University wins $1.17 billion hard disk patent verdict against Marvell

http://arstechnica.com/tech-policy/2012/12/jury-slams-marvell-with-mammoth-1-17-billion-patent-verdict

by bitcartel • 14 years ago

76 48 14 years ago

Hmm, I was wondering if there was a good stock buying opportunity here, and then I started reading employee reviews on Glassdoor (http://www.glassdoor.com/Reviews/Marvell-Technology-Reviews-...). So much for that :-\

rwmj• 14 years ago

Considering everything that goes into making a hard drive, the two patents[1][2] describe such a tiny detail (a tiny incremental improvement on distinguishing magnetic domains), how can $1.17bn be a just award?

[1] http://www.google.com/patents/US6201839 [2] http://www.google.com/patents/US6438180

aaronbrethorst2• 14 years ago

    Since the jury found the infringement by Marvell
    had been “willful,” meaning the company knew it
    was using the patented technology, the judge can
    award up to three times the verdict amount,
    according to a statement by K&L Gates, the law
    firm representing Carnegie Mellon.

http://www.nytimes.com/2012/12/27/technology/marvell-ordered...

tzs• 14 years ago

One thing to keep in mind is that the alleged infringement has been ongoing for nearly 10 years. Over that time, they sold over 2 billion of the infringing chips. A billion dollars sounds huge, but $0.50 per chip doesn't necessarily sound huge.

I believe that the current standard for figuring out what damages should be is based on trying to figure out what deal the parties would have made had their been a negotiated license deal under the constraint that both parties feel that they MUST come to an agreement. This should take into account royalties that the defendant has paid to license similar patents before, and the importance of the patents to the defendants business. There is a whole big list of factors used to guide this hypothetical negotiation. They were established in a case involving Georgia Pacific, so googling for that along with patent damages will get more information if you are curious.

To find out exactly what happened in this case, you'd need to get records from the trial. Both sides would have had hired experts prepare damage reports that look at the Georgia Pacific factors and argue for what royalty should result. It sounds like the jury decided to go with the plaintiffs estimate.

btian• 14 years ago

$0.50 per chip is HUGE. This is not the ultra-expensive Intel Core i7. ARM makes only $.10 per licensed chip[1]

[1] http://www.quora.com/ARM-Processor-Architecture/How-much-doe...

wallflower• 14 years ago

> $0.50 per chip doesn't necessarily sound huge.

One of my relative's husbands is a hard drive engineer.

He used to talk about how if they could eliminate one single bolt from the HDD assembly (3 cent cost) - it could end up saving millions over the total life of the production run.

$0.50 is huge

kansface• 14 years ago

This was a Pittsburgh jury that decided in favor of a Pittsburgh institution against a Silicon Valley company. I'd imagine the results would be a bit different if the trial took place in San Francisco.

xmanifesto• 14 years ago

Marvell's stock just took a massive hit, 10% down in under 2 hours[1] and will probably sink a bit more tomorrow. Meanwhile, Carnegie Mellon just doubled their annual revenue from $909m to ~$2bn[2].

---

[1]http://www.google.com/finance?cid=664838 [2]http://www.cmu.edu/finance/reporting-and-incoming-funds/fina...

btipling• 14 years ago

I think patents may sometimes have the opposite effect than the one intended. Instead of encouraging innovation and stimulating the economy through entrepreneurship and business, it may have a chilling effect. Who knows what patents are out there that may lead you to also face a steep penalty that could ruin your entire business?

shrughes• 14 years ago

This has not been mentioned on all the other patent threads.

praxeologist3• 14 years ago

It needs repeating because it is it is up there as one of the most widely believed and repeated falsehoods.

>Marvell lawyers said CMU's closing statement was "rife with misrepresentations," including suggestions that Marvell "broke the chain of innovation by not paying the royalties that they now owe," and noting those payments would be used "to fund further research, to lead to further innovation." That resulted in a short conference at the side bar, in which the judge warned "you can't dig deep into all of CMU's contributions to society and mankind."

There are tons of studies showing that IP law hampers innovation and not a single one showing it aids it.

Natsu• 14 years ago

The most valuable patents are the worst patents: the ideas that everyone else will come up with on their own and only later discover that they infringe when it's too late to do anything about it.

