a claim that an award of damages would be an inadequate remedy. Rather, a defendant’s ability
to pay merely indicates that a court should look to other considerations to determine whether a
damages award will adequately compensate the patentee for the harm caused by continuing
infringement.” Apple III, 735 F.3d at 1369. Thus, the Court must decide if a damages remedy is
adequate to compensate the patentee for the alleged irreparable harm rather than the underlying
infringement. Cf. id.
In order to sustain its burden on this prong, CMU relies on the same evidence and
reiterates it arguments that Marvell is financially unable to pay a judgment on both the past and

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continuing infringement and/or may seek to avoid same given the foreign incorporation of
MTGL. (Docket Nos. 787, 905). As the Court has rejected this position, and found that CMU
has not demonstrated irreparable harm, CMU has likewise failed to demonstrate that an award of
money damages for the past and continuing infringement is inadequate as a matter of law.
Accordingly, this factor counsels against entering a permanent injunction in this case.
3.

Balance of Hardships

“The balance of hardships factor ‘assesses the relative effect of granting or denying an
injunction on the parties.’” Apple III, 735 F.3d at 1371 (quoting i4i, 598 F.3d at 862). Proper
considerations under this factor include “the parties’ sizes, products, and revenue sources.” I4i,
598 F.3d at 862. Matters that are irrelevant to the inquiry include the consequences to the
infringer as a result of its infringement, such as, the costs of product redesigns, lost future
commercial successes, and sunk development costs. Id.
As CMU has failed to convince this Court that Marvell would be unable to pay the
judgment, the Court finds that CMU has not articulated any appropriate reason as to how or why
the proposed permanent injunction would benefit it. Again, CMU stands to be paid in excess of
$1.5 billion for past infringement and will be due any additional royalties for continuing
infringement, as is discussed in the following section of this Opinion. See § IV.B., infra. Any
injunction barring future infringement of the patented methods would cut off continuing
infringement and stop what could be a significant revenue stream to CMU. This revenue stream
will likely exceed an additional $100 million annually on top of the already substantial judgment
to be entered in this case. It is certainly well in excess of the “highly speculative forecast” of two
million dollars annually which CMU’s Technology Transfer Office forecasted in 2006. (Def.
Ex. 272). Additionally, there is no competition between the parties; CMU does not practice the

62

methods; and, it has no licensing arrangements for these patents outside of its DSSC program,
under which its members such as Seagate have free “use” rights. 29 Therefore, CMU is presently
in a position where it can either license the patents to Marvell for a handsome royalty or not
license them at all.
In contrast, if an injunction were granted, there could plainly be harm to Marvell beyond
the costs of redesigns, lost future commercial successes and sunk development costs, although
Marvell has and will continue to incur such expenses as it proceeds with its redesign of future
chip lines. I4i, 598 F.3d at 862. As has already been discussed, the Accused Chips are multifeature products with many non-infringing features and any injunction would bar these noninfringing features as well as the infringing ones. The Court has also concluded that CMU’s
“must have” evidence alone is not sufficient to meet the clarified standards for obtaining a
permanent injunction of these types of products under the Apple v. Samsung line of cases.
Further, CMU cannot meaningfully contest that an immediate injunction would significantly
impair Marvell’s customers, as Marvell’s lengthy sales cycle would preclude it from generating
redesigned products for over a year, leaving its customers without chips to incorporate into their
hard drives and other devices. (Docket No. 828 at 16, at Ex. 3). Moreover, the process of
disenabling the infringing features of the more than 2 billion chips that have already been sold is
basically impossible and the cost of disenabling the infringing features in existing chips that have
yet to be sold would be significant. (Id.). Finally, based on CMU’s infringement theory
presented at trial, any injunction which would only bar the use of the simulators rather than the
chips themselves would effectively stop production of all of Marvell’s chips and cause the same
type of harm that has already been discussed.

29

Despite the verdict and the post-trial filings and proceedings, CMU has not identified any additional
licensing agreements for this technology. (Docket Nos. 787, 853, 905).

63

For these reasons, the Court believes that this factor also favors Marvell but only slightly
because the Court does not believe that CMU would be harmed by continuing infringement as
such infringement would generate significant compensation.
4.

