Sehat Sutardja's Marvell Hit with Monster Verdict

A Pittsburgh jury has rendered a $1.17 billion patent infringement verdict against Marvell Technology and in favor of local Carnegie Mellon University.

The jury also found that the infringement was willful, allowing the judge to treble the amount of the verdict by way of punishing Marvell, a company founded and headed by Indonesian American Sehat Sutardja. If the judge does allow trebling, the resulting award would be the biggest ever patent-infringement damage award, and would come close to equaling the company’s current stock market valuation of $3.96 billion.

Carnegie Mellon had sued Marvell for infringing a patent on software algorithms devised by one of its professors and a student to enhance the accuracy with which disk drives can read data. The suit had claimed that between 2003 and 2012 Marvell had produced 2.3 billion chips incorporating the patented code.

Marvell had argued that its chips didn’t use the university’s patented technology, and alternatively, that the patent should never have been awarded.

Marvell plans to make a motion to have the verdict thrown out. If that motion fails, the company will appeal the judgment which will be based on the verdict.

Carnegie Mellon issued a statement saying it took “pride” in securing the award after Marvell failed to license its intellectual property.

Marvell is a specialized chipmaker. In addition to its mainstay of chips used in computer hard drives, it also makes processors for Blackberry smartphones, Sony Google TV internet video boxes and LED lighting controllers. Its biggest customer has been hard-drive maker Western Digital.

Two prior patent awards have ended up being larger than the unmodified verdict against Marvell, according to legal data firm Lex Machina. A 2007 judgment in the amount of $1.52 billion was awarded against Microsoft in favor of Lucent Technologies over alleged infringement of MP3 and MPEG video technologies. A 2009 judgment in the amount of $1.67 billion was rendered against Abbot Laboratories and in favor of Centocor Ortho Biotech for infringement of antibodies biotech patents. Both judgements were later overturned.

The largest surviving patent verdict — so far — is the $1.05 billion jury award against Samsung Electronics in favor of Apple. However, several more motions and rulings remain before that verdict is finalized into a judgment. A recent ruling by Judge Lucy Koh suggests that verdict is unlikely to survive intact.

The history of large patent jury verdicts suggest Marvell is unlikely to be hit with an equally large or larger judgment. Juries are often swayed by emotions and prejudices and disregard the merits of often convoluted disputes over ephemeral concepts or ideas for which patents were often improperly granted. A patent may be infringed even when the prior patented technology is arrived at independently rather than through conscious infringement.

Sehat Sutardja, 52, founded Marvell Technology Group in 1995 together with his elder brother Pantas and wife Weili Dai, a former UC Berkeley classmate. Sutardja, an engineer who holds over 150 patents, has been president and CEO since Marvell’s founding and a co-chairman since 2003. In 2006 he was recognized as the Inventor of the Year by the Silicon Valley Intellectual Property Law Association. In March 2009 a UC Berkeley building was named Sutardja Dai Hall after the Marvell co-founders donated over $20 million to the university’s nano-fabrication laboratory.

Sehat Sutardja was born around 1961 in Jakarta, Indonesia to wealthy ethnic Chinese parents who owned a Mercedes-Benz parts business. By age 12 Sehat taught himself analog signal processing by taking apart his family’s Phillips six-transistor radio and rebuilding it one component at a time. He boldly declared his intention to pursue a career in electronics much to his parent’s disappointment. In the 1970s this ambition amounted to becoming a TV repairman.

His brother Pantas appeared cut from the same cloth. He nearly electrocuted himself while taking apart the family air conditioner. The budding techies separated when Pantas was sent to a Chinese boarding school in Singapore, but stayed in touch by phone. Sehat frequently asked Pantas to translate Hong Kong electronics magazines into Indonesian.

After graduating high school Sutardja moved to the US. He received a B.S. in electrical engineering from Iowa State University and joined Pantas at UC Berkeley for his masters. Sehat and Pantas studied hard to be the best in their classes. While at Berkeley Sehat Sutardja met and married Weili Dai, an undergraduate programming major from Shanghai.

