Nvidia patent licensing program devastated by ITC ruling

Analysis: It doesn’t look good

Nvidia logoWhen Nvidia announced their current patent licensing program, SemiAccurate called it a “trolling scheme”. Today the ITC dealt the venture a devastating and potentially fatal blow.

Lets start things out on a positive note, Nvidia promised to update their progress on the ITC case and they did just that. The part that is praiseworthy is that the company was just crushed by this ruling and they still reported it as promised. That is a very hard thing for most companies to do and one that deserves a pat on the back. So consider yourselves patted Nvidia, but you really should have put up the ruling text this time too.

Now onto the actual ITC ruling. Nvidia brought an infringement claim against Samsung and Qualcomm to the ITC last fall. In April they were quite happy to announce a minor ruling where the judge favored their wording over that of their opponents. That said a win is a win, or at least a nod in your direction is just that. One nice thing about the construction claim is that if the actual ruling goes against you, it would seem to be much harder to appeal at that point.

The merits of the case or lack thereof stem from Nvidia’s so-called Kepler licensing program, something SemiAccurate said had, “absolutely no chance of success“. With a little more time to research the scheme, we came to the conclusion that it was nothing more than a pure patent trolling exercise. You may have noticed in the above piece that we directly stated Nvidia was going on a patent lawsuit rampage more than a year before it was announced.

In the two plus years since Nvidia became a patent troll, SemiAccurate has been following it closely. We have named the terms, the ‘potential licensees’, and brought you the news of many related updates and changes. The “licensing program” has had its terms reduced to less than a third of the initial offer, has targeted every player in the industry small or large, and in general turned over every rock possible. The licensee count still stands at zero for a good reason, there is nothing real to actually license.

Going back to the Samsung and Qualcomm suits, SemiAccurate was given the strong impression by some sources that these companies were targeted because of executive pique, not merit. More importantly it goes against the standard and proven methods of patent licensing suits but does bolster the value of the stock in the eyes of some. We will leave it up to the reader to decide which version, or both, you feel is more appropriate. That said even when the Nvidia claims are put to rest, we have strong reason to believe that the countersuits are unlikely to be dismissed.

And that brings us to the most recent news, an actual decision from an ITC judge. If you read the ruling there are three patents discussed, two were not infringed upon but the third was. Unfortunately that third one was also found to be invalid due to what sounds like prior art as were some counts of a second patent. This is the devastating part, there were seven patents asserted and as of now, three are out of play. Nvidia has said they will appeal the ruling but given the facts at hand, SemiAccurate strongly doubts that it will change much other than the near term stock price.

Stepping back a bit, after SemiAccurate exclusively bought you the story about the patent (at the time) threats, we researched the actual tech being offered for license. While we are not patent lawyers or anything close, every person we talked to on the subject regardless of affiliation, all said the same thing. They all said the ‘technology’ being ‘licensed’ was nothing more than prior art with the name GPU put in or something similar. Every single person said that the patents would very likely be blown out of the water once they were actually tested. No one could find a single valid item among those offered for ‘license’.

The devastating bit is not that two of the patents were found non-infringing. There were seven patents asserted and one and a few terms of a second were invalidated, they are now gone. That is a big percentage of the pool that is now lost forever for Nvidia, they were deemed ‘obvious’ by the judge. Nvidia has vowed to appeal but their earlier construction ‘win’ has made the task significantly harder, it will be interesting to see what if anything they actually appeal on.

Worse yet Nvidia seems to have voluntarily pulled most of the claims over the summer, something that strongly suggests that these too were about to be invalidated. This ITC move has been nothing short of a full-blown disaster for Nvidia’s patent licensing opportunities, and it is a self-inflicted one at that. Given the value the company assigns to these patents, how much did this just cost them? Of the seven they brought to the table, four were voluntarily pulled without any public fanfare, two were found non-infringed upon, and one and change were invalidated. Ouch.

If that isn’t bad enough, the ruling from the ITC doesn’t just cover a Samsung product, it goes far deeper. It specifically calls out Adreno, Mali, and PowerVR GPUs, effectively all of the mobile graphics cores that sell in any sort of volume. That means the seven most viable patents Nvidia has to assert were just cleared against the only GPUs that matter, it may not be game over but it I can hear an overly large woman warming up in the wings.

So now more than two years into the patent license/troll/war we have an actual ruling. It has quite simply removed almost half of Nvidia’s asserted patents from play and probably would have done so to more had the company not pulled them prior to the ruling. It also destroyed one entirely and another partially just like SemiAccurate has been predicting. Although there will be appeals, at the moment there is nothing leading us to believe they will do anything more than enrich various legal teams. We still stick by our well researched opinion that these suits are nothing more than an ill-thought out base patent trolling scheme without any underlying merit.S|A

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Charlie Demerjian

Roving engine of chaos and snide remarks at SemiAccurate
Charlie Demerjian is the founder of Stone Arch Networking Services and SemiAccurate.com. SemiAccurate.com is a technology news site; addressing hardware design, software selection, customization, securing and maintenance, with over one million views per month. He is a technologist and analyst specializing in semiconductors, system and network architecture. As head writer of SemiAccurate.com, he regularly advises writers, analysts, and industry executives on technical matters and long lead industry trends. Charlie is also a council member with Gerson Lehman Group. FullyAccurate