Nvidia files countersuit against Intel

Written by Tim Smalley

March 27, 2009 // 7:50 a.m.

Tags: #breach #case #chipset #contract #court #cross #filing #license #suit

Companies: #intel #nvidia

Nvidia has announced that it has filed a countersuit in the Court of Chancery, Delaware, against Intel for breach of contract.

This comes in response to Intel filing suit against Nvidia a few weeks ago over the companies’ four-year-old cross license agreements, which Intel says don’t extend to CPUs with integrated memory controllers.

Nvidia did not initiate this legal dispute,” said Nvidia CEO Jen-Hsun Huang, “but we must defend ourselves and the rights we negotiated for when we provided Intel access to our valuable patents. Intel’s actions are intended to block us from making use of the very license rights that they agreed to provide.

Looking through the two filings (Intel / Nvidia – both PDF), one part of the dispute appears to be over an article published on bit-tech last August following an open discussion with Tom Petersen, Director of Technical Marketing for Nvidia’s chipset business, where Petersen made it clear that Nvidia’s chipset license with Intel was valid for processors using the new Quick Path Interface. Intel claims that the statement given by Petersen was false because Intel believes that Nvidia doesn’t have a bus license for processors using an integrated memory controller.

In the countersuit, Nvidia denies the allegations put forth by Intel before moving onto its counter claims, which begin stating “Intel has manufactured this licensing dispute as part of a calculated strategy to eliminate Nvidia as a competitive threat.

Later on, the counter claims allege that Intel will attempt to prevent Nvidia from making chipsets for Nehalem based processors [such as Arrandale and Clarkdale] without an integrated memory controller. Nvidia continues the offensive by claiming that it has been informed and believes that Intel “is planning other means to prevent Nvidia from enjoying its license to make chipsets for [Arrandale and Clarkdale] CPU products.” These include the integration of the GPU onto the same substrate as the CPU for “no material or technical benefits” but in order to “make it difficult, if not impossible, for Nvidia to connect its MCP chipset to the CPU.

Nvidia also alleges that it has been informed that “Intel has other plans, both technical and strategic, that are designed to interfere with Nvidia’s license and disadvantage Nvidia in the marketplace, which may include improperly encrypting its buses, or degrading the performance of the buses.

In summary, Nvidia believes that “Intel’s conduct represents further breaches of the implied covenant of good faith and fair dealing. Whether it be by public repudiation of the license, or bad faith gaming of the technology, Intel is plainly preventing Nvidia from enjoying licensing rights that it bargained for while, at the same time, making full use of its cross license to Nvidia’s patent portfolio.

This legal spat could be a lot bigger than we first thought, but again it is difficult to quantify how big this might be without seeing the license agreements or the filings in full. It’s quite possible that Intel is using Nvidia technology in its X58 chipset, for example, in order to achieve optimal SLI performance on the platform. At the time when I was first informed of Nvidia’s decision to license SLI technology to the X58 platform, Tom Petersen explained to me that the chipset supports peer-to-peer writing which is almost exactly the same as the PW short technology Nvidia introduced with the NF200 switch chip.

If the agreements are cancelled, Nvidia may look to not only prevent Intel chipsets from supporting SLI by locking them out at the driver level, but to also seek to have its peer-to-peer writing technology disabled if it is part of the cross licensing agreement between the two companies. Neither option would be good for consumers, just as having a sole chipset supplier for Intel processors wouldn’t be good for consumers. But ultimately, this isn’t down to what is right for consumers, it is down to what rights both Intel and Nvidia have with regards to the two license agreements they signed in 2004.

How do you think this is going to play out? Let us know your thoughts in the forums.
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