In 1988 Sehat Sutardja earned a PhD in electrical engineering and computer science from UC Berkeley. Even then Sutardja liked to cast himself as “the best analog engineer in the world.” After graduation, Sehat and Pantas parted ways to work, respectively, in analog signal processing and digital processing at different companies. It took them a few years to see that combining their expertise in analog and digital in a single company would let them revolutionize the chip industry.

In 1995 Sehat, Pantas and Dai partnered to found Marvell Technology Group with investment from friends and family. They focused on designing chips to make disk drives smaller, cooler and faster than those on the market. For the first few years the three partners went without salary while laboring nights and weekends. But even when their product was ready, Dai, the sales department, struggled to convince customers to buy it.

“We were too small, way too risky,” recalls Sutardja. “It was just luck getting our customers, but we were able to build the products that our competitors couldn’t.”

Through a cold call Dai eventually reaching Kenneth Burns, a scientist at Seagate’s Minnesota office. Burns was struggling with a Texas Instruments chip that ran data at 200 megabits per second. Dai told Burns that Marvell could do better. She sent out her “two best engineers” to meet with him. Sehat and Pantas returned from Minnesota with a development deal.

It took a year for the Marvell duo to design a chip that moved data 20% faster than TI’s. The brothers were so confident in their design they sent it out to Seagate before it had been fully tested. It was approved, and Seagate dropped TI. Within a few years Marvell was supplying chips for 90% of big-brand disk drives.

Marvell moved on to networking and designing chips that would transmit data through ethernet ports at a billion bits per second — five times the speed of the then current standard. But even with their revolutionary products they ran up against bias from large, conservative corporations. Morgan Stanley reportedly decided against underwriting Marvell’s IPO because of concerns over how the family-run company would handle corporate governance.

Marvell’s corporate culture isn’t without its rough edges. In 2001 it was negotiating to buy patents from Jasmine Networks. After leaving a voicemail with a Jasmine contact, Marvell executives forgot to hang up the phone. Marvell patent attorney Eric Janofsky was recorded wondering aloud if Sutardja would go to jail if they stole Jasmine’s technology. Jasmine Networks sued Marvell, but the case was dismissed in December of 2009.

In 2006 Silicon Valley Intellectual Property Law Association (SVIPLA) selected Sutardja as Inventor of the Year. “Dr. Sutardja has incredible foresight into what technologies will power the future devices that will touch people’s lives—both on the consumer and enterprise side,” said Brian Coleman, president of the SVIPLA. “His ability to consistently create new technologies, while running a company that generates annual revenues in excess of two billion dollars, is simple astounding.”

Sehat Sutardja has personally filed over 150 patents. His example inspires employees to file hundreds of patent applications every year.

Sutardja’s biggest advice to aspiring tech leaders: “Learn as much as possible in software, biology, advanced physics, all fields. It’s not sufficient to know a single field of knowledge. A lot of people stop learning when they want to become a businessperson. That’s the biggest mistake they can make.”

After Marvell’s bold acquisition of Intel’s notoriously unsuccessful mobile chip business in 2006, Sutardja was asked by one of his new workers about Marvell’s culture and philosophy. “We’re a little like Hewlett-Packard,” he replied. “Engineers walk into each other’s cubicles to share ideas. But we’re also like… the tough old Intel under Andrew Grove, where engineers ruled and only the paranoid survived.” He added, “Chips are supposed to be not just engineering marvels but moneymakers, too… Some of you forgot about that. Do you remember that?”

Sutardja, Pantas and Dai are well-known for micromanaging. As a couple Sutardja and Dai never took vacations. Their only shared hobby was making the rounds to their employees. Former employees have complained at great length about the constant scrutiny they suffered from the founders.

Sutardja and Dai live in Santa Clarita where they have two sons. Sutardja and Dai have both expressed a desire to continue running their company into the indefinite future.