A group of major tech companies and influential academics have thrown their weight behind Marvell Semiconductor Inc.’s bid to reverse a $1.54 billion trial loss to Carnegie Mellon University, arguing that the megaverdict was based on a dangerous ruling applying U.S. patent law to overseas commerce.
Google Inc., Microsoft Corporation, and seven other companies are urging the U.S. Court of Appeals for the Federal Circuit to undo the damages award, which stemmed from CMU’s claims that Marvell infringed its patents relating to chip technology. In an amicus brief filed on Monday, the companies argue that the trial judge erred in allowing CMU to collect damages for every infringing Marvell product sold worldwide, including many that never entered the United States. Dan Bagatell and Kenneth Halpern of Perkins Coie are counsel of record for the tech giants.
“If the district court’s contrary view allowing U.S. courts to impose royalties based on worldwide sales becomes law, it would have grave consequences for amici and other innovative companies,” the Perkins Coie lawyers wrote. “As in this case, the potential liability could be staggering, and in some cases defendants may face duplicative exposure under foreign patents as well.”
Fifteen law professors reinforced that argument in an amicus brief of their own, also filed Monday. Counsel of record on the brief are Brian Love of Santa Clara University School of Law and Donald Falk of Mayer Brown. The signatories include Mark Lemley of Stanford Law School and Pamela Samuelson of the University of California, Berkeley, School of Law.
CMU brought suit back in 2009 in U.S. district court in Pittsburgh, alleging infringement of patents on a method for more accurately detecting data from disc drives. The university, represented by Douglas Greenswag and Patrick McElhinny of K&L Gates, alleged that Marvell incorporated the patented technology into billions of its chips, most of which were manufactured in Taiwan and installed in hard drives sold to foreign end-users.
The 2013 trial was a train wreck for Marvell’s lawyers at Quinn Emanuel Urquhart & Sullivan. Because Marvell designed and marketed prototype chips in California, U.S. District Judge Nora Barry Fischer ruled that CMU could collect damages for all similar chips sold worldwide. That instruction helped CMU persuade jurors to award $1.17 billion in damages in December 2012. Since the jury found Marvell’s infringement was willful, Fischer tacked on enhanced damages, bringing the total to $1.54 billion. CMU had pegged damages at more than $3 billion, but Fischer decided that figure was excessive and would put Marvell out of business.
Marvell filed its opening brief at the Federal Circuit on Aug. 5. The company objected to Fischer’s decision to impose damages for worldwide sales, but that’s just one aspect of the appellate strategy devised by Quinn Emanuel lawyers, including Kathleen Sullivan and Susan Estrich. They also attempted to poke holes in CMU’s expert witness testimony and reiterated arguments that CMU’s patent shouldn’t have been granted in light of prior research by Seagate Technology PLC.
Monday’s amicus briefs, meanwhile, drive home the idea that Fischer extended the Patent Act beyond its territorial limits. The tech companies and academics argue that under CMU’s damages theory, any patent practiced domestically for R&D purposes can result in a damages award reflecting every infringing unit sold worldwide. “The practical effect of that damages theory is to confer a worldwide patent right, contrary both to established precedent and sound innovation policy,” the professors argue in their brief.
CMU’s appellate lawyers, led by E. Joshua Rosenkranz of Orrick Herrington & Sutcliffe, haven’t yet filed their response at the Federal Circuit. But the university wrote in a court filing last year that Marvell has “blatantly mischaracterized” its damages theory. “CMU’s damage claim is grounded exclusively on domestic use of CMU’s invention,” the university’s lawyers wrote at the time. “CMU does not seek damages from alleged infringement of the accused chips that are never used in the United States.”
In a statement, CMU counsel at Orrick and K&L Gates said they expect the Federal Circuit to disagree with the amici’s position. “The district court issued a well-reasoned decision rejecting the same arguments to the contrary that Marvell and its amici make on appeal,” the statement said.