We must punish those who willfully infringe patents -- unless the infringer's losing patent invalidity defense is a "close call"

Marvell dodged a bullet in the case of Carnegie Mellon University v. Marvell Technology Group, Ltd. (Fed. Cir. Aug. 4, 2015). The jury and district court had found that Marvell willfully infringed certain Carnegie Mellon (CM) patents, and the judge slapped Marvell with enhanced damages (under 35 U.S.C. § 284) equal to 23 percent of the reasonable royalty award, or $287 million. On appeal, the Federal Circuit reversed the award, finding as a matter of law that Marvell had an "objectively reasonable" invalidity defense to infringement.

The evidence of Marvell's intentional duplication of the methods and systems claimed in the Carnegie Mellon patents was striking. Marvell's engineers used the name of one of the CM inventors as the basis for internal code names for the product development project in which Marvell replicated the patented CM methods. What saved Marvell was its invalidity defense.

The Federal Circuit characterized that defense as "objectively reasonable", even though ultimately that defense failed. "Although we conclude that a jury could properly reject Marvell's invalidity defenses based on Worstell, there was enough uncertainty about what Worstell discloses and what CMU's claims require that we cannot say that the defenses were objectively unreasonable." The appellate court even noted that the district court judge at the summary judgment stage described the invalidity defense as a "close call".

I'm not sure how this case and the SSL Services, LLC v. Citrix Systems, Inc. case (a Federal Circuit decision from last year) can be reconciled. As I discussed in an earlier blog post about this case, Citrix's invalidity defense was deemed "meritless" even though the US PTO initiated re-examination based on that defense, and it survived summary judgment at the district court. Perhaps the best way to harmonize the two decisions is that the invalidity defense that Marvell raised was a "closer call" than the defense that Citrix raised, and therefore Citrix gets hit with enhanced damages but Marvell does not. 

Another interesting aspect of the Marvell case is that the district court had rejected the applicability of Marvell's invalidity defense on the willfulness question because there was no evidence that Marvell even knew of the existence of the specific patents at issue at the time of infringement (although knowing in general that the methods described in the CM inventors' papers were patented).

The Federal Circuit disagreed, and disabused the district court of the notion that "state of mind of the accused infringer" is relevant. Because state of mind is not assessed at any time, "we have repeatedly assessed objective reasonableness of a defense without requiring that the infringer had the defense in mind before the litigation." In fact, the Federal Circuit explained that the invalidity defense need not even be one that was presented to the jury.

The jurisprudence in this area seems to encourage willfully infringing behavior. If you have confidence in your patent litigation team to bail you out with a colorable invalidity defense, full steam ahead, feel free to infringe. A crack patent trial team can always produce a colorable invalidity argument given enough time and resources.

I'm a bit fuzzy on how this furthers the policy rationale for punishing willful infringement. If the goal is deterrence, why are intentional infringers allowed to escape the consequences of that action by post-hoc invalidity defenses that arise for the first time at the patent trial? The district court's approach seems more aligned with the purported policy objectives underlying section 284.

The reason is obvious. The reason the Federal Circuit rejects the district court's approach is because then willful infringement would be all too easy to establish. In this case, the relevant Marvell staff had no knowledge of the specific patent claims at issue, so it would be logically impossible to have had an objectively reasonable basis for asserting that the claims are invalid. If the infringer's conduct is truly assessed at the time of infringement, willful infringement is much more likely to be established.

That the Federal Circuit must resort to such a kludgy artifice in an effort to prevent enhanced damages from becoming automatic is enlightening, and is further support for questioning the existence of the entire enterprise.

Determining whether an intentional infringer is going to pay the willful infringement penalty essentially turns on the strength of that infringer's losing post-hoc invalidity defense. Does this make sense?

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