Nvidia Sued for Patent Infringement

Credit: NvidiaCredit: NvidiaSubsidiaries of Xperi Corp, a company that licenses intellectual property, have filed suit against Nvidia in the U.S. District Court of Delaware for patent infringement. The case hinges on Nvidia's alleged violation of five of the company's patents for technology used in its gaming and supercomputer GPUs.

During the company's Q1 2019 earnings call, Xperi announced that its subsidiaries Invensas Corporation and Tessera Advanced Technologies had filed the suit:

In addition, today we filed a lawsuit against NVIDIA for patent infringement. We believe that NVIDIA is using our patent semiconductor technology in certain of its CPUs and processors and we have been speaking with NVIDIA for several years about taking a patent license. We ultimately could not reach an agreement and we felt that we needed to take this action to defend our intellectual property rights. We filed the case in Delaware Federal Court asserting 5 patents. -- CEO Jon Kirchner, via Seeking Alpha.

Credit: Xperi Q1 Investor Slide DeckCredit: Xperi Q1 Investor Slide DeckXperi and its subsidiaries invent and then license a broad range of technologies, like audio and imaging codecs like DTS:X, IMAX, Virtual:X, and has several large clients, like Sony, LG, Samsung, Tencent, and Alibaba.

But more importantly for this topic, the company also licenses semiconductor packaging and interconnect technology IP. The company claims that Nvidia has violated five of its U.S. Patents (5,666,046; 6,232,231; 6,317,333; 6,849,946; and 7,064,005), all of which pertain to semiconductor designs.

Nvidia doesn't spin its own silicon, it contracts with TSMC to manufacture its chips, but Xperi says the onus falls on Nvidia to answer for the alleged patent infringements because the company is responsible for its own architectural designs.

Given that Xperi has sued and won settlements against both Samsung and Broadcom over three of these same patents, there is little doubt the validity of those patents have passed the stiffest of legal challenges. Both Samsung and Broadcom settled with Xperi for undisclosed sums and entered into multi-year patent licensing agreements.

"Yes, there are five asserted patents, three of which were litigated either with Broadcom and/or Samsung. So, I think it’s IP that we are obviously very comfortable with. We think it’s broadly applicable to their core GPU and processor offerings. And it’s our preference to see a resolution to this, but after working diligently for an extended period of time, we felt it was necessary to take this step to help try to close the gap essentially on our respective views," Kirchner said during the earnings call.

We tracked down the company's filing in the U.S. Delaware Court, but proposed damages and/or royalty demands aren't listed yet. Compared to Nvidia with its ~$102.7 billion market cap, Xperi is a rather small company with a cap of ~$1.2 billion. But given the company's successful defense of several of these patents against industry behemoths Samsung and Broadcom, the validity of the patents will be hard to challenge, meaning the case will likely boil down to if Xperi can prove Nvidia is using the patented IP. Nvidia hasn't released a statement yet, but we've inquired with the company and will update as necessary.?

    Your comment
  • jankerson
    Sounds like a typical money grab that some Companies do to make money, they try and file suit to see if they can get a settlement.

    Doesn't work all the time though however when the Company tells them off and goes to Court. ;)

    Obviously if there was really anything real to it in the 1st place that could be upheld in court NVIDIA would have settled by now, it has been over 3 years already.
  • AllanGH
    Patent trolls are a primary reason for my opposition to the current state of patent law, in general.

    SCO, under the dubious leadership of Darl McBride, tried similar tactics years ago, with what I consider to be a justifiable end to the matter.
  • mihen
    I think it's wrong that patents from 2001 are still valid. The entire point of the patent system is for companies to share their inventions and further develop technology by allowing them a temporary monopoly. It was never meant to work as a long-term monopoly. This is clearly a patent troll, but the patents are not vague like some. They are very specific to the methods used during fabrication. That said, the only reason they are suing nVidia is that there is no way they can sue TSMC.