Douglas Greenswag and Patrick McElhinny of K&L Gates rocked the technology world on Wednesday, winning a $1.17 billion verdict for Carnegie Mellon University that, if it stands, will give the school a huge cash infusion, as well as wipe out a year’s worth of profit for a major Silicon Valley company.
As we reported here, a federal jury in CMU’s hometown of Pittsburgh returned a verdict that the semiconductor manufacturer Marvell Technology Group Ltd. infringed two CMU patents covering methods of reading data from disk drives. After a four-week trial and less than one day of deliberation, the jury awarded CMU a staggering $1.17 billion in damages. The verdict is the biggest of 2012. To put it in perspective, CMU’s endowment is roughly $1 billion, and Marvell made $900 million in profit in the last fiscal year. The company’s stock price dropped 10 percent after the verdict was announced.
K&L Gate’s win came against Quinn Emanuel Urquhart & Sullivan, a firm that now finds itself on the losing end of the two biggest jury verdicts of the year. Quinn Emanuel represented Samsung Electronic Co. Ltd. in a closely watched patent fight with Apple Inc., which climaxed in a $1.05 billion infringement verdict for Apple in August.
Until Wednesday’s verdict, the CMU case escaped the attention of most journalists (including us), partly because the patents at issue haven’t generated much litigation, or even licensing activity. CMU professor Jose Moura and his former doctorate student, Aleksandar Kavcic, filed for them in 1997. (As a condition of their employment, they assigned the patents to CMU.) The technology at issue relates to methods of reading information off of hard drive disks. According to deposition testimony from CMU witnesses, in 2003, the university sent letters to seven semiconductor companies, including Marvell, urging them to license the patents. None of the companies nibbled. Rather than bring immediately bring suit, CMU waited until 2009, when it hired Greenswag and McElhinny to bring suit against Marvell.
CMU’s complaint against Marvell almost didn’t make it to a jury. In its motion for summary judgment, Marvell argued that CMU’s patents were anticipated by prior art—specifically, a patent that Seagate Technology PLC filed for more than a year before Moura and Kavcic sent in their application. U.S. district judge Nora Barry Fischer ultimately rejected Marvell’s anticipation argument, but she noted in her September 2011 opinion that it was a “close call.”
Once Greenswag and McElhinny finally got before a jury, they delivered a slam dunk result. The jury awarded CMU exactly the damages that the school’s lawyers requested, and also found that Marvell’s infringement was willful. That means that Fischer can tack on additional damages.
Marvell, for its part, is determined to get the verdict reversed. It’s already moved for a mistrial on the grounds that Greenswag supposedly made improper arguments during his closing. Quinn Emanuel is particularly upset that Greenswag told jurors that Marvell’s infringement “broke a chain of innovation” at CMU and deprived the school of money to “fund further research.” Quinn Emanuel partner Steven Madison argued at sidebar that Greenswag flouted instructions from Judge Fischer that CMU couldn’t present “evidence and argument regarding any purported ‘harms’ or ‘damages’ other than the loss of a reasonably royalty.” Fischer sustained Madison’s objection, and told Greenswag he couldn’t “dig deep into all CMU’s contributions to society and mankind.”
Greenswag then went on to compare Marvell’s infringement to identity theft. “The invention in this case is like your electronic identity, your credit card numbers, your social security number. It’s that which is very personal and valuable to you.” Madison cut Greenswag off with another objection, which was also sustained. According to Marvell’s lawyers, those arguments constituted a “direct appeal to the jury’s biases and emotions.” K&L Gates, for its part, has argued that “the statements about which Marvell complains simply do not meet the high bar for the sanctions it now seeks.” Fischer denied Marvell’s motion for a mistrial without prejudice on December 20, but wrote that she would reexamine the issue after the verdict came in.
Even if Marvell can’t convince Fischer to rehear the case, it can still hope to prevail at the U.S. Court of Appeals for the Federal Circuit. The appeals court has made a point of reining in big damage awards. For instance, in 2011 it vacated a $1.67 billion jury verdict that Centocor Ortho Biotech Inc. won against Abbott Laboratories on the grounds that Centocor’s patent is invalid.
Greenswag and McElhinny declined to be interviewed. Maybe they’re finally relaxing after a hard-fought four-week trial that wiped out their holiday season. Or they could be bracing themselves for the post-verdict battle that’s sure to come.