Public Interest

The last factor that the Court must consider is whether “the public interest would be
disserved by an injunction.” Apple III, 735 F.3d at 1371 (citing eBay, 547 U.S. at 391). “[T]he
touchstone of the public interest factor is whether an injunction, both in scope and effect, strikes
a workable balance between protecting the patentee’s rights and protecting the public from the
injunction’s adverse effects.” i4i, 598 F.3d at 863 (citing Broadcom Corp. v. Qualcomm, Inc.,
543 F.3d 683, 703-04 (Fed. Cir. 2008)). The members of the public to be considered include the
infringer’s vendors, manufacturers, customers, end-user consumers, and other members of
distribution channels for the infringing products. Id.
The Court recognizes that there is a strong public interest in enforcing CMU’s patent
rights because this technology was sponsored, in part, by public funding. Precision Instrument
Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 815-16 (1945). However, the scope and
effect of the proposed injunction in this case would in all likelihood cause significant harm to all
of the companies which unwittingly participate in some fashion in the production and
distribution of Marvell’s read channel chips. Marvell is the dominant leader in the production of
these types of chips and has approximately a sixty percent (60%) market share. (Docket No. 707
at 122). The downstream effects of any such injunction could be very significant, as increased
prices set by the market leader would be passed down the stream of commerce to the ultimate
end-purchaser of computers and like equipment containing the subject chips. Distribution delays
would likewise have a dramatic effect on the hard drive manufacturers, like Seagate, computer

64

manufacturers and the retailers of same. Ultimately, the imposition of an injunction may force
semiconductor businesses like Marvell completely offshore which would not be in the best
interest of the public. It would also undermine what Dr. Kryder explained was one of the
primary purposes of the National Science Foundation’s support of the establishment of the DSSC
at CMU, i.e., to promote domestic research and production of this type of technology and to
prevent such business from moving to other countries. (Docket No. 682 at 27-28).
Accordingly, the Court finds that the public interest would be disserved by the entry of a
permanent injunction in this case.
5.

Conclusion

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.
B. Ongoing Royalty
While the Court has declined to impose the requested permanent injunction, an ongoing
royalty for continuing infringement of the patented methods will be assessed. The Federal
Circuit has held that:
[i]n most cases, where the district court determines that a
permanent injunction is not warranted, the district court may wish
to allow the parties to negotiate a license amongst themselves
regarding future use of a patented invention before imposing an
ongoing royalty. Should the parties fail to come to an agreement,
the district court could step in to assess a reasonable royalty in
light of the ongoing infringement.

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Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1315 (Fed. Cir. 2007). In undertaking this
assessment, the Court weighs the traditional Georgia-Pacific factors30 to arrive at a reasonable
royalty which is adequate to compensate the patentee for the continued infringement. Id. The
Court is not bound by the royalty rate that the jury determined was appropriate for prejudgment
infringement because of the possible changed bargaining positions of the parties. Varian, 2012
WL 1436569, at *11 (citing Amado v. Microsoft Corp., 517 F.3d 1353, 1361–62 (Fed. Cir.
2008)).
1.

Failed Negotiations

Pursuant to the Federal Circuit’s well-advised suggestion in Paice that the parties should
be permitted to negotiate any future ongoing royalty payments amongst themselves, the Court
ordered the parties to meet and confer to negotiate an ongoing royalty after the initial filing of
post-trial motions. (Docket No. 865). The parties were unsuccessful and advised the Court that
they “remain[ed] very far apart” at that point. (Docket No. 871). In an effort to bridge the gap
between the parties, the Court ordered lead trial counsel and party representatives with full
settlement authority to participate in Court-annexed mediation31 the morning before oral
argument on post-trial motions. (Docket No. 872). Unfortunately, they were unable to reach any
resolution or agreement at that time and have not indicated any willingness to return to the
negotiating table in the interim.32
2.

Ongoing Royalty

As the parties have been unable to negotiate an ongoing royalty for the continuing
infringement, the Court must step in to assess a reasonable royalty in light of the ongoing
infringement. Paice, 504 F.3d at 1315. The parties’ positions as advocated in their papers are
30
31
32

See Georgia–Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970).
See n.14, supra.
The parties are, however, negotiating the aforementioned bond at present.

