Nvidia Says Patent Settlement With Rambus Unlikely After Loss
January 27, 2010, 08:39 AM EST
Jan. 27 (Bloomberg) -- Nvidia Corp., a maker of graphics chips that help run video games, said it won’t negotiate with Rambus Inc. after losing a U.S. trade agency decision that it violated three Rambus-owned patents.
“Rambus and Nvidia talked for eight years before they sued us,” David Shannon, Nvidia’s general counsel, said in an interview yesterday in Washington. “I don’t think it’s realistic to think that there’s going to be an agreement anytime soon between the two companies.”
Judge Theodore Essex with the U.S. International Trade Commission in Washington said Nvidia infringed three Rambus patents, while two others are invalid. His finding is subject to review by the six-member commission and, if upheld, could result in a ban on imports of Nvidia chips and products that use them, including some computers made by Hewlett-Packard Co. Shannon said it won’t reach that point.
“Our customers will never have their businesses interrupted,” Shannon said. “Our position is there will be no exclusion order.”
Nvidia has several options to prevent any order banning imports, he said. If the commission sides with Rambus, Nvidia can appeal to a court that specializes in patent law. Nvidia is receiving “no pressure” from customers to settle the case, Shannon said.
Nvidia, based in Santa Clara, California, fell 53 cents, or 3.2 percent, to $16.21 in Nasdaq Stock Market trading yesterday. Rambus, based in Los Altos, California, dropped 48 cents, or 2 percent, to $23.94.
Patent Review
In a separate proceeding, the U.S. Patent and Trademark Office is taking a second look at the Rambus patents. The three found to be in violation by Essex were rejected by the agency, Shannon said. Rambus is appealing that decision in a process that will take more than a year, and in the meantime the patents remain valid and enforceable.
“We’re not going to pay on patents that are not valid,” he said.
Shannon said that, should Nvidia lose both before the ITC and the patent office, Rambus would have to accept limits on patent royalties because of an agreement reached last year with the European Commission.
Linda Ashmore, a spokeswoman for Rambus, said the company’s position is the same as that expressed last week, when General Counsel Tom Lavelle said the company is “very interested in having productive constructive settlement discussions with Nvidia whenever they’re ready.”
Samsung Settlement
The patents in the Nvidia case, which involve the memory controllers that connect the memory and the graphics chips, are newer than ones Rambus has been asserting against memory-chip makers.
Samsung Electronics Co. agreed to pay $900 million last week to end its dispute with Rambus and sign a new licensing agreement.
Nvidia trails Intel Corp. in sales of graphics chips. Intel, also based in Santa Clara, sells its semiconductors as part of other products, such as microprocessor chipsets. Nvidia competes more directly with Sunnyvale, California-based Advanced Micro Devices Inc. in the market for separate graphics chips used in computer cards.
In December, the U.S. Federal Trade Commission accused Intel, the world’s largest computer-chip maker, of illegally using its dominant market position to stifle competition, including for graphics chips.
Nvidia claims Intel’s bundling of its microprocessors with the company’s graphics-chip sets blocks Nvidia from the market. Intel also is making it hard for Nvidia to connect to its newer products, Nvidia said.
‘Monopoly Position’
“If you’re in a monopoly position, and you abuse it like Intel has, then the right remedy for the government is to open up those markets,” Shannon said.
The FTC is “mistaken,” Chuck Mulloy, an Intel spokesman, said in a telephone interview.
“They don’t understand the fundamentals of the market,” Mulloy said. The agency “did not conduct a thorough investigation of the charges related to Nvidia and the graphics market” before filing the complaint, he said.
A trial in the FTC case is scheduled for September in Washington. Separately, a trial is set for April in Delaware Chancery Court over whether a 2004 patent-licensing agreement they signed allows Nvidia to make chip sets work with Intel’s latest microprocessor family. Nvidia argues it does; Intel argues it doesn’t.
The contract dispute forced Nvidia to stop making those chip sets, Shannon said.
“We see no downside to that case at all,” Shannon said. “The damage to us has already been incurred in the fact we’re no longer in the business.”