Oddly enough, the fact that something is repeatedly reinvented independently does not appear to have any bearing on whether a patent fails the legal 'obviousness' test, because everyone is assumed to know about every patent (in the sense that they won't believe that you came up with it on your own even if you did), in spite of the fact that you get punished for having any knowledge thereof.

linuxhansl3• 14 years ago

This is very obviously and sadly true.

Where I work we are encouraged to not even look at patents, because then we would know about the "invention" leading to triple damages if we are found infringing. This is clearly nonsense and the diametric opposite of what was intended.

jrogers653• 14 years ago

That the idea of a monopoly somehow facilitating innovation and competition is accepted by so many people is the mark of a political and economical system which is corrupt at it's very core. I'm not just talking about software or hardware patents - medical patents have caused regressions in innovation just the same (see chapter 9 in the link below). How something so fundamentally and obviously incorrect has seeped into common culture is something which needs to be investigated and taken seriously.

That this has happened in the software industry in particular, where since day one everybody rejected the idea, is a testament to the notion that there are social and political factors which are actively spreading misinformation. Naming names might be an effective way to shunt them out of the economy by refusing to do business with them.

http://levine.sscnet.ucla.edu/general/intellectual/against.h...

kvb2• 14 years ago

The evidence in that article seems quite weak to me. It reads like an opinion piece - it nicely fits some statistics into a narrative, but it hardly seems like a conclusive demonstration that "medical patents have caused regressions in innovation".

rayiner2• 14 years ago

In my experience patents are a tremendous driving force for innovation. Universities use patents to be able to get a cut of the revenue stream generated by the inventions they produce. Start-ups in engineering fields with high capital costs depend on patent protection to compete with bigger players that could otherwise steam roll over them with their manufacturing prowess.

The whole wide world of engineering doesn't all look like Web 2.0. Innovation in "Big Engineering" is not by and large someone thinking "gee, wouldn't it be cool if we had a site that did this" and whipping up an RoR app to do it. Rather, it's PhD projects that take years of painstaking research and access to specialized equipment. It's teams of researchers analyzing reams of data and doing hundreds of experiments.

I worked at a very small tech company doing defense research, and we had individual pieces of equipment that cost as much as the YC VC fund gives to YC alums. We blew through double-digit millions of dollars just at the basic research stage, long before bringing a real product to market was on the table.

In this sort of environment, you need some way to keep other people from taking your ideas, after you've done the hard part, and competing with you using your own work. If you can't protect the designs, then all the competition comes down to who can most efficiently outsource manufacturing to China or who has the most efficient supply chain. And that's not exactly good for innovation either.

jennichen• 14 years ago

Looks like the real winners are Douglas B. Greenswag and Patrick J. McElhinny of K&L Gates ... Carnegie Mellon's lawyers.

monochromatic5• 14 years ago

Why does the winning litigant not count as a real winner?

uvdiv2• 14 years ago

Another commenter wrote an interesting reply to you. It got censored by friendly robot overlord, so I'll reproduce it:

«Perhaps jennichen was suggesting that since the appeal has already been filed and the verdict might be overturned, the lawyers win either way. In the end CMU may get nothing out of it after having spent millions on the lawyers.»

«Quoting from the article shared:»

«"As Brian Love, a professor of patent law at Santa Clara University, pointed out, most universities end up net losers (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2019190) in the game of "patent roulette," with their patents costing them more money than they make."»

(Thank you 'accountswu', that is an interesting find.)

jeswin• 14 years ago

If the US technology sector ever falls behind other countries, one could look back and see that a fundamentally broken patent system played a significant role. Pitting companies against each other in courtroom battles with no net productive output.

monochromatic5• 14 years ago

By that standard, every court case has "no net productive output." Should we disband the legal system?

theklub• 14 years ago

Yes, it needs a reboot at least.

praxeologist3• 14 years ago

Your statement is a strawman. They just mean patent cases, not every case conceivable between two corporations. I would agree with them because intellectual "property" qua property is bogus. The essential nature of what is claimed as property by IP law: patterns, ideas, techniques is that they are not scarce goods versus things like your body or your car.

How should we define "legal productivity"? I think that it should be measured by making victims whole and CMU was not deprived of anything by Marvell using the same pattern. The focus on arbitrary jail time and fines paid to government versus restoring victims is one thing which needs to be rebooted.

