Considered one of the biggest penalties to be awarded over a patent case, the $1.17 billion in damages award to Carnegie Mellon University is nearly twice as big as Marvell’s profit during its latest fiscal year. The conclusion of the case was preceded by a month-long trial in Carnegie Mellon’s home turf, U.S. District Court in Pittsburgh.
The jury discovered that Marvell’s violation of Carnegie Mellon’s patent was willful, which means that the presiding judge, Nora Barry Fischer, can triple the award translating to $3.96 billion. Marvell makes chips used by hard disk drives to read and write data.
The announcement of the verdict caused Marvell’s stock to plunge 10.3 percent, closing down to $7.40 on the Nasdaq.
The university said that the verdict was satisfactory. “Protection of the discoveries of our faculty and students is very important to us,” the school statement said.
The defendant on the other hand did not provide any comment on the verdict when contacted by Reuters.
Marvell defended itself by saying that violating the patent was not intentional and that Carnegie’s claim to own the patent was invalid. The company hinted in a November 29 filing that it will defend itself vigorously it lost the case.
K&L Gates, the law firm representing Carnegie Mellon University, claimed that Marvell copied the University’s technology used in allowing hard disk drives to read information from high speed magnetic discs.
The said patents were jointly developed by Carnegie Mellon Professor Jose Moura and former doctoral student and now University of Hawaii professor Aleksandar Kavcic.
The jury said that Hamilton, Bermuda-based Marvell had sold billion of chips using the technology without a permission to do.
Carnegie Mellon accused Marvell over two patents issued in 2001 and 2002. The two patents cover ways to detect and locate data stored on hard disc drive by filtering out unwanted electrical signals and noise. The school mentioned that a minimum of 9 types of Marvell’s circuits infringed on its patents.
The company’s U.S. operating unit based in Santa Clara, California is also included in the lawsuit.
Marvell posted a $616 billion profit from its net revenue of $3.39 billion during its most recent fiscal year, ending on January 28 2012. the company supplies chips to Seagate Technology Plc and Western Digital Corp among others.
According to a former Marvell employee and the current president of Stadtler Capital Management, Kevin Stadtler, investors are concerned about the possible triple damages. According to him, such move may force the company to issue shares to raise capital. Stadtler’s company is based in Fort Worth, Texas.
The court judge sets May 1, 2013 as the final judgment date in the case, according to court records.