Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd.

807 F.3d 1283

CARNEGIE MELLON UNIVERSITY, Plaintiff–Appellee

v.MARVELL TECHNOLOGY GROUP, LTD., Marvell Semiconductor, Inc., Defendants–Appellants.

No. 2014–1492.

United States Court of Appeals, Federal Circuit.

Aug. 4, 2015.

E. Joshua Rosenkranz, Orrick, Herrington & Sutcliffe LLP, New York, N.Y., argued for plaintiff-appellee. Also represented by Eric Shumsky, Washington, DC; Bas de Blank, Menlo Park, CA; Patrick Joseph McElhinny, Mark G. Knedeisen, Christopher Michael Verdini, K & L Gates LLP, Pittsburgh, PA; Theodore J. Angelis, Douglas B. Greenswag, David T. McDonald, Seattle, WA.

Kathleen M. Sullivan, Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, argued for defendants-appellants. Also represented by Edward J. DeFranco, Joseph Milowic, III, Cleland B. Welton, II ; Susan Rachel Estrich, Michael Thomas Zeller, Los Angeles, CA; Kevin P.B. Johnson, Redwood Shores, CA; Derek Shaffer, Washington, DC; Roy Wang, Marvell Semiconductor, Inc., Santa Clara, CA.

Ann A. Byun, Hewlett–Packard Company, Wayne, PA, for amicus curiae Hewlett–Packard Company.

Anthony Peterman, Dell Inc., Round Rock, TX, for amicus curiae Dell Inc.

Marta Y. Beckwith, Aruba Networks, Inc., Sunnyvale, CA, for amicus curiae Aruba Networks, Inc.

Dan L. Bagatell, Perkins Coie LLP, Phoenix, AZ, for amici curiae Broadcom Corporation, Google Inc., Limelight Networks, Inc., Microsoft Corporation, SAS Institute Inc., Xilinx, Inc. Also represented by Kenneth J. Halpern, Palo Alto, CA.

Donald Manwell Falk, Mayer Brown, LLP, Palo Alto, CA, for amici curiae Jeremy Bock, Michael A. Carrier, Bernard Chao, Jorge L. Contreras, Robert A. Heverly, Timothy R. Holbrook, Amy Landers, Mark A. Lemley, Yvette Joy Liebesman, Brian J. Love, Tyler T. Ochoa, Pamela Samuelson, Christopher B. Seaman, Lea Shaver, Toshiko Takenaka. Also represented by Brian J. Love, Santa, Clara, CA.

Daniel B. Ravicher, Ravicher Law Firm, Coral Gables, FL, for amicus curiae Daniel B. Ravicher.

J. Anthony Downs, Goodwin Procter LLP, Boston, MA, for amici curiae Boston University, Rice University, Texas A & M University, the University of Kansas, The University of Pittsburgh, the University of Minnesota. Also represented by William M. Jay, Washington, DC; David Zimmer, San Francisco, CA.

Before WALLACH, TARANTO, and CHEN, Circuit Judges.

TARANTO, Circuit Judge.

Carnegie Mellon University ("CMU") sued Marvell Technology Group, Ltd. and Marvell Semiconductor, Inc. (collectively "Marvell") for infringing two patents related to hard-disk drives. A jury found for CMU on infringement and validity, and it awarded roughly $1.17 billion as a reasonable royalty for the infringing acts, using a rate of 50 cents for each of certain semiconductor chips sold by Marvell for use in hard-disk drives. The district court then used that rate to extend the award to the date of judgment, awarded a 23–percent enhancement of the past-damages award based on Marvell's willfulness (found by the jury and the district court), and entered a judgment of roughly $1.54 billion for past infringement and a continuing royalty at 50 cents per Marvell-sold chip.

Marvell appeals. We affirm the judgment of infringement and validity. As to the monetary relief: We affirm the rejection of Marvell's laches defense to pre-suit damages. We reverse the grant of enhanced damages under the governing willfulness standard, which does not require that Marvell have had a reasonable defense in mind when it committed its past infringement. We reject Marvell's challenge to the royalty (past and continuing) with one exception.

That exception involves an issue of extraterritoriality—whether the royalty, in covering all Marvell sales of certain chips made and delivered abroad, improperly reaches beyond United States borders. We conclude that the royalty properly embraces those Marvell-sold chips that, though made and delivered abroad, were imported into the United States, and we affirm the judgment to the extent of $278,406,045.50 in past royalties (50 cents for each of the 556,812,091 chips the jury could properly find were imported), plus an amount to be calculated on remand that brings that figure forward to the time of judgment, and the ongoing royalty order to the extent it reaches imported Marvell-sold chips. But as to the Marvell chips made and delivered abroad but never imported into the United States, we conclude that a partial new trial is needed to determine the location, or perhaps locations, of the "sale" of those chips. To the extent, and only to the extent, that the United States is such a location of sale, chips not made in or imported into the United States may be included in the past-royalty award and ongoing-royalty order.

