The ITC rules against Nvidia in a patent-infringement suit begun by Rambus in 2008. Nvidia still has the option to license the Rambus IP, and assures its customers, which include makers of desktops and notebooks such as Hewlett-Packard and Asus, that it will still fulfill chip orders.
Graphics chip maker Nvidia infringed on three patents held by Rambus,
according to the U.S. International Trade Commission, which July 26 ruled that
certain products containing the Nvidia chips may not be imported.
The ITC ruling pertains to Nvidia's GeForce, Quadro, nForce, Tesla and Tegra
chips, which are used by customers such as Hewlett-Packard, Asustek Computer
and Biostar Microtech. After the ruling, Nvidia officials said the company
would pay a bond that will enable it to continue supplying HP and other OEMs
with chips while the company appeals the ruling. The bond is 2.65 percent of
the value of what it is being imported, and enables Nvidia and its partners to
continue to bring in the products for a period of 60 days.
Rambus filed the complaint in November 2008. In a July 27 statement, Rambus
General Counsel Thomas Lavelle expressed his pleasure with the ITC's findings.
"We are extremely pleased with the ITC's decision to issue a Limited
Exclusion Order, signaling the strength of our innovation efforts beyond the
Farmwald-Horowitz patents of our founders," Lavelle said. "The value
of our patented inventions has been recognized by our current licensees, and we
will continue our efforts to license others."
Deutsche Bank analysts said they believe an injunction is unlikely, as
Nvidia, through an agreement negotiated by the European Commission, has the option
to license the Rambus IP (intellectual property).
"Under that agreement the royalty would be 2 percent, but capped at a
$20 ASP [average selling price]," the analysts said in a July 27 research
note. "We note the majority of Nvidia's products have ASP well north of
$20 and therefore we suspect the effective royalty is well below 2 percent and
probably closer to 1 percent."
The note added that Nvidia, with its $4 billion in annual sales, could
"easily support" a 1 percent royalty.
According to Bloomberg, Nvidia plans
to appeal the ruling, and has assured its customers that their orders will
still be filled as expected.
In July 2008, Rambus filed a civil suit against Nvidia in a U.S. District
Court, alleging the infringement of 17 Rambus patents and looking to collect on
past damages. While the ITC ruling "resolves the future, it doesn't
resolve the past," Lavelle recently told Bloomberg.
"For more than six years, we have diligently attempted to negotiate a
licensing agreement with Nvidia, but our good-faith efforts have been to no
avail," Lavelle said in a statement at the time of the filing.
"Graphics and multimedia products require leading-edge memory performance,
and as Nvidia advances its product portfolio, it infringes more and more of our
patents. We are left with no other recourse than litigation to protect and seek
fair compensation for the use of our patented inventions."
Deutsche Bank analysts said they expect the ITC ruling to negatively affect
the civil suit.
"The ITC verdict likely strengthens Rambus' position," the
analysts wrote, "but any outcome on damages looks unlikely in the short term."
Bloomberg reported that 96 percent of Rambus' $113 million revenue for 2009
came from patent licensing royalties.
Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.