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Carnegie Mellon University v. Marvell Technology Group

November 5, 2012


The opinion of the court was delivered by: Judge Nora Barry Fischer


This patent infringement action is set to commence jury selection and trial on November 26, 2012. The parties have filed a number of motions in limine seeking pretrial rulings on the admissibility of certain evidence at trial. Presently pending before the Court is Defendants Marvell's "Motion in Limine No. D9 to Exclude Reference to the Entire Price, Profit, and/or Margin Associated with Any One or More Accused Chips'" (Docket No. 514). Marvell argues that the reference to the overall price, profit or margin of the accused chips is irrelevant and highly prejudicial in light of the recent decision, LaserDynamics, Inc. v Quanta Computer, Inc., 694 F.3d 51, (Fed. Cir. 2012), (Docket No. 515). Plaintiff Carnegie Mellon University ("CMU") opposes this motion, arguing that LaserDynamics does not affect its expert, Catherine Lawton's royalty calculation because she never based her calculation on the entire market value, with which the LaserDynamics Court found issue. (Docket No. 567). The Court heard argument on the motion during a hearing on October 17 and 18, 2012. (Docket Nos. 579, 590, 591). For the following reasons, Marvell's motion [514] is DENIED.


a.Factual Summary

This is a patent infringement action in which CMU alleges that Marvell has infringed two of its patents, U.S. Patent Nos. 6,201,839 (the "'839 Patent") and 6,438,180 (the "'180 Patent") (collectively, the "CMU Patents"). The patents-in-suit are generally directed to sequence detection in high density magnetic recording devices, and more specifically, to high density magnetic recording sequence detectors. See '839 Patent 1:20-23. Both patents claim priority to a May 9, 1997 provisional application. See '839 Patent; '180 Patent. The '180 Patent is a continuation-in-part of the '839 Patent. See '180 Patent.

Although much of the scope of Marvell's alleged use are still disputed, CMU generally contends that Marvell used the accused technology throughout its so-called "sales cycle."*fn2 The sales cycle involves testing of both computer programs and manufactured chips. If a sales cycle is successful, it culminates with a "design win," whereby Marvell makes mass sales of chips that allegedly perform the patented methods. CMU accuses Marvell of infringement during this design and testing stage.

CMU thus seeks a reasonable royalty for Marvell's alleged infringement throughout this process. To that end, CMU proffers in part Catharine Lawton as its damages expert, who has produced an extensive report. (See Docket No. 367-2).*fn3 The underlying theme of Ms. Lawton's report is that Marvell considered CMU's technology "must have." (See id. at 14). After finding no established royalty, Ms. Lawton engaged in an extremely detailed Georgia-Pacific analysis in order to reach her opinion on a reasonable royalty for the case. (See Docket No. 449 at 4-6). (Docket No. 367-2 at 368-540). All told, she concludes that a running royalty of $0.50 per unit should be applied to Marvell's sales of the Accused Chips at issue. (Id.).

b.Motion for Summary Judgment on Ms. Lawton's testimony

Marvell previously moved for Summary Judgment to exclude the proffered expert testimony of Ms. Lawton (Docket No. 367). After consideration of opposition briefs (Docket No. 395), and oral arguments presented at the hearing on July 10 and 11, 2012 (Docket No. 433), the Court granted, in part, and denied, in part, Marvell's motion. (Docket No. 451). That challenge was based on four theories: (1) Ms. Lawton's purported use of the entire market value rule; (2) her apportionment analysis; (3) reliance on an irrelevant PowerPoint slide; (4) a "kitchen sink" of alleged indicia of unreliability. (Id.) The first theory is reexamined herein.

The Court found that Ms. Lawton had not applied the entire market value rule simply by referencing Marvell's total operating profit on a per-unit basis. (Id. at 7). Instead, she had used the average operating profit as a starting point for her apportionment analysis which was justified as long as the testimony did not purport to show how "reasonable a royalty was". (Id.); (See Docket No. 367-2 at 505); (See Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1319 (Fed. Cir. 2011)). In fact, Ms. Lawton's deposition testimony demonstrates that some reference to revenues, margins and values is necessary to formulate and support a reasonable royalty. (See Docket No. 396-6 Ex. 14 at 83-86). The Court thus ordered the parties to meet and confer to submit a proposed limiting instruction in accord with this Court's opinion and with Uniloc. (Docket No. 451 at 8).


Under Rule 702 of the Federal Rules of Evidence, a court may permit an expert to offer opinion testimony only if such testimony "will assist the trier of fact" and "(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case." FED.R.EVID. 702. "The district court acts as a gatekeeper tasked with the inquiry into whether expert testimony is 'not only relevant, but reliable.'" IP Innovation L.L.C. v. Red Hat, Inc., 705 F.Supp.2d 687, 689 (E.D. Tex. 2010) (Rader, J.) (quoting Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 578, 589 (1993)). Testimony that does not meet the standard set forth in Rule 702 must be excluded.

In a patent infringement action, a successful plaintiff is entitled to "damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court." 35 U.S.C. § 284 (2006). Two forms of compensation are authorized by § 284: lost profits and reasonable royalty damages. Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009). Because CMU does not manufacture or sell products that practice the claimed methods, it is not entitled to lost profits.

"A reasonable royalty contemplates a hypothetical negotiation between the patentee and the infringer at a time before the infringement began." Red Hat, 705 F.Supp.2d at 689 (citing Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075, 1078 (Fed. Cir. 1983)). The hypothetical negotiation presumes that both the patentee and the accused infringer are willing parties to the negotiation, and also assumes that the patent was valid, enforceable, and infringed. Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116, 1120 ...

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