Nvidea Blocks Intel's Uppercuts and Punches

Nvidia has reportedly blocked Intel’s lawsuit, which had earlier requested the court to allow it to sell its newest line of integrated circuits (IC’s) without having to pay any licensing fee to Nvidia, with a counter lawsuit that has claimed breach of contract and termination of Intel’s (News - Alert) rights to its selected patents as per an earlier signed agreement by the two companies.

The legal side of the episode started earlier this year on February 18 when Intel allegedly claimed to a Delaware court that its latest IC’s were designed in a way which did not require it to shell out any licensing related payments to Nvida and that there was absolutely no supporting clause in all the fine print of the November 2004 agreement. It made particular mention of its present and future Nehalem (named after the Nehalem River in Northwest Oregon) IC series in this context.

The statement made at the time of signing the original agreement is in stark contrast with the current deteriorated scenario. "Today's agreements are significant for both companies and, more importantly, represent a win for our mutual customers who now have more choices for enhancing the PC experience," said Louis Burns, vice president and general manager, Desktop Products Group, Intel on November 19, 2004.

The first micro architecture Nehalem IC to be released was the Core i7 in November 2008 and it was followed by the Mac Pro in March 2009. Officials claim that it plans to release Nehalem technology IC’s for high capacity and super quick servers in the fourth quarter of 2009 and is targeting the mobile industry with an IC release sometime in 2010.

Fiscal pundits predicting the recession more than a year ago allegedly triggered officials to strip bare all micro elements of cash outflow to see where the company could save cash. One such result, it appears, was the company discovering that Nehalem micro architecture is totally unconnected with its agreement with Nvidia and it could lower costs by eliminating related fees.

Nvidia’s legal counter suit was made on March 26. It claims that it has made all possible attempts over the last year to resolve the disagreement in a fair and reasonable manner.

"NVIDIA (News - Alert) did not initiate this legal dispute," said Jen-Hsun Huang, president and CEO of NVIDIA. "But we must defend ourselves and the rights we negotiated for when we provided Intel access to our valuable patents. Intel's actions are intended to block us from making use of the very license rights that they agreed to provide."

Intel’s response partially acknowledges the year long disagreement. Chuck Mulloy, Intel Spokesperson, said, "There is a substantial disagreement between Intel and Nvidia about their licensing rights under the agreement. We've been trying multiple times, multiple ways to find a way to settle the argument."

The report cites a telling comment that emanated from the lawsuit and reflects Nvidea’s mood. It says, “"Having breached the contract and irreparably injured Nvidia, Intel has lost the right to continue to enjoy the considerable benefit of its license to Nvidia's patent portfolio."