BACKGROUND

CMU owns U.S. Patent No. 6,201,839, titled "Method and Apparatus for Correlation–Sensitive Adaptive Sequence Detection," and related No. 6,438,180, titled "Soft and Hard Sequence Detection in ISI Memory Channels," both granted to Drs. Aleksandar Kavcic and José Moura. The patents' written descriptions are largely identical, and both patents claim methods, devices, and systems for improved accuracy in the detection of recorded data when certain types of errors are likely due to the recording medium and reading mechanism. The inventions are particularly suited for the magnetic data-storage media of hard-disk drives in computers.

The record in the case teaches that a storage disk in a typical hard-disk drive is coated with microscopic granular magnetic material segmented into vast numbers of magnetic "bit regions" arrayed in concentric tracks. Each region may be polarized so that its north pole may point in either of two directions, and that choice of polarity allows for recording of digital data. In particular, data may be encoded in transitions, i.e., in how one magnetic region's orientation compares with (is the same as or differs from) the orientation of the next magnetic region in line as one moves in a particular direction. In a hard-disk drive, a read-write head hovering above the disk, moving along a track, can detect the orientations of neighboring magnetic regions, thereby reading data, or alter the regions' orientations, thereby writing data.

Although hard-disk drives constituted a mature and well-known technology by the time of the '839 and '180 patents, the demand to store ever more data on each disk gave rise to ever new challenges. One way to store more data is to make the magnetic regions on the disk smaller and smaller, thereby increasing the number of changes in magnetic polarity within each track. But shrinking the magnetic regions makes it difficult in practice for a read head—which detects magnetic forces and translates them into electrical signals, the so-called "measured signals"—to accurately identify the actual polarities and transitions on the disk. It becomes harder to distinguish region-to-region boundaries at which polarity changes from those at which it does not.

Two such difficulties are central to this case. First, a change in magnetic polarity at one region-to-region boundary can affect the measured signal the read head obtains from more than one magnetic region. How much that spill-over effect occurs—how much "noise" there is in the measured signal obtained by the read head—can depend on what polarity changes there actually are, i.e., on the actual "signal" encoded on the disk. The patents term this "signal-dependent noise." Second, nearby (adjacent or almost adjacent) regions and boundaries tend to have related amounts of measurement error. The patents term this "correlated noise." Those two noise effects are sometimes together called "media noise." For technical reasons the parties have not treated as critical to the issues on appeal—including properties of the materials composing the magnetic regions and properties of the read heads—the noise problems become more significant when the size of the magnetic regions shrinks below certain levels. See J.A. 2210 (signal distortion occurs when magnetic region size nears media grain size).

Although increasing miniaturization of disks' magnetic regions permits the storage of more data in the same amount of space, the benefit can be lost if the data cannot be read accurately because of noise problems. Working together at CMU's Data Storage Systems Center, Dr. Kavcic, as a graduate student, and Dr. Moura, as a professor renowned for expertise in signal processing, conceived of ways of reducing the errors due to media noise and reliably detecting the data recorded on a hard disk. Their solution, embodied in the claims of the two patents at issue, uses a form of maximum-likelihood detection to estimate, given a measured signal (e.g., a sequence of voltage levels produced by a read head's response to detected magnetic forces), the most likely sequence of data symbols actually recorded (by polarization of magnetic regions) on the disk. In theory, for a measured signal consisting of N "samples" taken from N recorded symbols, the most likely recorded-symbol sequence could be determined by comparing every possible N-length sequence of symbols with the measured N-sample signal to determine which sequence best matches the measured signal, by some measure of similarity. But the number of possible sequences to compare grows exponentially with N. More efficient methods are desirable.

One such method (on which the patents at issue here build) takes its name from Andrew Viterbi, a founder of Qualcomm Inc. The Viterbi method proceeds, in effect, two symbols at a time. It starts with the set of possible first symbols for the sequence and possible second symbols and determines which pair makes the measured signal sample most likely. For example, if symbols correspond to single bits and the first symbol is 0, the Viterbi method compares whether a measured sample (say of 0.2 Volts) is more likely if the next recorded bit is a 0 or a 1 (i.e., if the sequence begins 00 or 01).¹ It then iterates the process with the next symbol. It ultimately produces a sequence...