Court Monitor

Patent Settlement Largest Ever for Computers

America produces more than 90% of the useful inventions in the entire world, in part because the United States has always had the greatest protections for the property rights of inventors. Ever since our Founders took a break from the Constitutional Convention to watch a demonstration of a new invention known as the steamboat, and then inserted the Patent Clause into the U.S. Constitution, inventors have been inspired to create and obtain patents here.

Large corporations and other opponents of our patent system insist that "patent trolls" rather than genuine inventors obtain unjustified patents and use them to bring frivolous lawsuits against productive companies. But the largest computer patent settlement ever shows how wrong the anti-patent narrative issue is.

In 2012, Carnegie Mellon University won a jury award of $1.17 billion for two patents that Electrical and Computer Engineering Professor Jose Moura and his student Aleksandar Kavcic had developed at the college. Their inventions facilitate the ability to read data from hard drives while reducing the effect of "noise," or electronic errors, as amounts of data increase.

The trial judge boosted the award to $1.54 billion. That represented 50 cents for every chip of a certain type that was sold by Marvell Technology Group and Marvell Semiconductors, the defendants.

But on appeal, as often happens in patent litigation, the court sharply reduced the damage award. The Federal Circuit, which specializes in intellectual property cases like patents, reduced the award to only $278 million. Carnegie Mellon University v. Marvell Technology Group, 807 F.3d 1283 (Fed. Cir. 2015). This appellate court held that defendants were not liable for infringement for any the semiconductor chips that they manufactured and sold outside of the United States. The court remanded for a new trial to determine if defendants were entitled to additional damages.

Interestingly, the University had waited six years after learning about the patent infringement before bringing its lawsuit, which the trial court found to be "unreasonable and inexcusable." But the trial judge found that defendants had willfully infringed the patents and would have continued doing so even if the University had complained earlier, and thus the defense of "laches" that would ordinarily help defendants was unavailing here.

The decision by the appellate court did allow the University to recover 50 cents per chip made or sold by Marvell in the United States in the future, which may have induced Marvell to settle the litigation. In February 2016, Marvell agreed to pay the largest settlement ever for a computer-related patent, in the total of $750 million, to the University and its inventors.

The University indicated that it shared the settlement with the individual inventors, one of whom is still a professor there, while his former student is now an engineering professor at the University of Hawaii. The University kept about $250 million of the settlement for itself, which it promised to use to help future students, and the inventors are to receive substantial sums that richly reward them for their innovation.