After about three hours of deliberating Friday, a federal jury in Marshall determined that Samsung — the largest memory chip maker in the world — must pay Netlist $303.15 million for infringing five of its patents related to computer memory technology.
The trial began here in Marshall’s federal court last Friday, with U.S. District Chief Judge Rodney Gilstrap presiding. In the case, Netlist accused the global technology giant of willfully infringing five patents related to improving the performance and memory capacity of memory subsystems.
“The verdict affirms that Samsung willfully infringed on Netlist’s valid patents,” stated McKool Smith Principal Jennifer Truelove, co-counsel for Netlist. “Our client is grateful that the jury recognized the value of their technology and that they will receive the compensation they deserve.”
Netlist was represented by the Marshall-based McKool Smith trial team, which included principals Jennifer Truelove, Sam Baxter and Kevin Burgess. Netlist was also represented by Los Angeles, California-based Irell & Manella and led by Jason Sheasby.
“You heard from the [president of] Samsung, the largest memory chip maker in the world,” Sheasby said during Friday’s closing statements.
He said the jury also heard about Samsung’s 12,000 patents, yet seeking the help of Netlist a small Orange County, California company of 120 employees.
“They did that because they wanted to access our patents; they wanted to access our skills,” said Sheasby. “The innovation was created by Netlist.”
Samsung, whose principle office is in Korea, denied infringement and contended that Netlist’s patents were invalid.
Samsung’s attorney, Ruffin Cordell of Fish & Richardson PC, of Washington, D.C., argued that Netlist didn’t invent anything novel as seen in the film “Flash of Genius” inspired by the true story of inventor Robert Kearns, who invented the intermittent windshield wiper.
“I always wanted to be a patent lawyer. I love getting to know new things and exploring new technology,” said Cordell. “When we approached the evidence in this case, what struck me is where is that story with Netlist? Where is that ‘flash of genius [idea]’”? Cordell, representing Samsung, questioned. “Where is that big problem they were trying to solve?
“The answer is it just wasn’t there,” said Cordell. “We didn’t hear it.”
In the case, Netlist was seeking a reasonable royalty of $404.2 million. Samsung argued if infringement was found it was only worth an $8 million royalty.
Jurors determined Friday that Samsung willfully infringed and ordered the company to pay a breakdown of $33,150,000 for infringing the ‘339 patent; ‘147,225,000 for infringing the ‘918 and ‘054 patents; and $122,775,000 for infringing the ‘060 and ‘160 patents, for a total of $303,150,000 in damages.
Because the jury found that the infringement was willful, presiding Judge Gilstrap could increase the amount by as much as three times the amount set by the jurors.
Background
Giving the history of the plaintiff, Sheasby noted earlier during the trial that Netlist is a small California company founded in 2000, and currently boasts 120 employees. He said the company is focused on sophisticated innovation as used in space memory modules, the army defense system and more such as when using a scan for surgery.
“Since its founding in 2000, Netlist has been a leading innovator in high performance memory module technologies,” the lawsuit filed by Netlist states. “Netlist designs and manufactures a wide variety of high-performance products for the cloud computing, virtualization and high-performance computing markets. Netlist’s technology enables users to derive useful information from vast amounts of data in a shorter period of time. These capabilities will become increasingly valuable as the volume of data continues to dramatically increase. Netlist has a long history of being the first to market with disruptive new products such as the first load-reduced dual in-line memory module (“LR-DIMM”), HyperCloud, based on Netlist’s distributed buffer architecture later adopted by the industry for DDR4 LRDIMM. “Netlist was also the first to bring NAND flash to the memory channel with its NVvault NVDIMM. These innovative products built on Netlist’s early pioneering work in areas such as embedding passives into printed circuit boards to free up board real estate, doubling densities via quad-rank double data rate (DDR) technology, and other off-chip technology advances that result in improved performance and lower costs compared to conventional memory,” the lawsuit states.
Giving jurors background on the case as it kicked off last Friday, Judge Gilstrap noted prior to the trial the parties entered a Joint Development and License Agreement (JDLA) years ago, which allowed Samsung to license Netlist’s patents-in-suit. After the JDLA had been in effect for some time, a dispute developed between the parties. That dispute was heard before a California federal court, which determined Samsung no longer had a license to Netlist’s products under the JDLA as the JDLA had expired in 2020.
As a result of the lawsuit, the Marshall federal jury had the task of deciding whether Samsung infringed the patents-in-suit, whether the patents are invalid; and if infringement is found, if it was willful.
The accused products-in-suit are Samsung’s Dual In-line memory modules and high bandwidth memory (HBM), which weren’t a part of the former licensing agreement. Sheasby said, instead, Samsung decided to take Netlist’s technology and make, use, sell, offer to sell and/or import semiconductor memory products that infringe the patents-in-suit.
Arguments
Sheasby argued during the trial that Samsung has been fixated on Netlist’s on-module power management product for years, since 2014. He contended that Samsung launched its infringing DDR5 product with management power in 2022, which was three years after reaching out to Netlist’s engineering team about their technology.
“They did it because they needed it,” said Sheasby, contending that it increased memory efficiency of their design by 30 percent.
In Friday’s closing arguments, Cordell, representing Samsung, argued that in this case, the patents-in-suit relate to a Flash-DRAM hybrid memory module.
“When you turn the power off, all your memory goes away,” he explained earlier in the trial. “There’s another kind of memory called flash, and flash is permanent memory. Even if you turn the power off, the [data] stays. That was the whole idea.”
“They tried to make a product out of it, but no one wanted it,” Cordell said of Netlist’s hybrid product. “It wasn’t a big seller.”
He said as a result of more than a decade of filing continuations at the patent office, Netlist ended up with a result that strayed from the original invention.
“Ultimately, it was unrecognizable,” said Cordell.
“We know that they filed continuation after continuation,” said Cordell. “That’s allowed under the rule. What you can’t do is continue to file continuations and take the patent further and further away from (what was intended) because when you do that, it’s invalid.”
The jury determined Friday that Samsung did not prove its case of invalidity. Representing Netlist, Sheasby contended in his closing statements that Netlist’s “flash of genius” story can be found in Samsung’s internal documents when the company was seeking access to Netlist’s power saving technology.
“In 2019, they [described it] as a unique proprietary know-how that they wanted to access,” Sheasby said of Netlist’s written request to access Samsung’s technology. “[Shortly] before they created their DDR5, they came to us and asked us how do they create the DDR5 on-module power management.”
“We’re here for one reason and one reason only,” he said, noting that reason is because Samsung refuses to pay for the use of Netlist’s technology. “We’re here because Samsung is violating the law.”
Sheasby said Samsung keeps bringing up the fact that the Samsung’s corporate representatives flew more than 6,000 from Korea to the federal court in Marshall to defend the lawsuit claims filed by the American company.
However, “It doesn’t matter what country you are from. In this country, you follow the law,” said Sheasby. “You have to follow the rules whether you are a 120-person company (like Netlist) or the largest semiconductor manufacturer in the world (like Samsung) and you [profit] $19 billion, and you need to come to us for help.”
Sheasby contended that Samsung doesn’t want to license Netlist’s patents but wants to continue to use the technology in order to stay on top in the market.
“They want to keep dominating the market,” he said.