|By Maureen O'Gara||
|January 4, 2013 08:15 AM EST||
The day after Christmas a federal jury in Pittsburgh stuffed a scuttle full of coal into Marvell Technology's stocking when it found the semiconductor company owed Carnegie Mellon University roughly $1.17 billion for infringing a couple of the school's patents.
The award is right up there in the stratosphere with the $1.14 billion Apple won this summer off of Samsung for infringing the iPhone.
Samsung can easily pay the judgment if it's upheld - even if it's increased for willfulness as Apple hopes.
Marvell, on the other hand, which got nabbed for infringing patents related to the disk drives used in PCs and servers, has all of $2 billion in the bank so it could be looking at bankruptcy if the judge trebles the judgment.
Even if the judge cuts the award Marvell will still have to come up with the interest accrued during any post-trial motions and a presumably long appeal to the Court of Appeals for the Federal Circuit in Washington, DC, that Marvell says it will seek if otherwise rebuffed.
It allegedly sold billions of chips incorporating the school's patented noise predictive detection technology without the license CMU offered it in 2003.
The widgetry, which goes to the core of all of Marvell's HDD controller business, increases the accuracy of retrieving data off of drives.
Marvell claims the patents were obtained by withholding prior art from the Patent and Trademark Office. It also claims the CMU widgetry can't be reproduced in silicon and so used its own IP.
Still, the jury found the patents valid and assessed Marvell a 50-cent-a-chip royalty just on the parts it sold since 2009 (ah, patent law).
According to Seeking Alpha's calculations, going forward "the per-chip royalty [here and abroad] will result in roughly a 20% hit to operating margins on [Marvell's] HDD controller business (taking operating margins from 50% to 40%), and at least a 50% reduction to the HD controller business net earnings. Since the HD controller business makes up approximately 50% of Marvell's sales, the ongoing impact to earnings will be astounding, and could result in a 25% reduction in net earnings for Marvell as a whole going forward."
Apparently Marvell was also less than transparent about disclosing its exposure to its investors.
The judge denied a mistrial motion by Marvell without prejudice so the issue of CMU's allegedly inflammatory statements to the court could be revisited.
Competitive underdog LSI could get a cost advantage.
Marvell supplies the quad-core Armada XP ARM SoC that Dell is using in its avant-garde Copper servers in a hyperscale enterprise cloud retort to HP et al.
Nov. 25, 2014 09:30 PM EST Reads: 908
Nov. 25, 2014 09:30 PM EST Reads: 950
Nov. 25, 2014 08:00 PM EST Reads: 1,309
Nov. 25, 2014 07:00 PM EST Reads: 1,100
Nov. 25, 2014 04:30 PM EST Reads: 1,170
Nov. 24, 2014 07:00 PM EST Reads: 1,563
Nov. 24, 2014 12:00 PM EST Reads: 1,440
Nov. 24, 2014 11:00 AM EST Reads: 1,576
Nov. 24, 2014 09:00 AM EST Reads: 1,591
Nov. 23, 2014 07:30 PM EST Reads: 1,782
Nov. 23, 2014 12:00 PM EST Reads: 1,720
Nov. 23, 2014 07:45 AM EST Reads: 1,729
Nov. 22, 2014 05:30 PM EST Reads: 1,470
Nov. 22, 2014 05:30 PM EST Reads: 1,536
Nov. 21, 2014 08:00 PM EST Reads: 1,540
Nov. 21, 2014 08:00 PM EST Reads: 1,468
Nov. 21, 2014 07:00 PM EST Reads: 1,396
Nov. 20, 2014 09:15 PM EST Reads: 1,448
Nov. 20, 2014 06:00 PM EST Reads: 1,386
Nov. 20, 2014 01:00 PM EST Reads: 1,666