27 NVIDIA logoNVIDIA has just announced that it is suing both Samsung and Qualcomm for patent infringement on their graphics processor technologies. This is the first time that NVIDIA has ever filed a claim for patent infringement.

The company is asking the U.S International Trade Commission (ITC) and courts in the United States (Delaware) to block shipments of Samsung Galaxy Mobile phones using Qualcomm’s Adreno graphics unit (or GPU), which is virtually in every Snapdragon processor (or SoC), which itself powers a vast number of phones, including Samsung’s. There no doubt that if NVIDIA was to win this, the repercussions will extend well beyond Samsung.

"IDENTIFIED SAMSUNG PRODUCTS INCLUDE THE GALAXY NOTE EDGE, GALAXY NOTE 4, GALAXY S5..."   A closer look at NVIDIA’s press release reveals a specific list of devices: “The identified Samsung products include the Galaxy Note Edge, Galaxy Note 4, Galaxy S5, Galaxy Note 3 and Galaxy S4 mobile phones; and the Galaxy Tab S, Galaxy Note Pro and Galaxy Tab 2 computer tablets.”

An exhaustive list of mobile graphics technology vendors are also listed as allegedly infringing NVIDIA’s intellectual property: “Most of these devices incorporate Qualcomm mobile processors – including the Snapdragon S4, 400, 600, 800, 801 and 805. Others are powered by Samsung Exynos mobile chips, which incorporate ARM’s Mali and Imagination Technologies’ PowerVR GPU cores.”

According to a blog post from NVIDIA, the company says says that it has talked to Samsung executives to make their case, but that from Samsung‘s point of view, this was pretty much a “Qualcomm Problem”. Here’s the exact quote: “We made no progress. Samsung repeatedly said that this was mostly their suppliers’ problem”.

This is a huge escalation in the ongoing competition between NVIDIA and Qualcomm in which Samsung finds itself in the middle. The choice of targeting Qualcomm’s largest customer may be designed to put maximum pressure on the case, but one has to wonder if this would turn Samsung in to a permanent adversary going forward. NVIDIA must feel very confident that the other side won’t have any choice but negotiate a settlement, but without intimate knowledge of the case, it’s hard to foresee who will come on top.

"WHY NOW? BECAUSE AFTER TALKING TO SAMSUNG FOR TWO YEARS, WE MADE NO PROGRESS (NVIDIA CEO)"   One could speculate that NVIDIA is trying to leverage its graphics intellectual property (IP) strength to counter Qualcomm’s dominance in the overall software and hardware stack, backed by an impressive array of LTE modems and technologies like RF360, which allows its customers to launch in hundreds of different countries at once – this is a key element in Qualcomm’s dominance of the mobile chip market. Even Samsung has to use Qualcomm’s chips if it wants to launch worldwide. Samsung produces its own mobile processors under the Exynos brand.

Created in 1993, NVIDIA has had ample time and talent to build up a very strong portfolio of graphics-related patents (7000). The company can claim having invented many things related to programmable shading, and it even won a legal standoff with Intel in the past. Still, this is new for NVIDIA.

As of late, NVIDIA has hinted several times that it would like to sell its intellectual property, in addition of selling chips – a good idea overall, I had not imagined last year that things would heat up like this. NVIDIA’s latest chip, Tegra K1, comes with excellent graphics and overall performance. However, no major contract with Tier-1 phone makers has been announced yet. There were however some design-wins with ACER and Xiaomi.

There will be a lot of technicalities during any trial or procedures, and there’s no doubt that Qualcomm will seek to disprove the accusations. If Qualcomm was to lose this, it would have an important (monetary) impact on its business because the graphics units are deeply integrated into every Snapdragon mobile chips.

However close, or remote, this possibility does exist. Worst case scenario, NVIDIA would make money on every Qualcomm chip and Samsung phones that the courts deem to infringe. If NVIDIA wins, it is not the end of Qualcomm, but the financial impact on NVIDIA’s bottom-line would be tremendous.

"AN NVIDIA 'WIN' WOULD LIKELY LOOK PRETTY SIMILAR TO WHAT MICROSOFT DID TO ANDROID DEVICE MAKERS"   Note that Microsoft does get royalties on every Android phone sold. After successfully suing Samsung, Microsoft started to receive royalties payment from the Korean giant and went on getting more royalties from other vendors like Acer, Viewsonic, HTC etc… In the end, Microsoft ended up making more money with Android than with Windows Phone back in 2011. An NVIDIA “win” would likely look pretty similar to what Microsoft did to Android device makers.

If NVIDIA loses, it may have to pay for all the legal fees, but the downside seems limited. Its relationship with Samsung may also suffer form it, but they seem rather cold at the moment anyway. Yet, sometime it is better to have an inactive partner than an active adversary. Overall, NVIDIA has little to lose and there is no existential threat in its immediate future.

Qualcomm’s graphics hardware team now employs a number of former AMD engineers who were key in building DirectX 11 level Radeon hardware. So far, NVIDIA has not challenged AMD’s intellectual property and did not indicate its intent in doing so. AMD also has a rich graphics patent portfolio and it is not inconceivable that if NVIDIA wins, AMD would pursue a similar course of action.

14:30 Update: We tuned into NVIDIA CEO Jen-Hsun Huang’s conference call and there are more details coming out of it.

This is broader than just Qualcomm’s GPUs. Jen-Hsun Huang specifically said that he believes other mobile graphics architectures (ARM, Imagination technologies included) do infringe on its patents as well. Since Samsung uses all three architectures in its products, NVIDIA can engage all architectures that it thinks infringe on its patents.

What is the desired outcome?: NVIDIA is asking the courts to decide if its IP was infringed upon, if yes, what damages should be awarded and what licensing fees should apply going forward.

NVIDIA has picked 7 specific patents. The company has a “very high level of confidence” that these patents have been infringed upon.

What about Apple? Jen-Hsun Huang replied “today, we focus on Samsung and Qualcomm”, and we’re still discussing with other companies out there.” Since Apple uses one of the three architecture mentioned earlier, it is clear that NVIDIA believes that it is in a similar situation as Samsung, but it seems that talks are still ongoing with Apple at the moment.

Why now? When asked if there was a specific event that led to the filing of the lawsuit, Jen-Hsun Huang replied “we made no progress. We have made every effort to have a negotiated outcome for a long time, but maybe when you are used to use technology for free, it’s hard to come to a large settlement. We came to the conclusion that we were not going to make any progress, so we’re asking for the help of the courts”

A possible legal timeline could look like this:

ITC

  • Decision for ITC between 30 days to open an investigation
  • Discovery process begins
  • Trial Mid 2015-trial
  • Initial decision a few months later

District Court of Delaware

  • Schedule conference 15-90 days to set up trial date
  • Trial in 2 to 3 years from now

Qualcomm reached out to Ubergizmo to confirm that the company was “aware of the lawsuit and was investigating the claims”. Samsung representatives were not available for comments.

Filed in Cellphones. Read more about legal, NVIDIA, qualcomm and Samsung.

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