Nvidia counter sues Intel over agreement

After Intel's problems with AMD a fortnight ago (See: AMD and Intel cross swords over cross licensing agreement), another chipmaker has decided to initiate legal action against the former. Nvidia said Thursday it filed a countersuit against Intel, alleging breach of contract.

Santa Clara-based Nvidia's suit, filed in the Court of Chancery in Delaware, also seeks to terminate Intel's license to its patent portfolio. Nvidia believes that without a licensing agreement, Intel's line of integrated graphics chips violate Nvidia's patent portfolio, according to Nvidia spokesman Hector Marinez.

The countersuit was brought in response to a filing by Santa Clara-based Intel last month in the Delaware court, alleging that the four-year-old chipset license agreement does not extend to Intel's future generation CPUs with "integrated" memory controllers, such as its Nehalem processor.

In its suit, Nvidia said that Intel has "manufactured" the licensing dispute as part of a "calculated strategy to eliminate Nvidia as a competitive threat," and says it is fully licensed to continue making products that interact with Intel microprocessors.

Nvidia said Intel has attempted to steer customers away from Nvidia products for months by claiming there was a licensing dispute. By officially disavowing the licensing pact through its lawsuit, Intel has breached the contract, Nvidia said. "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."

"Nvidia did not initiate this legal dispute," said CEO Jen-Hsun Huang. "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 spokesman Chuck Mulloy said the two companies "have a significant disagreement over Nvidia's rights in the agreement with Intel." "I think the issues are now crystallized and we'll ask the court to sort this out for us," Mulloy said.

Nvidia entered into the disputed agreement in 2004 to bring platform innovations to Intel CPU-based systems. In return, Intel took a license to Nvidia's portfolio of 3D, GPU, and other computing patents.

Analysts have said the legal tussle highlights the heightening rivalry between the two chipmakers and the blurring lines between chips used to perform main computer functions and those for graphics.