* Judge awards Carnegie Mellon "enhanced" damages
* Award less than university sought; Marvell shares rise
(Adds details from decision, comments from analysts and
Carnegie Mellon law firm, updated share price)
By Jonathan Stempel
April 1 A federal judge ordered Marvell
Technology Group Ltd to pay nearly $1.54 billion to
Carnegie Mellon University for selling billions of
semiconductors that infringed the school's two hard disk drive
While the award is 31 percent more than the $1.17 billion
previously awarded by a jury, it was less than half the maximum
$3.75 billion that Carnegie Mellon sought, and eased concern
that the payout might be higher. Marvell still plans to appeal.
Shares of Marvell were up 3.4 percent at $16.29 in morning
Nasdaq trading after peaking at $16.65.
In her decision late Monday, U.S. District Judge Nora Barry
Fischer in Pittsburgh, where Carnegie Mellon is based, said the
school deserved "enhanced damages" because it showed that
Marvell and its Marvell Semiconductor unit deliberately copied
its patents through "known willful infringement."
Carnegie Mellon said at least nine Marvell circuit devices
had incorporated patents issued in 2001 and 2002 over how
accurately hard drive circuits read data from high-speed
The payout is equal to 1.23 times the sum of the original
$1.17 billion jury verdict from December 2012, plus $79.6
million for alleged infringements that the jury did not consider
because it had lacked recent financial information at the time.
"This award is sufficient to penalize Marvell for its
egregious behavior and to deter future infringement activities,"
the judge wrote in a 72-page decision.
Fischer rejected Carnegie Mellon's request for an
"unprecedented financial penalty" to triple damages to $3.75
billion, roughly twice Marvell's liquid assets, saying this
would "severely prejudice" Marvell's business. She also denied
the school's request to stop further sales of the chips.
MKM Partners analyst Ian Ing, who rates Marvell "buy," wrote
that the decision removed a "major overhang" on the stock.
Several analysts expect the award to be lowered, especially
if the 50-cent-per-chip royalty rate that Fischer used is cut.
"Fears were the damages would be even higher," wrote Brean
Capital analyst Mike Burton, who also rates Marvell a "buy." He
said Marvell might on appeal reduce the damages award by 80
percent, "if the case even stands to begin with."
K&L Gates, a law firm representing Carnegie Mellon, said in
a statement that it was pleased that Fischer "addressed both
Marvell's continuing and willful infringement." It said it
looked forward to the appeals court "vindicating Carnegie Mellon
University's intellectual property rights just as Judge Fischer
Patent infringement lawsuits have gained greater prominence
in recent years as more companies try to protect inventions they
create or acquire amid rapid innovation.
Apple Inc and Samsung Electronics Co
have battled for nearly three years over smartphone technology,
while the U.S. Supreme Court is hearing six patent cases, an
unusually large number, in its current term.
Marvell said it intended to argue before the U.S. Federal
Circuit Court of Appeals in Washington that the Carnegie Mellon
patents are invalid, that there was no infringement, and that
Fischer erred in calculating the royalty rate and applying it to
chips made and sold abroad.
The company has said a single, $250,000 royalty payment
should have sufficed.
Marvell is based in Hamilton, Bermuda, and Marvell
Semiconductor is based in Santa Clara, California.
The initial $1.17 billion award was the third-largest in
U.S. patent litigation since 1995, PricewaterhouseCoopers said
in a June 2013 study.
The case is Carnegie Mellon University v. Marvell Technology
Group Ltd et al, U.S. District Court, Western District of
Pennsylvania, No. 09-00290.
(Reporting by Jonathan Stempel in New York; Additional
reporting by Nate Raymond in New York and Rachel Chitra in
Bangalore; Editing by Gopakumar Warrier, Nick Zieminski and Lisa