In a recent lawsuit, Xockets, a startup backed by prominent figures from Yahoo and Intel, has taken legal action against Nvidia and Microsoft for allegedly infringing on its patented data processing unit (DPU) technology. The lawsuit also claims that the two tech giants are part of a buying cartel that aims to artificially lower prices for AI chip technology, monopolizing the market in the process.
Xockets alleges that Nvidia inherited the patent infringement through its acquisition of Mellanox in 2020, claiming that Mellanox initially infringed on its patent after Xockets publicly showcased its DPU tech in 2015. The lawsuit specifically points to Nvidia’s DPUs – BlueField, ConnectX, and NVLink Switch – as being based on Xockets’ patented technology. Additionally, the startup accuses Microsoft of benefiting from Nvidia’s infringement by having “privileged access to NVIDIA’s infringing GPU-enabled server computer systems and components for AI.”
Apart from patent infringement, Xockets claims that Nvidia and Microsoft are part of a cartel, facilitated by an organization called RPX, which was allegedly created at the request of major tech companies to form buyers’ cartels for intellectual property. Through this cartel, Xockets alleges that Microsoft and Nvidia are able to control the market for GPU servers for AI and monopolize GPU-enabled generative artificial intelligence.
Xockets is seeking damages for the alleged infringement and is requesting the court to order Nvidia and Microsoft to cease violating its patents and antitrust law. Despite facing two tech giants in court, Xockets’ investor and board member, Robert Cote, an IP lawyer, expressed confidence in the startup’s ability to challenge Nvidia and Microsoft, referring to the legal battle as a confrontation of “David against Goliath.”
The legal battle between Xockets, Nvidia, and Microsoft highlights the intense competition and disputes within the tech industry over intellectual property rights and market dominance. As the case unfolds, it will be interesting to see how the courts address the allegations of patent infringement and cartel behavior, and what implications the outcome may have for the future of AI chip technology.