back to article Marvell: We don't want to pay this $1.5bn patent bill because, cripes, it's way too much

Chip biz Marvell is still trying to wriggle out of paying a whopping $1.5bn to Carnegie Mellon University after infringing the college's patents. The design firm has now warned the penalty could have "sweeping consequences" – to its existence, we presume. Marvell, based in Santa Clara, California, was found guilty in 2012 of …

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How much were the chips?

Regarding "No reasonable jury could have found 50-cents-a-chip on worldwide sales is a reasonable royalty," I guess two points:

1) How much were the chips? It makes a big difference if these are like $1 chips versus (I know, unlikely) $50 chips.

2) If Marvell had wanted a reasonable royalty rate, they should have negotiated a resonable royalty rate and paid it. They didn't, so it's far too late for them to whine about the royalty rate being unfair somehow.

3) Wait, they've shipped out like 2 billion hard drive chips over 9 years? Wow.

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the price

1) 50¢ royalty was reasonable for a chip that, on average, sold for $4.42 and earned Marvell $2.16 in operating profits.

source http://www.cmu.edu/patent-lawsuit/images/timeline/2014-10-20-cmu-responsive-brief.pdf

page 55

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Re: the price

To know whether 50 cents per chip is reasonable, we would have to know how many patents were used by the chip. If it uses exactly one patent, 50 cents might be reasonable. If it uses 100 different patents, then 50 cents per patent on a $5 chip is obviously unreasonable.

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Re: the price

If a licence to use the patent had been negotiated, it probably would have been a $0.15 royalty; triple damages and a rounding-up are probably what pushed it to $0.50.

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Headmaster

Re: the price

Treble economic damages are only available if Carnegie-Mellon was the victim of monopolistic practices under the Sherman Antitrust Act, which doesn't seem to be the case here. So I guess it is possible that the 50 cents per chip enforced royalty could be too high. That would depend on a lot of data and calculations I don't have access to

The punitive damages amount could be reviewed too, but its less likely. That is where all the "punishment for bad behavior" penalties go.

So basically the current judgement is that Carnegie-Mellon is owed $1.17 billion for the economic value of its intellectual property used by Marvell, and $300+ million because Marvell was egregious about appropriating or sheltering the appropriation of that intellectual property.

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Re: the price

To know whether 50 cents per chip is reasonable, we would have to know how many patents were used by the chip. If it uses exactly one patent, 50 cents might be reasonable. If it uses 100 different patents, then 50 cents per patent on a $5 chip is obviously unreasonable.

If 100 patents with a royalty of 50c each were used to design a chip, then the unreasonable part is selling that chip for $5.

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@ Marketing Hack... Re: the price

You have damages and you could ask the court to triple the damages based on the fact that the infringement was willful.

I agree that the courts did in fact properly award the damages and the penalty.

Marvel is SOL and would be better off paying it off now and getting out of court.

It wasn't a single patent, but several and they were necessary for Marvel's chip to work.

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Re: the price

Nonsense. If 100 patents with a royalty of 50 cents each were used, then the unreasonable part would be producing the chip in the first place. If I need 100 patents to produce a chip that can be sold for $5 (there is competition as well, you know, and customers might just not want to pay that much), then quite obviously these patents are not worth 50 cents each.

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Fair result

20% of Marvell profit on the final sales seems reasonable, Marvell could probably have cut a better deal with Carnegie Mellon if they had licenced the patents when they were first used as the success of these products was not then assured.

9 years of back licensing should be repaid over a 9 year period starting now.

Presumably after 2012 the product was properly licenced or was no longer offered for sale.

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Re: Fair result

> 9 years of back licensing should be repaid over a 9 year period starting now.

Of course, that would also require 9 years worth of interest payments as well. So then they would be caught up in the never ending cycle of not getting around to paying off the debt, because they are too busy paying off the interest accrued on said debt.

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Anonymous Coward

But did they...

blatantly and recklessly copy the patents?

Ok, so the court ruled they did, but was this just a case of ignorant jurors ruling on an issue they had no ability to decide? Or have Marvell actually coughed to this and said "mea culpa"?

