Nvidia Corp. lost the first round of its royalty dispute against Samsung Electronics Co. and Qualcomm Inc. after a U.S. trade judge said there was no violation of the graphics chipmaker’s patent rights.
Elements of two patents are invalid, and third isn’t infringed, U.S. International Trade Commission Judge Thomas Pender said in a notice posted on the agency’s website Friday. The judge’s findings are subject to review by the six-member commission, which has the power to block imports of products that infringe U.S. patents.
Nvidia has said it filed the complaint after two years of failed patent-licensing talks. It’s counting on the threat of an import ban on Samsung mobile phones and tablets to forge an agreement.
The case is over chip innovations that make graphics processing units, or GPUs, more efficient and more capable of supporting complex functions for smartphone and tablet users, such as video gaming and playing movies.
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, saying they infringe its patents. 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.
Nvidia fell as much as 2.3 percent to $25.58 in New York trading on the news. Qualcomm was up less than a percent to $57.84.
“Qualcomm has maintained from the outset of the case that the accused Snapdragon products do not infringe any valid claim of Nvidia’s patents and we are obviously pleased with this ruling,” said Alex Rogers, Qualcomm’s legal counsel.
The commission staff, which represents the public interest, recommended that the judge find no violation of Nvidia patent rights, saying they were either invalid or not infringed. The judge followed some but not all of the specific recommendations of each patent.
Samsung retaliated with its own patent-infringement claims against Nvidia, along with the chipmaker’s customers, at the trade agency. A trial in that case, which involves computer memory technology, was held in August and the judge is scheduled to issue his findings Dec. 22. The ITC staff in that case recommended Nvidia be found to have infringed two of the three Samsung patents.
Each company also has filed petitions with the U.S. Patent and Trademark Office, seeking to have the patents canceled by arguing they never should have been issued in the first place. The Patent Trial and Appeal Board is conducting a preliminary analysis to determine if further review is warranted.
Nvidia is trying to branch out into technology licensing, looking for a greater return on in its investments in graphics chip research and design. By going after Samsung, the largest maker of mobile phones, Nvidia is trying to demonstrate to other potential licensees that its intellectual property has value and they need to pay it.
The approach mirrors what Qualcomm has achieved in mobile phones where it designs and sells chips. Phone makers also pay to license its technology regardless of whether they buy silicon from it.
The Nvidia case against Samsung is In the Matter of Certain Consumer Electronics and Display Devices with Graphics Processing, 337-932, and the Samsung case against Nvidia is In the Matter of Certain Graphics Processing Chips, Systems on a Chip, 337-941, both U.S. International Trade Commission (Washington).