66

consistent with their “very far apart” report as CMU argues that the ongoing royalty should be
set at up to $1.50 per Accused Chip given the finding of willful infringement while Marvell
suggests that the ongoing royalty should be set at a rate much less than the jury’s allegedly
excessive award of $0.50 per Accused Chip. (Docket Nos. 787, 837, 853, 863). Having fully
considered the parties’ positions in light of the jury’s verdict, all of the Court’s post-trial rulings
and the relevant Georgia-Pacific factors, the Court believes that a reasonable royalty for the
ongoing infringement is $0.50 per Accused Chip.
In reaching this decision, the Court recognizes that it is not bound by the jury’s findings
that $0.50 is a reasonable royalty and that “pre-suit and post-suit acts of infringement are
distinct, and may warrant different royalty rates given the change in the parties’ legal
relationship and other factors.” Paice, 504 F.3d at 1317 (Rader, J., concurring). However, the
Court finds the jury’s determination reasonable as CMU’s trial presentation of this royalty rate
was well-supported by Ms. Lawton’s credible and comprehensive testimony. The Court believes
that the parties at a hypothetical negotiation at this juncture of the case would likely reach the
same figure, even with changes in the parties’ legal relationship and considering any other
changes in the parties’ positions since the verdict.
At this point, CMU is a prevailing patentee which has been awarded one-hundred (100%)
percent of the compensation it sought through a substantial award of compensatory damages,
accounting for every $0.50 in Marvell’s “excess profits” which its expert attributed to the
inclusion of the patented methods in each chip. It has also received an additional twenty-three
percent (23%) compensation on the pre-judgment royalties, which equates to an additional
$0.115 per Accused Chip. See § II.C., supra. All told, CMU has received one hundred twenty-

67

three percent (123%) compensation for the pre-judgment infringement, or $0.615 per Accused
Chip, for a judgment award totaling in excess of $1.5 billion. Id.
While this award can be appropriately characterized as very significant, the return on
investment by CMU is at best described as staggering. The record is uncontested that CMU
developed these patents through its DSSC program with public grants and the support of
corporate donors. (Docket No. 901 at 10). Its own financial investment in the research and
development of the patents has never been quantified during these proceedings but under any
measure would be considered extraordinarily insignificant when compared to the present award.
Given the valuation of these “must have” and “industry standard” patents, CMU’s
marketing efforts, or lack thereof, is stunning to the Court.33 CMU then ignored repeated
allegations of infringement from the inventors and took nearly six full years to decide whether to
pursue litigation, never following up with Marvell during this time period. (Docket No. 920). It
received similar allegations about other entities but to this Court’s knowledge has not pursued
them. (Id.). And, despite the verdict, CMU has not negotiated licenses with any other third
parties.
From the Court’s view, CMU appears largely satisfied with the exceptional returns on its
minimal financial investments in these patents and only questions whether it will be able to
collect the judgment against Marvell.34 Accordingly, the Court believes that CMU would accept
an ongoing royalty of $0.50 per Accused Chip for the continuing infringement rather than the
requested $1.50 per Accused Chip or some rate between those two figures, including the
33

To this end, CMU: sent out initial correspondence to DSSC members Seagate and IBM in 2001 announcing
the patents; sent its “friendly” licensing letters to fourteen companies, including Marvell, in 2003; and had some
unsuccessful negotiations with Intel in 2004 which included a brief discussion of these patents. (See Docket No.
920 at 12-13 (citing Pl. Exs. 422; 431; Def. Exs. 182, 185; 225; 226; 227; 229; 230; 231; 232; 233; 234; 1573); 901
at 12 (citing Def. Exs. 255, 263; Docket No. 682 at 100, 183-85)).
34
The Court acknowledges that CMU also seeks to recover its attorneys’ fees in this litigation. The Court
postponed its decision. (Docket No. 884). The Court does not consider same as part of its “investment” in the
patents.