If they did deliberately copy the patents, then they deserve to be slapped. Otherwise, it would seem a somewhat excessive punishment.

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Re: But did they...

Back then:

Marvell said that they did look at the patents, but that it was impractical to implement the design in silicon, so they did something else instead.

Patent quality is generally so pathetic that this is very believable, but I have no idea what is actually true.

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Mushroom

Re: But did they...

Marvell admitted they looked at the patent, and they claimed in court that it was impractical so they did something "similar." The problem for Marvell is that they got caught using exactly the same algorithm (down to the names!) as was used at CMU internally. The fact is that they were blatantly using these patents during their development activities and that came out in discovery. The patent infringement in this was went way beyond infringement to blatant abuse, which is why the award is so high. And it was so obviously blatant that the jury ruled unanimously that it was blatant (which we should probably blame the engineers at Marvell for -- couldn't they have made it at least plausible that they did this accidentally?!).

If you look, the jury's judgement of the value of the patents was pretty accurate at about 5% of the profit of the chips. Remember, using this was necessary for them to be competitive in the market, as Seagate and others testified (and Seagate is a big customer of Marvell's disk drive chips). It's the treble damages and interest costs for willful, blatant infringement that's really painful for Marvell. Well, that's the point. Marvell didn't do this accidentally, they did it with malice aforethought and now they're being called to account for that behavior.

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A school owns patents?

That seems a bit backwards there... Schools like CMU are supposed to encourage innovation, not crush it...

Besides, what are they going to do with that much cash anyway? I doubt it would be used to reduce student tuition rates...

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Re: A school owns patents?

They aren't just a school - they are a research institution. That means they churn out innovative ideas as one of their primary functions, so it's hardly surprising they'll have patents.

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Re: A school owns patents?

you need to wake up.

Even at British universities, students on Msc & PHD are 'informed' that their work at the university belongs to the university and any ideas they may have during their time at the uni. also belong to the uni.

I'm afraid that the idea of Uni.'s being places of learning died out a long time ago, they are now just massive businesses selling off qualifications for a quick buck, even many of the courses are not run by qualified professionals, but rather students using teaching material ripped from books.

Go do an Msc at a reputable Uni. and see for yourself.

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Re: A school owns patents?

> Even at British universities, students on Msc & PHD are 'informed' that

> their work at the university belongs to the university and any ideas they

> may have during their time at the uni. also belong to the uni.

That certainly isn't how I remember it. Have a look at the Cambridge rules here, for example:

http://www.admin.cam.ac.uk/univ/so/2010/chapter13-section2.html

Scroll down to section 14 for the rules for students, which starts like this:

14. The entitlement to intellectual property rights in material created by a student shall rest with the student, with the following exceptions:

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Re: A school owns patents?

For my final year uni project we were required to sign over all rights to it for the princely sum of $1.

No, I never actually got that dollar so I guess I could have got it invalidated.

It wouldn't have bothered me if the education was free but it certainly wasn't!

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Re: A school owns patents?

Schools like CMU are supposed to encourage innovation, not crush it.

Two points here.

As already mentioned, Uni's, especially in the Engineering depts, do a lot of research. They do encourage innovation and pushing of boundaries. They will then get patents on these, and use the royalties (which are normally available for anyone to license, unlike those held by many companies) to invest back in to the school. Without these, students (or the govt on their behalf) would be expected to pay a hell of a lot more than they already do.

Also, patents do encourage innovation where used properly. They allow the inventor of something innovative to claw back something for all their hard work inventing it, by granting a temporary monopoly and stopping others ripping off their work. They also require publication of details, meaning future efforts can more easily piggy-back this work, as long as they gain the permission of the patent holder.

Where things fall down is in the current implementation and use of patents. We have the trolls, who buy patents and then hoard them, waiting for the best moment to strike with a case against an infringement. We have companies who use broad and generalised patents to stop competitors. And we have broken patent offices which allow this to happen.

Overall, I would say that patents to more good than harm, but we hardly ever hear about the good cases. In this case, it seems CMU are in the right. CMU did a lot of research, and would have licensed the patents to Marvel had they negotiated. Marvel violated the patent (according to the court) and made no effort to negotiate reasonable royalties. The court had to decide on a level, and awarded punitive damages too.