Another is the tragedy of the commons situation with free and open access to courts. This creates a long queue for trials and simply drawing out a case which has no merit is used as a weapon itself. If justice was a service being paid for and we implement a loser-pays doctrine, as has always been the case in common law, we wouldn't see a lot of these patent cases, besides the fact that IP cannot exist without a state to grant the monopoly.

kvb2• 14 years ago

This seems like a silly way to analyze things. If, as you seem to assume, the US is currently at the forefront of innovation, then why shouldn't we attribute the status quo to the US's strong IP regime by the same logic?

pi18n3• 14 years ago

If you read the claims they are apparently infringing upon, it's all math with a thin veneer of "on a magnetic storage medium". It's literally mathematical signal processing. I would bet a few dozen bucks that it is obvious to anyone studying signal processing, since it seems like an advancement on a Kalman filter.

monochromatic5• 14 years ago

Yeah, we're probably doing a better analysis glancing at the claims than the team of patent attorneys defending against a billon dollar lawsuit did.

wmf• 14 years ago

Yeah, it's so obvious that it was published in IEEE Transactions on Information Theory and the author got a PhD from CMU for it.

Brashman2• 14 years ago

I agree. Since this is coming out of research out of a university, I would be more inclined to guess that (at the time at least) this was actually innovative and new work. The fastest way for a paper to be rejected is for it to have been done already, or even for it to be "obvious to anyone" with basic knowledge in the field.

Also, I don't see why the fact that it's advancing existing techniques or that it's just math somehow makes it less important. There are whole fields that are just math, such as computer science originally.

pi18n3• 14 years ago

So I lose the bet, but it's still mathematics that shouldn't be patentable in the first place.

uvdiv2• 14 years ago

Not a Kalman filter, but rather a Viterbi decoder -- a type of error-correcting code.

https://en.wikipedia.org/wiki/Viterbi_decoder

From lurking on HN, I read that the whole field of ECC's is infested with patents. There's even an example on here of a specific startup (allegedly) destroyed by an ECC patent:

http://news.ycombinator.com/item?id=3432322

rutigers• 14 years ago

Taiwan University sues Apple over SIRI[1]. Columbia University sues Illumina[2]. University of California sues Facebook[3]. And now, CMU sues Marvell.

---

[1]http://www.reuters.com/article/2012/07/30/us-apple-patent-ta...

[2]http://www.reuters.com/article/2012/03/26/us-illumina-columb...

[3]http://www.reuters.com/article/2012/09/13/us-patents-faceboo...

linuxhansl3• 14 years ago

Universities should teach, research, and publish. What the heck are they doing in patent litigation?!

Also, is CMU partially tax funded? If so, do they really own these patents to begin with? Should they?

tingletech2• 14 years ago

In the process of research, professors and graduate students (and sometimes non-academic appointment staff) make discoveries and inventions that can be patented. The University owns part of every patent, because the University often provides the infrastructure yadda yadda, but usually the academics are the ones who start companies to exploit the patent. Technology transfer officers who manage the University patent portfolios will negotiate licenses if you call them up, but these offices are often dealing with grant compliance issues as well and are dealing with so much data it seems like they can hardly keep track of all the research going on in the academy, let alone look for patent violators. I don't think a University ever owns 100% of a patent, so I have to believe it is the inventor's company that is really going after people; and the university is just a co-plantif because they own part of the patent are are legally compelled to take part in the patent defense / plus they want to get their slice of the pie.

Brashman2• 14 years ago

If the professors and graduate students involved in this didn't start a company to exploit the company, then I'm guessing the university still owns 100% of the patent (I don't know if that's the case in this situation or not). I think this is similar to in industry when employees may have their name on patents but the company they're working for will own the patent.

This case gets me thinking a bit because they are probably involved in this in part so that they can get money to do more research. It's not like they're doing this as a power play to grab more market share.

linuxhansl3• 14 years ago

My point was more along the line that a university should exist for the public good of education. As such it should teach, research, and publish (and by publishing produce prior art that prevent future patenting of the invention).

Acquiring patents (or being complicit in doing so) and then litigating (even as a proxy) does not appear to be in the public interest.

University wins $1.17 billion hard disk patent verdict against Marvell

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