Nvidia Sues Samsung, Qualcomm After Patent Talks Fail


Nvidia Corp. (NVDA), a maker of graphics chips and processors used in mobile phones and tablets, filed a patent-infringement complaint against Qualcomm Inc. (QCOM) and Samsung Electronics Co. (005930) after two years of failed licensing talks.

Nvidia is seeking to block imports of the latest Samsung Galaxy phones and tablets that use Qualcomm’s Snapdragon graphics processing units or Samsung’s Exynos processors. In the complaint, filed with the U.S. International Trade Commission yesterday in Washington, Nvidia said it seeks to stop Qualcomm and Samsung “from their wholesale infringement of Nvidia’s important visual computing technologies.”

Improved graphics processing units, or GPUs, are becoming more important as smartphones and tablet computers are increasingly used for playing games and watching movies. Nvidia, with its Tegra chipsets for tablets and phones, has failed to make a significant dent in Qualcomm’s leading share in that market and hasn’t become a major supplier to Samsung or other major handset makers.

Nvidia introduced the Shield tablet earlier this year to expand the Santa Clara, California-based company’s move into mobile devices.

Nvidia said in the complaint that it’s tried since August 2012 without luck to reach a licensing agreement with Suwon, South Korea-based Samsung, the world’s biggest maker of smartphones.

Chipset Suppliers

“Samsung has negotiated based on delay and by pointing the infringement finger at its chipset suppliers, such as Qualcomm, or third parties that supply GPU technology to Samsung, while continuing to reap enormous profits from the Samsung-branded products shipped into the United States and elsewhere,” Nvidia said in the complaint.

The Samsung products targeted in the complaint include the Galaxy Note 4 and Galaxy S5 phones, and the Galaxy Tab S and Galaxy Note Pro tablet computers.

Qualcomm is aware of the complaint and is evaluating it, the San Diego-based company said in an e-mailed statement. Samsung will take “all measures necessary” against Nvidia’s claims, spokeswoman Jini Park said in a statement.

Nvidia, which already licenses technology to Intel Corp. (INTC), is trying to increase the amount of money it gets from other companies that it says use some of its graphics-related patents, Chief Executive Officer Jen-Hsun Huang said on a conference call with analysts.

“This is an important part of our overall company strategy,” Huang said. “The size of the use of our technology is much, much larger in the mobile market.”

Legal Action

Nvidia is in productive discussions with other companies, Huang said. He declined to identify them or say whether he intends to extend legal action to include other companies.

The trade commission, which has the authority to order products halted at the U.S. border, typically takes about 15 to 18 months to complete its investigations. David Shannon, chief administrative officer for Nvidia, said the company is hoping to use the relative speed of the agency and the expertise of the commission’s judges to help drive a quick settlement.

“Sometimes when the economics are significant, you need a neutral third party get involve and resolve some of the issues,” Shannon said in an interview. “We’d like to get something resolved sooner rather than later.”

Nvidia said it also filed a patent-infringement suit making the same allegations in federal court in Wilmington, Delaware. That case is likely to be put on hold if the ITC agrees to investigate the complaint.

The case is In the Matter of Certain Consumer Electronics and Display Devices with Graphics Processing and Graphics Processing Units, Complaint No. 3029, U.S. International Trade Commission (Washington).


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