NVIDIA Responds Boldly To Intel Court Filing

NVIDIA Responds Boldly To Intel Court Filing

NVIDIA and Intel have always had an interesting relationship, consisting of a dash of mutual respect and a whole lot of under-the-collar disdain. And with situations such as these, it's easy to understand why. NVIDIA today has come forward with a response to a recent Intel court filing in which Intel alleges that the "four-year-old chipset license agreement the companies signed does not extend to Intel’s future generation CPUs with 'integrated' memory controllers, such as Nehalem."

NVIDIA is quick to point out that this filing doesn't impact chipsets that are currently being shipped, and Jen-Hsun Huang, company president and CEO, had this to say about the whole ordeal: "We are confident that our license, as negotiated, applies. At the heart of this issue is that the CPU has run its course and the soul of the PC is shifting quickly to the GPU. This is clearly an attempt to stifle innovation to protect a decaying CPU business." Ouch, and double ouch!

The graphics maker has stated that it entered into the agreement in 2004 "in order to bring platform innovations to Intel CPU based systems; in return, Intel took a license to NVIDIA's rich portfolio of 3D, GPU, and other computing patents." Mr. Huang explained that "given the broad and growing adoption of NVIDIA’s platform innovations, it is not surprising that Intel is now initiating a dispute over a contract signed four years ago. Innovations like ION, SLI, Hybrid power, and CUDA threaten Intel's ability to control the PC platform." In case you haven't noticed, Jen-Hsun isn't afraid of saying what he truly feels in public, but given NVIDIA's dominance in the space in which it competes, we suppose he can get away with such quips.

We know we're only getting one side of the story here, but NVIDIA claims that it has been making attempts to remedy this problem in a "fair and reasonable manner" for over a year now. Obviously, the lawyers have now been called in to handle things in a more formal manner. Like all Intel vs. NVIDIA squabbles, this too should be interesting to see play out.

Update: We have received a response from Intel on the matter.  "Intel has filed suit against NVIDIA seeking a declaratory judgment over rights associated with two agreements between the companies. The suit seeks to have the court declare that NVIDIA is not licensed to produce chipsets that are compatible with any Intel processor that has integrated memory controller functionality, such as Intel’s Nehalem microprocessors and that NVIDIA has breached the agreement with Intel by falsely claiming that it is licensed. Intel has been in discussions with NVIDIA for more than a year attempting to resolve the matter but unfortunately we were unsuccessful. As a result Intel is asking the court to resolve this dispute. It is our hope that this dispute will not impact other areas of our companies’ working relationship."


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So, to paraphrase:

nVidia licensed to make Intel northbridge and southbridge chipsets.

Now that the memory controller is no longer needed, nVidia wants to produce an integrated chipset like they've been doing forever with nForce for AMD64.

So, obviously, Intel should sue them to get more money for... innovating?

This leaves me with two or three questions:

First the simple one: Why does Intel think nVidia should pay them anything? Did Intel provide nVidia with new chipset blueprints or something else (that they're now claiming nVidia isn't licensed to have)?  Or do they simply think that producing any device that uses an Intel processor entitles them to profits from the device beyond the cost of the processor?

Now the big one: Why isn't it illegal for Intel to make such licensing agreements when they already knew they were going to destroy the ongoing value for nVidia by changing the CPU architecture?

If you read anything Paul Ortellini and others at Intel said just a few years back, they were vehemently swearing that there was no benefit to integrated controllers vs. their then-strategy of bigger caches. It's obvious they were saying this stuff at the same time their engineers were already dabbling with Nehalem-bound architecture.

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Full Disclosure:  My current PC uses an Intel processor and nVidia chipset.

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The answers to 3vi1's questions are fairly simple.

You ask "Why does Intel think nVidia should pay them anything?"

The answer: Intel doesn't want nVidia to pay them anything!! Read the article again. Intel simply wants the court to resolve the license dispute. Intel is not asking for any compensation from nVidia whatsoever.

You ask: "Why isn't it illegal for Intel to make such licensing agreements when they already knew they were going to destroy the ongoing value for nVidia by changing the CPU architecture?"

The answer: why should it be illegal? There wasn't anything deceptive here. Everyone in the industry, including nVidia, knew that Intel was going to move to an integrated memory solution even before AMD made the move. Both companies have always been moving toward that because they both knew it was necessary. AMD simply got their first. Why should it not be legal to issue a license for one product architecture that doesn't automagically apply to every future product architecture?? The notion that it should be illegal to issue a license for an architecture that doesn't also apply to future unrelated architecture's is rather absurd.

To Jeremy: the thing that Intel got from the license arrangement was not a "detailed look into how nVidia does graphics acceleration". It was the right to make SLI compatible motherboards.

Unfortunately for nVidia, this is not of much value to Intel, and puts them in a horrible bargaining position. nVidia doesn't gain anything by refusing Intel the right to make SLI compatible boards.

I also do not think Intel ever adamantly sweared that the integrated memory controller offered no advantage. As I said, the entire industry knew that was inevitable before either company had yet moved to an integrated memory controller. It was always a question of timing, and everyone who understands the industry knew it. AMD was early to that party, and Intel was late.

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I think you're pretty much right on here, Klintus, on virtually all of your points. It's going to be interesting to see how things play out for both Intel and NVIDIA in the coming months.

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>> Intel doesn't want nVidia to pay them anything!! Read the article again. Intel simply wants the court to resolve the license dispute.

Think it through to the next step. If Intel can get the court to declare that nVidia doesn't have rights to make any chipsets for Intel processors with integrated memory controllers, how does nVidia remedy that?

>> why should it be illegal? There wasn't anything deceptive here.

It was entirely in bad faith. nVidia obviously thought they were licensing to make chipsets for Intel CPUs, and Intel (claims to have) made the deal specific to a CPU architecture. See, they made the deal such that they still have access to relevant nVidia tech, whereas nVidia now only has rights to build for an antiquated CPU.

>> Everyone in the industry, including nVidia, knew that Intel was going to move to an integrated memory solution even before AMD made the move.

Please cite your source. Intel didn't announce they would do this until 2007, years after the nVidia deal. If you look around the web, you will find quotes from Intel's CEO claiming that integrated memory solutions weren't necessary (they were careful not to say they'd never do it) over a year *after* they made the deal with nVidia.

At any rate, I don't see why Intel's change in the position of the memory controller should give Intel carte blanche to declare nVidia's half of the agreement worthless.

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If you want to read even more between the lines, this statement sticks out to me.

>>" ... in return, Intel took a license to NVIDIA's rich portfolio of 3D, GPU, and other computing patents."

So, Intel got a detailed look at how nVidia does graphics acceleration, and got license to use nVidia technology. Now that Intel's IGPs are getting more powerful (with perhaps something more looming?) as a result, they no longer see the benefit of allowing nVidia to make chipsets that work with their processors.

I also remember Intel adamantly swearing the their competitor's technology of integrated memory controllers offered no advantage, despite benchmark after benchmark that said otherwise. Now their design philosophy has changed. It'll be interesting to see how this whole thing plays out.

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Also interesting to note that this little disagreement hasn't stopped Intel from creating SLI-compatible chipsets/motherboards for the i7 platform. Since SLI technology patents are owned by nVidia, if Intel wins this battle and the license agreedment is voided it's conceivable that they could be forced to pull all SLI capable motherboards from the market.

It's a longshot, but within the realm of possibilities.

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