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effective rate of $0.615 per Accused Chip which it has been awarded for the pre-judgment
infringement and willfulness. CMU effectively seeks to have the Court impose a higher rate than
the jury’s assessment to punish Marvell for its willfulness rather than arriving at that figure after
undertaking a comprehensive Georgia-Pacific analysis.35
Marvell stands before the Court as an adjudicated willful infringer which has been
ordered to pay substantial compensatory and punitive damages to CMU in order to account for
its unlawful conduct. While the award is very high due, in part, to CMU’s inaction, it is a just
award given the scale and scope of the infringement and its utter disregard for CMU’s patent
rights. Marvell remains in a position where it needs to continue to use its simulators and include
the infringing methods in its read channel chips for the foreseeable future. But, Marvell has
started to redesign certain of its read channel chips and avers that its redesign will be concluded
by the end of this year. (Docket No. 833 at 23). If successful at developing non-infringing
products, Marvell will have the ability to walk away from the patented technology.36
As Ms. Lawton discussed at trial, Marvell also has the option of moving a large portion
of its operations to an overseas location in an effort to avoid incurring a significant portion of the
expected future damages. (Docket Nos. 686, 710). This could be achieved by moving its
simulators and testing programs offshore along with other significant aspects of its U.S. based
sales cycle and these moves could limit the amount of ongoing royalties to only those resulting
from its inducement of customers located in the United States to use the patented methods. But,
this scenario is unlikely as Marvell is ingrained in its Silicon Valley headquarters having made
significant investments in infrastructure and key personnel at that location and conducting nearly

35

Indeed, while Lawton has submitted numerous post-trial declarations in support of CMU’s various
motions, CMU has not put forth her opinion on the results of a post-trial hypothetical negotiation between these
parties.
36
It is unknown whether Marvell’s customers will accept these redesigned products.

69

all of its sales cycle activities from there. (Docket Nos. 802-2 at ¶ 20; 802-1 at ¶¶ 6-9). Further,
as explained in the context of the Court’s discussion responding to CMU’s request for an
injunction, Marvell’s products contain numerous non-infringing features which undoubtedly
provide significant value to its customers and end-users. See § IV.A., supra. Considering all of
these factors, the Court believes that Marvell should be willing to pay an ongoing royalty of
$0.50 for the continuing infringement, rather than the lesser amounts it has suggested.
3.

Conclusion as to Ongoing Royalty

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. Accordingly,
CMU’s motion is granted to the extent that an ongoing royalty of that amount will be ordered for
the ongoing infringement. The Court will further order that Marvell make periodic, quarterly
accountings of its continuing sales to CMU; that the parties meet and confer to reach agreement
on pertinent sales data and continuing damages from the ongoing royalty; and, provide the Court
with status reports outlining same going forward.37
As a final point, considering the present status of the parties’ bond negotiations, wherein
the parties are actively meeting with a court-appointed Special Master to determine the
appropriate level of financial security for Marvell’s forthcoming appeal, (Docket No. 930), the
Court will deny, without prejudice, CMU’s requests that an escrow account be established and
that Marvell deposit any ongoing royalties in same and refer such requests to the Special Master
with the same direction as the initial referral of the bond issues, i.e., the parties should initially be
granted the opportunity to negotiate these issues and, if necessary, present any contested matters

37

To the extent that the quarterly accountings process engenders disputes, the Court will appoint a Special
Master to resolve same.

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to the Special Master for resolution through a Report and Recommendation directed to the Court.
See FED. R. CIV. P. 53. However, the immediate priorities for the parties and the Special Master
remain to finalize the bond issues so that a final judgment can be entered and Marvell can take its
appeal.
V. CONCLUSION
Based on the foregoing, CMU’s Motions [788], [786] and [790] are granted, in part, and
denied, in part. As explained herein, CMU’s requests for prejudgment interest and a permanent
injunction are denied and its requests for supplemental damages, enhanced damages, postjudgment interest and an ongoing royalty are granted. A summary of the damages award is, as
follows:
Type of Damages

Amount

1

Jury Verdict

$1,169,140,271.00

2

Supplemental Damages

$79,550,288.00

3

Prejudgment Interest

$0.00

4

Total Damages

$1,248,690,559.00

5

Enhanced Damages Factor

1.23

6

Total with Enhancement

$1,535,889,387.60

7

Post-Judgment Interest

0.14%

8

Ongoing Royalty

$0.50 per chip

As noted in the Court’s prior Orders, the parties will be directed to meet and confer and present
the Court with a proposed final judgment in light of these rulings and the prior rulings in this

71

case. They are also to proceed to negotiate the bond issues with the court-appointed Special
Master. An appropriate Order follows.
s/Nora Barry Fischer
Nora Barry Fischer
United States District Judge
Date: March 31, 2014
cc/ecf: All counsel of record

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