Nvidia Sued for Patent Infringement

Subsidiaries 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 Deck — (Image credit: Xperi Q1 Investor Slide Deck)

Xperi 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.

Paul Alcorn is the Deputy Managing Editor for Tom's Hardware US. He writes news and reviews on CPUs, storage and enterprise hardware.

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10 Comments Comment from the forums

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.
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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.
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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.
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bit_user

PaulAlcorn said:
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.
Thanks for posting the number and links. I've heard patent trolls would often not even disclose the supposedly-infringing patent numbers, while trying to negotiate a settlement. I don't know if they still do that.

For the curious, here are their titles and dates granted:
Reference voltage circuit having a substantially zero temperature coefficient (9/1997)Planarized semiconductor interconnect topography and method for polishing a metal layer to form interconnect (5/2001)
Package construction of semiconductor device (11/2001)
Planarized semiconductor interconnect topography and method for polishing a metal layer to form interconnect (2/2005)
Semiconductor apparatus and method of manufacturing same (6/2006)
Yeah, two have the same title, but are otherwise different.

One thing that's puzzling is why a patent granted in 1997 is still listed (according to the link) as "in force", although I'm not entirely up-to-date on patent law.

BTW, the fact that other companies settled doesn't necessarily mean all that much. Like a skilled criminal demanding a ransom, the litigant might be adept at estimating the cost of litigation and price the license fee in the same ballpark. The other companies might've simply decided it was easier to pay a license fee than try to fight it and risk losing + having to pay a lot more.

I think IP law always feels at least a little dirty. I understand the necessity to have some kinds of protections for the investments of companies and individuals, but it feels rare to see the system actually working as it should.
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bit_user

BTW, it's important to remember that we all pay for patent trolling in the form of higher prices. The costs pervade society, as each business has to pass on these costs to their customers.

Another favorite example is credit card networks (i.e. Visa and Mastercard). I sometimes wonder how much cheaper everything would be, if you could somehow magically purge society from all the "rent-seeking" that provides no real underlying value. Perhaps it would even be enough to drive an uptick in economic growth.
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in_the_loop

bit_user said:
BTW, it's important to remember that we all pay for patent trolling in the form of higher prices. The costs pervade society, as each business has to pass on these costs to their customers.

Another favorite example is credit card networks (i.e. Visa and Mastercard). I sometimes wonder how much cheaper everything would be, if you could somehow magically purge society from all the "rent-seeking" that provides no real underlying value. Perhaps it would even be enough to drive an uptick in economic growth.

Yeah, we all pay for somebody having an artificial/forced upon monopoly of something.
I think a patent should only be legal if you actually have produced something out of the theoretical (often in general term) description in the patent.
And software patents (which is not an issue in most of Europe) shouldn't be allowed.

As for the credit cards/paycards, there is also the issue of them requiring the shop owners to pay for every transaction made. At least in Sweden, there is a cost of 3 kr (About 25-30 cent) for every transaction.
Guess who it affects?
The customer, once again!
It is even to the point now that some shop owners refuse to take a credit card, if the cost of the item is less than a certain price (like 30 kr), since they in some cases would loose more due to the cost for the transaction!

For me it has happened many times, often I have to just leave without buying the soda or whatever it is, since I had no cash on me.
That is a hard it for them since Sweden more or less has gone cash-less as a society. Almost nobody carries cash anymore.

But it has actually lead to a new "local" way of paying by mobile called "Swish". We can "Swish" each other money (any person, even private) by the Swish app in the phone. More and more shops are accepting that now, bypassing the creditcard/paycard networks since The Swish servie is directly connected to the bank (it is registered when logged into the bank as a service).
Think it's quite unique in the world right now as the usage is becoming really high for it (making even more way for a cashless society)
https://play.google.com/store/apps/details?id=se.bankgirot.swish&hl=en
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jimmysmitty

mihen said:
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.

I think patents should be in effect as long as possible however I think the holder of said patents should have to provide products based on that patent instead of just holding it to wait and make money off a company actually using and providing products with said idea.

It makes no sense to me why we even allow people to just buy and hold onto an idea without actually producing it. Anyone could file a patent for the most insane idea and when another person thinks of it and wants to make a product with it, bam. Lawsuits and wasted time and money.
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oczdude8

jankerson said:
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.

I'm not sure why people always think anyone protecting their IP is a patent troll. There is reason why its called Intellectual PROPERTY. When someone uses your PROPERTY without your permission, its effectively stealing. Also keep in mind that IP doesn't come cheap. It often takes a group of top researchers years to generate such IP, so the company that funded that research should get some payback for it. Even if a third-party company buys the IP, they still paid for it and should be allowed to generate some revenue from it. This is essentially the concept of investing, but on a technological level.

These large companies like Samsung, Intel, etc, are founded and exist based on IP, and if anyone infringed on their patent they would immediately respond (think of the high profile lawsuits we have seen over the years).
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bit_user

jimmysmitty said:
I think patents should be in effect as long as possible however I think the holder of said patents should have to provide products based on that patent instead of just holding it to wait and make money off a company actually using and providing products with said idea.
A variation on that would be to make them pay a renewal fee that's too high for patent trolls to simply sit on large numbers of patents. I believe there is currently a renewal fee, but I think it still might be rather low.

Now, the question is how much to price the fee. For different industries, it could vary, so you might have a system where the amount of money that could be collected by licensing a patent is determined by the fee schedule you signed up for.
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bit_user

oczdude8 said:
I'm not sure why people always think anyone protecting their IP is a patent troll.
I was speaking hypothetically. I don't know enough about semiconductors to say whether this is trolling, but I believe it might fall into a somewhat grey area.

oczdude8 said:
There is reason why its called Intellectual PROPERTY. When someone uses your PROPERTY without your permission, its effectively stealing.
I think we all understand that. But be careful about reading too much into the terminology. IP is a legal fiction created to mirror aspects of physical property. There are good reasons for it, such as to protect R&D investments, but it's truly an artificial framework, rather than anything intrinsic to the underlying information. This makes it more susceptible to abuse.

Everyone knows what stealing physical property is, and what it looks like. However, when IP can be created out of thin air and someone employing a similar technique (even if it was obvious or common practice) can be labelled as stealing, things get a lot more murky.

oczdude8 said:
Also keep in mind that IP doesn't come cheap. It often takes a group of top researchers years to generate such IP,
For every patent like that, there could be multiple patents that fail to meet the criteria of novel and non-obvious. I personally know of some junk software patents that were filed (and granted!) on some techniques already in common use. I know of another case where a badly-named but truly novel invention was rejected by a USPTO examiner who clearly took a cursory look, did a quick web search, and incorrectly decided that it was insufficiently novel.

So, the system is deeply flawed, as has been well & widely documented. That's not a reason to scrap it, but I don't think anyone here is calling for that. However, we need to be clear-eyed about abuses, as reporting of these will hopefully help drive further reforms.

oczdude8 said:
These large companies like Samsung, Intel, etc, are founded and exist based on IP, and if anyone infringed on their patent they would immediately respond (think of the high profile lawsuits we have seen over the years).
Are you claiming that there are no abuses of the system and that it's working perfectly, as is?

Are you arguing that the cited patents are truly novel? Do you have any expertise to make such claims? I have to say that I'm rather suspicious of any firm that deals exclusively in IP licensing and doesn't actually make any products of its own. I think it's highly likely such firms are either patent trolls or fall somewhere in a grey area.

I also find it problematic that such patents seem to be remaining in force, over such a long period of time. I think it's not justifiable for one company to maintain a lock on some technique for > 20 years. That's multiple lifetimes, in tech.
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