
Jury Finds Marvell Must Pay $1.17 Billion in Patent Case - pebb
http://allthingsd.com/20121226/jury-finds-marvell-must-pay-1-17-billion-in-patent-case/
======
michael_miller
I find it interesting that here, when a university is doing the patent-suing,
HN errs on the defensive side:

"Accusing Carnegie Mellon of patent trolling is probably not the most
effective way to advocate for patent reform."

"Universities have been among the biggest producers of patents for 50+ years
now."

"The internet needs more details so we can make an uninformed opinion and
collectively decide to be impotently pissed off at the university or not."

However, when a large commercial entity is suing (e.x. Apple v. Samsung [1]),
HN bashes the patent system:

"these cases set a chilling precedent for the platform that looks likely to
dominate the computing industry for at least the next decade."

"It will hurt innovation because every damn thing is going to have to go
through a committee of lawyers before being approved, and it will hurt
innovation because the idea that innovation always involves making something
brand-new and from whole cloth is fucking retarded."

"Apple's successful use of the broken patent system sends exactly the wrong
signal."

Are these entities (Apple and CMU) really all that different? Both spend a lot
on R&D, and both want to protect their property. In a sense, there are better
reasons to support Apple filing patent lawsuits (forgetting about the
specifics of either suit) than CMU. CMU receives a large fraction of funding
from taxpayer-funded sources, and produces no real products, just IP. By
contrast, Apple receives very little taxpayer money, and uses the patent
system to defend its real products.

[1] <http://news.ycombinator.com/item?id=4430101>

~~~
chc
It's almost as though these are different commentators (only about 20 of HN's
thousands of users have commented on this story so far), different entities
(yes, Apple Inc. is very different from Carnegie-Mellon University) and
completely different patents (one covers a user-facing software feature and
the other appears to deal with circuit design).

------
xbryanx
An article with more details -
[http://www.insidebayarea.com/business/ci_22263081/marvell-
sl...](http://www.insidebayarea.com/business/ci_22263081/marvell-
slammed-1-2-billion-patent-infringement-judgment)

------
dromidas
The internet needs more details so we can make an uninformed opinion and
collectively decide to be impotently pissed off at the university or not.

~~~
cremnob
Another patent troll hurting innovation.

~~~
rayiner
If we're just ignoring the details of the article, we can just as easily
characterize it as ripping off someone else's work and making lots of money on
the resulting products.

~~~
cremnob
I was being sarcastic.

------
shadowmint
News stories are blindly passing information free snippets around based on the
article from Reuters.

There's a bunch of specific information about the case here, for the curious:
[http://dockets.justia.com/docket/pennsylvania/pawdce/2:2009c...](http://dockets.justia.com/docket/pennsylvania/pawdce/2:2009cv00290/90950/)

-_- the uspo has terrible links, but here are the links to the patents themselves too, they're pretty specific.

[http://patft.uspto.gov/netacgi/nph-
Parser?Sect2=PTO1&Sec...](http://patft.uspto.gov/netacgi/nph-
Parser?Sect2=PTO1&Sect2=HITOFF&p=1&u=/netahtml/PTO/search-
bool.html&r=1&f=G&l=50&d=PALL&RefSrch=yes&Query=PN/6201839)

[http://patft.uspto.gov/netacgi/nph-
Parser?Sect1=PTO1&Sec...](http://patft.uspto.gov/netacgi/nph-
Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL&p=1&u=%2Fnetahtml%2FPTO%2Fsrchnum.htm&r=1&f=G&l=50&s1=6,438,180.PN.&OS=PN/6,438,180&RS=PN/6,438,180)

------
sridharvembu
I don't know anything about the merits of this case, but there is something
disquieting about a taxpayer financed non-profit entity, supposedly pursuing
truth in a disinterested way, doing this. If CMU wants the freedom to pursue
its self-interest, it should not be accorded any special taxpayer funding and
be stripped of its non-profit status. You cannot have it both ways.

