Federal Circuit Applies Extraterritoriality Principle To Trim Damages Award

Continuing its careful scrutiny of damage awards in patent cases, the Federal Circuit in Carnegie Mellon University v. Marvell Technology Group Ltd.et al., 2014-1492 (Fed. Cir. Aug. 4, 2015) reversed a substantial portion of a $1.5B patent infringement award and remanded for determination of whether accused chips that were made and delivered solely outside of the United States could be used to measure damages for infringement of a method claim in the U.S. Even though Marvell's foreign chips never entered U.S. soil, the Federal Circuit acknowledged that they might be used to measure damages because Marvell's sales process included substantial U.S. contacts. The precise question on remand is whether the foreign chips can be deemed to have been "sold" in the U.S. in light of the place of Marvell's contracting for sales and any other relevant U.S. connections.

The Federal Circuit left in place $278M in damages, affirming a royalty of 50 cents for each chip Marvell imported into the U.S. The Court's refusal to permit damages based on conduct occurring entirely outside of the U.S. builds onPower Integrations v. Fairchild and other recent case law applying the principle that U.S. patents do not have extraterritorial effect.

The complexity of the damages issues in this case highlights the need for careful analysis of such issues by experienced counsel, both at the assertion stage when evaluating the strength of a case and during subsequent litigation. The case also highlights the need for patent filing strategies that consider uses of the patented technology in the global marketplace.