Marvell Technology Group Ltd on Wednesday said it will pay Carnegie Mellon University $750 million to settle a nearly seven-year-old lawsuit accusing it of infringing two hard disk drive patents held by the Pittsburgh school.
The accord was announced six months after a federal appeals court said an earlier $1.54 billion damages award against the chipmaker should be reduced significantly and that a new trial be held, but that Marvell must pay at least $278.4 million.
That sum would have represented a 50-cent-a-chip royalty on 556.8 million chips imported into the United States for use in the disk drives.
The settlement was announced after U.S. markets closed. Marvell shares rose 45 cents to $9.75 in after-hours trading. They closed up 18 cents at $9.30 in regular trading.
Carnegie Mellon had sued Marvell in March 2009 over patents issued that related to how accurately hard disk drive circuits read data from high-speed magnetic disks.
The university said at least nine Marvell circuit devices incorporated the patents, which were issued in 2001 and 2002, letting the company sell billions of chips without permission.
Marvell is headquartered in Bermuda, and its main U.S. operating unit is in Santa Clara, California.
It said it previously set aside $388 million in its 2016 fiscal year for the litigation, and had more than $2.3 billion of cash and short-term investments as of Jan. 30.
A federal jury in Pittsburgh had awarded Carnegie Mellon $1.17 billion in December 2012. U.S. District Judge Nora Barry Fischer later boosted that sum to $1.54 billion, reflecting Marvell's alleged willful infringement plus interest.
Carnegie Mellon said a "substantial share" of the $750 million settlement, after deducting legal fees and costs, will go to the inventors of the technology at issue.
They are José Moura, a professor of electrical and computer engineering at Carnegie Mellon; and Aleksandar Kavcic, a former student of Moura's and now a professor of electrical and computer engineering at the University of Hawaii.
(Reporting by Jonathan Stempel in New York; Editing by Alan Crosby)