Next time a venture capitalist tries to talk me into taking venture capital
because "our funds come from University endowments" - it is sacred money
because you know it is sprinkled with the holy water of "education" - I know
what I would say.

CMU should be at liberty to pursue its self-interest. Let's just not allow it
to claim a sacred disinterested pursuit of knowledge.

Let me disclose my bias here. I have come to believe that the University
system as it exists today is not true to its original mission. This case
serves to reinforce my bias.

~~~
rayiner
You're missing the fact that the university is not profiting here. This money
doesn't go into shareholder pockets, it goes back into the university to
support further research activities, reducing the need for government subsidy.
This isn't a debate about whether universities should pursue their self-
interest, but rather about how R&D costs for fundamental research are
allocated among the government and industry.

The fact that universities are publicly subsidized does not mean that Marvell
should get to use the technology they develop for free. My tax dollars pay for
the NYC subway system, but I still have to pay a fare to take a ride.

Indeed, there is a very strong argument in favor of "charging fare" to
companies that use publicly-funded technology. The university system is a huge
subsidy to companies, particularly technology companies,* that benefit from
the free R&D and free training of high-skill engineering workers. Requiring
those companies to pay for access to that technology reduces the amount of
government subsidy necessary to support the same level of R&D activity.

*) Next time a Microsoft or Google publicly complains about the "shortage of engineers" and how the U.S. needs to educate more people in STEM, realize that they are literally asking for an increase in the subsidization of their labor costs.

~~~
_dps
> This money doesn't go into shareholder pockets, it goes back into the
> university to support further research activities, reducing the need for
> government subsidy.

This is a reasonable intuitive expectation, but it's simply not the case in
reality (former academic from an academic family here).

The vast majority of research, including graduate student stipends and
professors' summer salaries, comes from sources outside the university's
budget (this is complicated for the first few years of a professor's career
during which they usually get "start up" funds from the departmental budget
before they get their first external grant, but it is true over the long
haul).

A professor can almost never go to the university and say "I'm doing great
research. You just made $X million from patents, so give me money to continue
my work." In fact, nearly the reverse is true; when the professor finds
outside funding, the university takes a cut. So, if Professor X gets $100k
from the NSF to study mole rats, the university will claim as much as $50k of
that grant and put it into the university's general fund.

Now you might say, "Hey _dps that's fine first-order thinking, but if a
university gets enough patent royalties they can reduce their demanded
overhead percentage." In practice, overhead percentage at the best
universities are set not by budgetary need but instead are set indirectly by
the funding agencies themselves (e.g. the NSF has limits on overhead charges
that institutions take very seriously in setting their internal schedules).
The reason for this is that the academic employment market is _extremely_
illiquid because transferring your entire research program from one school to
another is a huge hassle; thus professors have comparatively little
negotiating power in setting the university's overhead policies.

Having said all that, it's not clear that there's an obviously better system.
I recognize the need to cross-subsidize university activities that aren't easy
to fund externally. But it's important to remember that universities, in
practice, make profits just like corporations. It's just that the profits go
back into the endowment, capital expenditures like new buildings (though
rarely capital expenditures like new research equipment), or at some
institutions, administrator bloat. These profits are almost never directly
pushed into new research, or used to reduce grant overhead rates.

------
breckognize
CMU CS alum and Pittsburgh resident here. While $1.17 billion would more than
double the university's endowment, it's hard to be excited about this. I don't
understand how this settlement is remotely proportional to the damage Marvell
could have done to CMU.

This case was also decided by a Pittsburgh jury, which doesn't seem right.

~~~
rayiner
The patents in question covered technologies used in billions of chips over a
number of years. I think it is quite conceivable that the rights to those
technologies could have been worth $1.2 billion if Marvell had licensed them.

------
saraid216
"[Marvell] argued in the case that it didn't infringe the patents, which
Marvell alleged were obtained improperly by withholding information about
prior inventions from the U.S. Patent and Trademark Office."
[http://webcache.googleusercontent.com/search?q=cache%3Aonlin...](http://webcache.googleusercontent.com/search?q=cache%3Aonline.wsj.com%2Farticle%2FSB10001424127887323984704578203751185147598.html)

The way I read this, Marvell is claiming that CMU filed for the patent without
having done a proper search for prior art? Can anyone dig up the relevant
court docs? My legal-fu is not that strong.

