The Federal Circuit vacated a $1.54 billion damages award for patent infringement, directing the district court to determine whether the allegedly infringing computer chips were ever actually sold in the United States.
Before it was vacated, the damages award was the largest ever in a patent infringement case.
The court reduced the damages award by $1.25 billion and ordered a partial retrial.
Carnegie Mellon University (“CMU”) sued Marvell Technology Group, Ltd. and Marvell Semiconductor, Inc. for infringing two patents related to hard-disk drives.
A jury found for CMU and awarded about $1.17 billion as a reasonable royalty, based on a rate of 50 cents for each of the infringing semiconductor chips sold by Marvell for use in the drives. The court enhanced the award due to Marvell’s “willfulness.”
Under 35 USC § 271(a),
whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.
Marvell argued that “foreign” chips were improperly included in the royalty base.
The Federal Circuit affirmed the judgement of infringement and validity of the patents at issue. However, it concluded that a new trial was required with reference to “the Marvell chips made and delivered abroad but never imported into the United States.”
The court noted that § 271(a)
states a clear definition of what conduct Congress intended to reach—making or using or selling in the United States or importing into the United States, even if one or more of those activities also occur abroad. Where a physical product is being employed to measure damages for the infringing use of patented methods, we conclude, territoriality is satisfied when and only when any one of those domestic actions for that unit (e.g., sale) is proved to be present, even if others of the listed activities for that unit (e.g., making, using) take place abroad.
Determining where a product is “sold” can be a complex question. As the court noted in this case,
The standards for determining where a sale may be said to occur do not pinpoint a single, universally applicable fact that determines the answer, and it is not even settled whether a sale can have more than one location. [cite] Places of seeming relevance include a place of inking the legal commitment to buy and sell and a place of delivery…
As shown by this case, determining the place of sale of infringing goods can have a huge impact on patent damages.
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Photo Attribution: “Carnegie Science Center” by Allie_Caulfield. Licensed under CC BY 2.0 via Wikimedia Commons.