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Re: A school owns patents?

"waiting for the best moment to strike with a case against an infringement."

This is the most broken part of the entire patent system. There really ought to be rules or laws in place limiting how how long a patent holder can sit and wait for the maximum value sueball. If a patent holder comes along 10 years down the line to sue once the patent has become far more valuable, then they must demonstrate that they were unaware of the infringement.

Of course, from a developers point of view, trawling through billions of insignificant little patents such as "a method of screwing a screw into a hole" makes it almost impossible to innovate without some level of patent licensing or inadvertent infringement. The only viable "solution" appears to be to design, build and market a product in seclusion so at least you can disprove "willful infringement" when the inevitable sueballs appear.

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Re: Without these, students ... would be expected to pay a hell of a lot more

Utter rubbish. I've been out Uni almost 30 years now and even back then it was obvious that even at nominally student friendly institutions the only thing they cared about was how much they could fleece you for. If you were fortunate enough to choose the right career you might pay off the debts you accumulated while there in 10 or maybe 15 years. If not, well the Uni already had their money and the banks loans were guaranteed by some combination of governments, so they were all good.

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Patents: Sought by the Wright brothers while Europe built planes

THEY ARE PATENTS.

Retarded shit for rent seekers. From a university, moreover.

Oh wait, it's Amurrica. Never mind.

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Re: Patents: Sought by the Wright brothers while Europe built planes

Europe has always led the way with crappy patent rules - they were the first to switch from first to invent to first to patent and persuaded the US to stupidly follow them.

It's not really surprising given that Europe is dominated by large companies....

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Re: Patents: Sought by the Wright brothers while Europe built planes

That's probably why the uni won the suit. I'm thinking the company figured "oh... uni patent... no need to pay to use it".

Besides, this is not like it's some patent troll. CMU does a lot of research and development.

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Re: Patents: Sought by the Wright brothers while Europe built planes

"First to file" is so much better than "first to invent". Saves so much potential for dodgy court cases.

Successful product on the market for years suddenly gets sued by someone with "proof", sort of that they invented the same concept before the other guys. The proof is all perfectly legit m'lud, honest!

The current system can be abused but its still saves a hell of a lot of arguments later. If it is shown that there is already an existing product on the market you just don't (shouldn't!) get your patent granted.

And I say that as I have just had to drop a patent application because a MSc thesis that had been mouldering away in a university's library just got published online invalidating my application. It was considered "prior art" because it was still originally "published" and in the "public domain" even though the only way of finding out about it was to go to the actual american university library in question.

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Anonymous Coward

Re: Patents: Sought by the Wright brothers while Europe built planes

"It's not really surprising given that Europe is dominated by large companies"

Far less so than in the US - where the entire political system is bought and paid for by corporations.

The corporate ownership of the US is so successful that for instance over half of Americans still don't acknowledge that Global Warming is real - largely due to corporate sponsored FUD giving the illusion of a debate - even though AGW has not been in any scientific doubt for at least a decade now...

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Anonymous Coward

Re: Patents: Sought by the Wright brothers while Europe built planes

I was really surprised that my 1980's 'O' level CDT exam work was used to prove that wind-up radios were prior art. I'm sure that I didn't invent it. (The school kept the work and were actively using it as an example in future classes for at least 11 years afterwards - so the pool of people who knew about it must have into the thousands.)

On my HND IT course we were told that all software or hardware inventions were the property of the Polytechnic. It just meant that I didn't disclose many ideas for commercial products until after I had left, and just did non-descript and non-commercial projects for my coursework. - who was the loser, not me!

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Re: Patents: Sought by the Wright brothers while Europe built planes

"The corporate ownership of the US is so successful that for instance over half of Americans still don't acknowledge that Global Warming is real " ... one track mind hey? and tunnel vision for good effect.

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Re: Patents: Sought by the Wright brothers while Europe built planes

"It was considered "prior art" because it was still originally "published" and in the "public domain" even though the only way of finding out about it was to go to the actual american university library in question."

Yes, because the point isn't that you're accused of copying the other chap(/ess). It's that if two people have come up with the same idea, that rather invalidates the claim that it's worthy of patent protection.

