Chipmaker Marvell loses $1.17 billion patent verdict

Thu Dec 27, 2012 6:33am IST

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REUTERS - A federal jury on Wednesday found that Marvell Technology Group (MRVL.O) infringed two patents held by Carnegie Mellon University, and ordered the chipmaker to pay $1.17 billion in damages.

The award is one of the largest by a jury in a U.S. patent case, and is nearly twice Marvell's profit in its latest fiscal year. It followed a month-long trial in the U.S. District Court in Pittsburgh, the home of Carnegie Mellon.

Jurors also found that Marvell's patent infringement was willful. This could enable the trial judge, Nora Barry Fischer, to award triple damages, a sum close to the $3.96 billion market value of Marvell, whose chips are used for reading and writing data on hard disk drives.

Shares of Marvell fell 10.3 percent on Wednesday, closing down 85 cents at $7.40 on the Nasdaq.

Carnegie Mellon said it was gratified by the verdict. "Protection of the discoveries of our faculty and students is very important to us," it said.

Marvell and its law firm, Quinn Emanuel Urquhart & Sullivan, did not immediately respond to requests for comment.

The company had argued that it had acted in good faith, and the Carnegie Mellon patents were invalid. In a November 29 regulatory filing, Marvell said it intended to litigate vigorously in any potential appeal if it lost at trial.

Carnegie Mellon had accused Marvell of infringing patents used in technology for hard disk drive circuits to read data from high-speed magnetic disks, according to a statement from the university's law firm, K&L Gates.

The law firm said the patents related to systems and methods developed by Carnegie Mellon Professor Jose Moura and a doctoral student, Aleksandar Kavcic, who is now a professor at the University of Hawaii.

Through its verdict, the jury found that Marvell had sold billions of chips incorporating the technology without being licensed to do so, K&L Gates said.

Marvell is based in Hamilton, Bermuda. Its U.S. operating unit Marvell Semiconductor Inc is based in Santa Clara, California, and was also a defendant in the case.

The company posted a $615.1 million profit on net revenue of $3.39 billion in its most recent fiscal year, which ended on January 28. It counts Western Digital Corp (WDC.O) and Seagate Technology Plc (STX.O) among its largest customers.

The trial judge set a May 1, 2013, hearing to consider a final judgment in the case, court records show.

The case is Carnegie Mellon University v. Marvell Technology Group Ltd et al, U.S. District Court, Western District of Pennsylvania, No. 09-00290.

(Reporting by Jonathan Stempel and Nate Raymond in New York and Himank Sharma in Bangalore; Editing by Steve Orlofsky, Leslie Adler, Andrew Hay and Phil Berlowitz)

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