I disagree. There is no reason that Google couldn't have built their own clean-room implementation of the JVM and called in Android. If they used no Sun code and no Sun trademarks, there were would be copyright or trademark infringement. Outside of some technical advantage, the only other reason to completely change the design of the VM would be to get around JVM related patents.
It's quite possible that Dalvik allows Google to avoid most of Sun's patents on Java technology. The patents included the suit would seem to be violated by most VM technologies, including Microsoft's .NET CLR.