At the moment there are an awful lot of patents granted which also shouldn't be, for other reasons, so it's a bit unfair on you that you run afoul of one of the few protections still working properly, but the solution is to fix the rest of the problems, not to abolish the working part.

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Re: Patents: Sought by the Wright brothers while Europe built planes

"Europe has always led the way with crappy patent rules - they were the first to switch from first to invent to first to patent and persuaded the US to stupidly follow them."

Really? I'm rather surprised that so many disparate countries managed to harmonise their patent application rules and laws so long ago considering that the EU still are not able to fully harmonise the system.

For those not in "europe", the EU is not (yet!) a country. Most EU laws, rules etc are effectively guidance to the member states who then interpret that guidance and implement it within their own sovereign legal system. This sometimes leads to legal challenges at EU level where some countries have mis-interpreted the intentions of the guidance.

As an example, the UK often takes the EU guidance and interpret it strictly "by the book" and land us with often onerous legislation. The French are more likely to read it loosely, go "meh!" and implement something vaguely resembling the EU guidance.

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Re: Patents: Sought by the Wright brothers while Europe built planes

""!The corporate ownership of the US is so successful that for instance over half of Americans still don't acknowledge that Global Warming is real " ... one track mind hey? and tunnel vision for good effect."

This is actually true. The majority of Americans are just as ignorant regarding the facts of anthropomorphic global warming as they are on say geography:

http://beforeitsnews.com/alternative/2013/06/37-of-americans-cant-find-america-on-a-map-2676508.html

LOL @ "Despite Americans’ seemingly underdeveloped sense of their own geography, history and domestic policy, they did score high points on the issue of patriotism, calling America .....“a place to definitely explore when I finally get my passport” (22 percent).”"

Also see http://news.nationalgeographic.com/news/2006/05/0502_060502_geography.html

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Re: Patents: Sought by the Wright brothers while Europe built planes

Actually, the EU is now a country. It's got it's own national anthem and the EU also wants it's own army.

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Re: Patents: Sought by the Wright brothers while Europe built planes

even though the only way of finding out about it was to go to the actual american university library in question.

Really? Research institutions in the US have pretty much universally required theses and dissertations be published, first in microform and later electronically, for decades. They're not available in the local bookshop, true, but any research library should be able to obtain a copy.

Master's theses are admittedly harder to find, since they aren't as widely indexed. (Dissertation abstracts have been available through serial indexes like DAI for decades.) But once you hear of the thesis, actually getting the text shouldn't require a physical trip to the university that issued the degree.

These days, when someone defends a thesis, it's likely to be splashed across social media, or at least posted to something like academia.edu, and indexed by firms like ProQuest. So now the problem isn't recall, it's precision - sorting out the one you want from all the search hits.

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Re: Patents: Sought by the Wright brothers while Europe built planes

calling America .....“a place to definitely explore when I finally get my passport”

America consists of two continents. The USA is only part of one, and its citizens do indeed need passports to explore most of America.

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Re: Patents: Sought by the Wright brothers while Europe built planes

The problem is neither a strict "first to file" nor a strict "first to invent" is ideal.

First to file means if I put a product on the market with a feature I think isn't worth patenting, you can then get a patent and turn around and sue me all apple-style.

First to invent is a legal nightmare to enforce.

What's needed is a hybrid of the features of the two. The first person to file get it, but in the case that an existing product has the feature (but didn't have it long enough to meet the legal definition of prior art) they can continue to use it in all their products, present and future without royalties.

(none of this appears to be relevant in this case though)

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Vic
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Re: Patents: Sought by the Wright brothers while Europe built planes

First to file means if I put a product on the market with a feature I think isn't worth patenting, you can then get a patent and turn around and sue me all apple-style.

No, that's not the case. If the product is on the market before the patent is filed, it is clearly prior art, and that is an absolute defence. Indeed, no sane patent owner would ever file suit against the product, since it would invalidate their patent.

Vic.

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Anonymous Coward

Re: Patents: Sought by the Wright brothers while Europe built planes

"America consists of two continents. The USA is only part of one, and its citizens do indeed need passports to explore most of America."

