Carnegie Mellon University Wins All-Time Biggest Computer Patent Settlement

February 29, 2016

Patent LawCarnegie Mellon University recently settled its patent infringement lawsuits against Marvel Technology for a payment of $750 million.  This settlement is the largest one ever negotiated for a computer technology patent.  It illustrates the potential economic power of patents for academic institutions and other organizations.

A member of the Carnegie Mellon University faculty and his graduate assistant invented technology to help reduce the disruptive impact of the “noise” that impedes the accuracy and effectiveness of computer disk reading devices.  This technology is now widely used in virtually all computer equipment, including the devices manufactured by Marvel Technology.

This technology became ever more significant as the volume of data stored on computers and associated devices increased.  Greater volumes of stored data substantially increased the amount of noise present, and thus impaired the operational effectiveness of the devices involved.

Approximately four years ago, Carnegie Mellon sued Marvel Technology for infringement of two of its patents.  In 2012, a jury awarded Carnegie Mellon $1.17 billion, and the trial judge increased that award by adding certain penalties.  On appeal, the award was reduced, and additional litigation was initiated.  The parties continued negotiations, and early this year they agreed upon the $750 million settlement.

Matsuura Blakeley BannerCarnegie Mellon has indicated that the settlement award will be shared by the University, the faculty member involved, and the graduate assistant who was involved in the work.  A significant portion of the University’s share of the payment will reportedly be used to provide opportunities for additional students to study computer science at Carnegie Mellon.

This case highlights the potential significance of patents and other intellectual property for academic institutions.  To the extent that they are successfully able to commercialize the work of their faculty, staff, and students, those institutions can earn much needed revenues for the full range of their operations.

Each time a highly visible patent award such as this one arises, it is important to recognize that these major commercial windfalls are extremely rare.  Although they are significant and potentially highly valuable for academic institutions, those institutions must remain mindful of the fact that these gains are the exception, not the norm.

The mission of academic institutions extends far beyond the goals of technology commercialization and revenue generation.  They play vital roles in human resource development, generation of knowledge, and application of knowledge and innovation to address critical human and societal needs.  Colleges and universities should not be blinded by the occasional commercial windfalls from their intellectual property.  Their primary mission has never been technology commercialization.  Instead, academic institutions should always remember that their primary goals are education, research, and service to society.