Docket No. 2014-1492
WALLACH, TARANTO, CHEN
August 4, 2015
Update: Carnegie Mellon’s request for rehearing en banc held in abeyance until SCOTUS Halo (FC 2014, SCOTUS cert. granted 10/19/15) and Stryker (FC 2015, cert. granted 10/19/15) cases are decided but otherwise denied, as was Marvell’s petition.
Brief Summary: DC award of enhanced damages reversed due to Marvell’s “objectively reasonable” invalidity defense. Issue of royalties remanded with respect to sale of chips not imported into the US.
Summary: Marvell appealed DC award of about $1.54 billion, including a 23% enhancement for willfulness, and ongoing royalty of 50 cents per Marvell-sold chip to CMU for infringement of its US 6,201,839 and 6,438,180 directed to data storage methods, devices and systems. The FC panel first considered Marvell’s rejected invalidity for anticipation arguments and agreed with the jury conclusion of no invalidity and that it directly and indirectly infringed the claims. It also disagreed with Marvell’s “argument[s] that the equitable defense of laches should bar CMU’s recovery of damages for Marvell’s infringement pre-dating CMU’s filing of this action”, finding the DC “conducted a thorough review following the principles of our en banc decision in Aukerman” (FC 1992 (“Conscious copying may be such a factor weighing against the defendant” but is not required to have caused the delay.)) Here the FC panel agreed with the DC that “Marvell’s blatant and prolonged copying of CMU’s inventions met the standard of particularly egregious conduct” and may have contributed to the delay (Serdarevic, FC 2008). Regarding enhancement of damages, the opinion explains that “[w]here, as here, enhancement is not asserted to rest on the infringer’s actual knowledge that it was infringing, our precedent prescribes that a district court may enhance damages only upon proof of willfulness, which we have held to require ‘clear and convicing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent’ and ‘this objectively-defined risk…was either known or so obvious that it should have been known” (In re Seagate, FC 2007; Safeco Ins. Co., US 2007). And “the first requirement is not met when the infringer, whatever its state of mind at the time of infringement, presents a litigation defense, including an invalidity defense, that is objectively reasonable (though ultimately rejected)”, which is a question of law reviewed de novo on appeal (Halo Electronics, FC 2014). The FC panel agreed with the jury finding that Marvell knew and should have known of the patents and claims in dispute before the action began (“That Marvell may not have ultimately copied the patents’ preferred embodiment does not show that it was, or even thought it was, doing something outside CMU’s claims…the facts that Marvell sought and obtained patents gave it no defense to patent infringement….” In re Kaplan, FC 1986; AbbVie, FC 2014) It agreed with Marvell, however, that “the enhancement of damages must be reversed because the invalidity defense it presented in this litigation was objectively reasonable.” The opinion explained that to avoid enhancement the invalidity defense need not have been known to Marvell at the time of infringement (“‘The state of mind of the accused infringer is not relevant to th[e] objective inquiry’ into the risk of [reckless] liability….”). It also agreed with Marvell that the royalty award improperly included chips not imported into the US in the calculation (§ 271(a); this point was remanded) but otherwise found no reversible error with the DC royalty decision (rejecting Marvell’s argument that CMU’s witness was not an expert, reasonable royalty determination).