The meaning of "America" without further qualification to an American is clearly the USA... So we can safely conclude that lots of Americans are very ignorant. Which explains quite a lot...

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It's a damn shame that CMU is not going after some FAR bigger fish for infringing on their FAR bigger patents. CMU had argued that they don't want bad publicity. Now that the judgement has been reached in Marvell case I remain hopeful that CMU will see that they were going after the underdog and go for the big nasties out there...you know those that have more in unpaid dividends than the whole of Marvell is worth..

It's time someone put them in their place.

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Boffin

@Pele ...

The rule of thumb is to go after the easier targets first. Then you have a precedent of a win behind you. After that you go for bigger and bigger fish who will either settle or will have a harder time in court arguing facts that you have already used in a different court.

If you go after the bigger fish out of the gate... you fight a company with deep pockets who can tie this up in court longer than you can.

And by no means is Marvel a little fish.

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Re: @Pele ...

I agree with you completely but I am talking about a whole different patent and from my perspective the longer you let it simmer the more money the corporation in question will have accumulated for their legal expenses and more afraid one becomes of chasing them. This is sonething that CMU has been quiet on for the past 15 years (when it was first used in a MAJOR product) and the patent is probably 25 years old. By now it is something that pretty much everyone is using at home or in their car. You know what the funny thing is? The aforementioned company even said "no we don't feel like licensing this from you but we'll gladly go after the OTHERS together with CMU! Now, you tell me is that cheeky or what?

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Re: @Pele ...

You have to be very, very careful when you don't assert a patent after you become aware that it's been infringed. Waiting to assert will massively lower any award you get.

The problem for Marvell in this case is that CMU came after Marvell under the suspicion that Marvell was using their patents. Marvell denied that and CMU walked away. Only later did evidence arise that made Marvell's infringement obvious and caused CMU to come back to Marvell, Marvell to stonewall again, and finally this suit. It was Marvell's initial denial that allowed CMU to reach back much farther than would be typically allowed in a case like this. Well, that and the fact that Marvell's internal documents showed a blatant intent to infringe the patents.

Marvell was built on these chips. They were Marvell's first products and have been a cash cow for them for over a decade.

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Blasphemy

To me, the most interesting part of this story is the depravity of the headline. There's no need to blaspheme the God of many of your readers, in a headline which has nothing to do with religion.

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Re: Blasphemy

Respectfully disagree. Its the US of A. Has everything to do with religion especially in California!!

Move there and one of the questions frequently asked is which church will you join?

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Anonymous Coward

Re: Blasphemy

No one's forcing you to read it.

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Re: Blasphemy

You amended the headline. Very gracious of you and much appreciated.

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Re: Blasphemy

Yeah, because your snow-fairy is completely incapable of striking anyone down.

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Re: Blasphemy

A "true" christian would have just turned the other cheek, content in the "knowledge" that the author would be subject to buttock prods from Lucifer's putchfork for his blasphemy, and gone along his way.

Instead, you've wailed on about it being blasphemous, and forced others to bow down to your invisible sky daddy. Besides, when has your God, had anything to do with science or tech?

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Re: Blasphemy

Besides, when has your God, had anything to do with science or tech?

Actually, there is some good science in the bible. The one example I can remember off the top of my head is that, in the Hebrew scriptures (Old Testament) I think, it is stated that the earth is round. In this case, the word used for round meant like a ball, spherical. This was at a time when most thought it was flat.

Not a believer any more, but I studied all that when I was young, and still remember quite a lot. It's great for using in debates on either side. I had a "discussion" recently with someone arguing that they, a Christian, shouldn't have to provide services to homosexuals. A few scriptures later from Jesus' life, and I had proved that his own Holy Book commanded him not to discriminate. Unfortunately, he was just an ignorant bigot who wouldn't be moved, so I got bored and abandoned it.

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(Written by Reg staff) Silver badge

Re: Blasphemy

Changed the headline to make it slightly shorter (for design reasons, layout nerds; it now fits in just two decks in the article view). I'm pretty sure your omnipotent deity can cope with an enterprise tech newspaper using his son's name flippantly.

(Original headline.)

C.

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