~~~
chc
Marvell was essentially trying to recite the incantation to get a patent
invalidated. In order to get a patent thrown out, you need to show that it is
not substantially different from prior art, so Marvell unsurprisingly argued
that there was prior art which was substantially the same as the patented
invention. Assuming they agreed that their products used the technology in the
patent, AFAIK this is pretty much the only defense they could have made.

~~~
DannyBee
No. This is incorrect, assuming the newspaper quoted that part right.

When you file for a patent, you are required to file all sorts of info, and
applicants have a duty to disclose prior art or background information that
may be relevant to the patentability of the applicant's invention that they
know about. Search for "invention disclosure statements" if you want to know
more So, withholding information would be something like "knowingly failing to
alert the PTO that you had a previous publication or patent app on the same
technology that was abandoned and is now prior art", etc.

Again, i'm assuming the newspaper used the right terminology, which is of
course, dangerous. Sadly, the federal circuit has set a pretty ridiculously
high standard for what constitutes misconduct that would cause you to lose a
patent.

You are, IMHO, much more likely to get disbarred by the PTO than you are to
lose a patent.

~~~
chc
Hrm, you might be right. My usual reporterese-to-actual-reality heuristic gave
me "They said there was some prior art that wasn't noted at the time of the
filing," and that is a commonplace situation — but your interpretation makes
sense as well. My bad for autopiloting it.

------
mrb
Note to the value investors out there: Marvell is an undervalued company (even
after taking into account this $1.2 billion penalty.) Their stock price
declined by 10% today, making it even more attractive.

~~~
asdf333
uncertain. it is widely recognized that they are getting killed in all their
main business segments and revenues are declining precipitously. the major
silver lining was that their cash position would their cash and income streams
to aggressively buy back stock to keep the share price higher even as they
downsized their business.

guess what, their cash hoard is more than halved today alone. that brings
shareholder equity to 3.4 (taking a straightforward look at the balance sheet)
and cuts cash on hand by over 50%. And it could get worse if the judge
increases the fine. that means less for buybacks.

working our way down their balance sheet, we see that 2 bil of the equity is
in goodwill. this is usually overpayment for acquisitions and other pretty
illiquid assets that don't fetch much value (high level generalization) so
lets take that out just to be safe.

you have a company with shareholder equity of 1.4 billion in a shrinking
market with earnings of...lets assume 200-300 million figuring that they
somewhat arrest their astonishing decline.

this is trading at 3.6 billion right now. its not the worst bet but it is more
than somewhat dicey. the semiconductor industry is winner take all and
extremely competitive. this means value investing isn't the best strategy.
value investing requires that you can reliably predict future income streams.

i've been looking at MRVL as well. i'm just saying its not straightforward

~~~
mrb
Interesting. I would like to know your source for the fact they are "getting
killed".

MRVL gets a significant fraction of its revenues from the HDD industry (disk
controllers, HBA controllers, etc), and AFAIK they are maintaining their
position of a leader, especially in the consumer SATA market.

------
dhughes
Iron Man is real?!

------
pebb
More and more, I think patent trolling is a great business for startups. No
need for expensive sales, marketing teams at all. You only need devs and
patent attorney.

~~~
koenigdavidmj
Even universities can get on board now!

~~~
loceng
This is where a lot of R&D happens.

~~~
koenigdavidmj
Then it's not patent trolling as they're actually designing things, not just
sitting on their patents and waiting to pounce.

~~~
HarryHirsch
Development costs in EE are typically smaller than those in medicine. In
software engineering development costs are minimal.

~~~
rayiner
It depends entirely on the kind of software in question. The R&D cost for
advanced vision processing technologies, advanecd radio technologies, robotics
technologies, etc, are not at all minimal.

