Shares of Marvell Technology Group (MRVL) are pushing on multi-year lows after a sell-off late Wednesday that carried into after-hours trading following crippling news in a patent infringement case. A jury in Pittsburgh, Pennsylvania on Wednesday unanimously found that the chipmaker infringed on patents owned by Carnegie Mellon University for chip technology utilized in data storage systems. According to the case, Marvell had sold billions of the semiconductors without licensing the technology from the university.
The case was initiated by Carnegie Mellon in 2009 in the federal court of the Western District of Pennsylvania.
In one of the biggest awards ever granted in a patent infringement case, Santa Clara, California-based Marvell was ordered to pay Carnegie Mellon $1.17 billion in damages. The verdict comes on the heels of the Apple, Inc. (AAPL) versus Samsung Electronics Corp. decision this summer in which Apple was awarded just over $1 billion for Samsung swiping their technologies.
Marvell had about $2 billion in cash and equivalents at the end of October.
Based upon so-called “willful infringement” of the patents, U.S. District Judge Nora Barry Fischer could increase the award to Carnegie Mellon by as much as three times the $1.17 billion, or to $3.51 billion.
The two, extremely large awards come amidst a litany of ongoing patent litigation between many technology rivals – especially in the mobile device and advertising sectors – as well as companies known as “patent trolls,” outfits that buy patents and then seek damages for those using them.
Marvell is immediately seeking a lower judgment, arguing that they didn’t use the technology and that separate, similar technologies were developed before Carnegie filed for patents on their technology, meaning Carnegie was improperly granted the patents. Marvell says that it will appeal if Judge Fischer doesn’t reverse the decision in its post-trial motions. Apropos, similar activity is happening in the Apple/Samsung case with the judge denying Apple’s motion to ban sales on infringing Samsung products as well as denying Samsung’s request for a lower award. Samsung says it will continue to appeal the original decision.
The two patents in the Marvell/Carnegie case cover “noise predictive technology” that increases the speed in which circuits in hard drives read data from magnetic disks in personal computers, servers and more. The cited technology was developed by Carnegie Mellon professor Jose Moura and Ph.D. student Aleksandar Kavcic under support from the school’s research organization, Data Storage Systems Center.
Shares of MRVL closed down on Wednesday by more than 10 percent at $7.40 and slid after hours to $7.18. Early in 2012, shares were as high as $16.86 before dropping as low as $7.05 in November, marking the lowest level for the company since March of 2009.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer