Nanotech - The Circuits Blog

Updated on March 27 at 8:15 a.m. PST with comments from analyst.

On Thursday, Nvidia announced that it filed a countersuit against Intel in response to a filing by Intel last month alleging that a chipset license agreement does not extend to Intel's future-generation processors.

The action also seeks to terminate Intel's license to Nvidia's patent portfolio.

Last month, Intel alleged in a lawsuit that the 4-year-old chipset license agreement with Nvidia does not extend to Intel's future-generation processors with "integrated" memory controllers, such as its Nehalem processor.

"Nvidia did not initiate this legal dispute," said Jen-Hsun Huang, president and CEO of Nvidia, in a statement. "But we must defend ourselves...Intel's actions are intended to block us from making use of the very license rights that they agreed to provide."

Nvidia entered into the now-disputed agreement in 2004. In return, Intel took a license to Nvidia's portfolio of 3D, GPU, and other computing patents, according to the Santa Clara, Calif.-based graphics chipmaker. Nvidia said it had been attempting for more than a year to resolve the disagreement with Intel.

Nvidia said last month that Intel is claiming that the cross-license agreement doesn't apply to future bus interfaces, specifically the interface Intel uses to link the Nehalem processor to the system's memory, a new Intel feature.

Nvidia believes that the PC has become a GPU-based platform as much as a CPU-based platform and that Intel is trying to delay that inevitable shift by using the courts. (CPU stands for central processing unit; GPU stands for graphics processing unit.)

In a research note Friday Doug Freedman of Broadpoint AmTech said: "We are not surprised by NVDA's (Nvidia's) counter-suit against INTC (Intel) over chipset licensing of Nehalem's front side bus (FSB). We believe Intel's intent is not to prevent NVDA from using Nehalem FSB, but to use litigation as leverage for obtaining necessary IP/cooperation from NVDA (even possibly seeking IP in support of its non-PC SoC initiatives)." (IP stands for intellectual property; SoC stands for system-on-a-chip.)

Psion Teklogix has answered Intel's claims regarding the chipmaker's right to use the term "Netbook." The Canadian company claims that Intel is being "unjustly enriched" by unauthorized use of the trademark.

Psion Teklogix Netbook Pro

(Credit: Psion Teklogix)

Last week, Intel filed for a declaratory judgment against Psion Teklogix, claiming that the the term "netbook" is a "widely used generic term that describes a class of affordable computing devices, much like the term 'notebook' or 'ultra-mobile PC,'" Intel said in a statement last week.

Not surprisingly, Psion had a firm response: "Intel has acted willfully and maliciously, has unlawfully attempted to trade on the tremendous commercial value, reputation and goodwill of the NETBOOK mark," Psion said in a court filing in the U.S. District Court Northern District of California.

Ironically, Psion lists a product called "Netbook Pro" as discontinued on its Web site. It describes the product as having the "virtues of a larger laptop device such as a large screen, full keyboard and multiple communications ports."

Psion did not use the Netbook trademark on laptop computers for five consecutive years following the date of registration in 2000--apparently a legal requirement--mostly because Psion's mobile computers did not succeed in the market and were discontinued, according to Intel.

Psion denies its discontinued selling laptop computers under the mark netbook in approximately 2003, as Intel alleges. In October 2003, Psion launched the Netbook Pro laptop computer and denies that sales of the Netbook Pro have been discontinued.

In the filing, Psion lists retail sales (in dollars) of laptop computers "under Psion's NETBOOK mark" in the U.S. from 1999 to the present. For example, in 2005 Psion cites sales of netbooks at $1,709,433, in 2006 sales were $2,073,207, and in 2007, Psion says retail sales were $586,680.

Psion Teklogix was formed in 2000 when Teklogix merged with Psion PLC, a U.K. company which made handheld "organizers" in the 1980s and 1990s whose tiny clamshell design resembled the smallest Netbooks offered today.

The company is also demanding a jury trial.

Intel has filed for a declaratory judgment against Psion Teklogix in order to continue using the term "Netbook" generically. The legal filing also revealed, as a separate matter, that Google would prohibit search advertisements that include the term "netbook."

Psion Series 5 was launched in 1997

(Credit: Psion)

What's the difference between a Netbook and a notebook? More than the design, according to Psion Teklogix.

Psion "purports to be the owner of U.S. Trademark Registration No. 2404976 issued on November 21, 2000 for the mark Netbook for use in connection with laptop computer," according to an Intel legal filing in the United States District Court for the Northern District of California.

Not surprisingly Intel and others, including Dell, don't agree.

"Our view is that the term 'netbook' is a widely used generic term that describes a class of affordable computing devices, much like the term 'notebook' or 'ultra-mobile PC,'" Intel said in a statement Wednesday.

Intel continued: "In order to continue to use the generic term 'netbook' we filed the case. We're asking for a decision to clarify that the use of 'netbook' does not infringe anyone's rights."

Psion Teklogix, which describes itself as a "provider of mobile computing solutions," has been sending cease-and-desist letters to manufacturers, retailers, bloggers and others since December claiming the trademark. Before it became Psion Teklogix, Psion PLC made handheld "organizers" in the 1990s whose tiny clamshell design resembled the smallest Netbooks offered today by Asus or clamshell mobile Internet devices (MIDs) offered by companies like Compal and OQO (see photo).

Part of the Intel counter-claim is that the chipmaker believes that Psion did not use the Netbook trademark on laptop computers for five consecutive years following the date of registration in 2000--apparently a legal requirement. Mostly because Psion's mobile computers did not succeed in the market and were discontinued, according to Intel.

Intel cited a letter in its suit from Psion's legal counsel that asserted that "Intel aided, abetted and otherwise induced manufacturers and retailers" to "use the term 'netbook.'"

The Intel suit for a declaratory judgment also cited the fact that Google informed Intel that it "would prohibit all advertisements that include the term 'netbook' in the ad text." This was the result of a legal action by Psion against Google that "had the immediate effect of effectively ending Intel's (and all others') ability to advertise the netbook category of computers via search engine marketing."

Spansion and Kodak slammed Samsung with two separate patent infringement lawsuits Monday.

Spansion, one of the world's largest suppliers of flash memory chips, on Monday announced it has filed two patent infringement complaints against Samsung with the International Trade Commission and in the U.S. District Court in Delaware.

Spansion is seeking the exclusion from the U.S. market of more than 100 million MP3 players, cell phones, digital cameras, and other consumer electronics devices containing Samsung's allegedly infringing flash memory components.

The complaint also seeks an injunction and treble damages for alleged patent violations relating to Samsung flash memory that Spansion says has accounted for more than $30 billion in Samsung's global revenues since 2003.

Flash memory is found in virtually all electronic devices and is one of the largest segments of the semiconductor industry, with nearly $130 billion in total revenues since 2000.

The Spansion patents named in the lawsuits are fundamental to floating gate technology, "which is the foundation for approximately 90 percent of the flash memory market," according to Spansion.

The chipmaker is also targeting MirrorBit, a "charge-trapping technology" that represents a growing share of the flash memory market and is expected to replace floating gate technology in the future. Flash memory companies including Samsung have publicly announced their plans to transition to charge-trapping type technologies for their future generation products, according to Spansion.

The acquisition of Saifun appears to be one of the driving forces behind these lawsuits. "The acquisition of Saifun Semiconductor earlier this year expanded Spansion's IP portfolio and was a key milestone in Spansion's strategy to create a major licensing business, and generate new streams of significant revenue with very high margins," the company said.

Spansion also listed the "manufacturers of downstream products" containing Samsung's infringing devices in its ITC complaint. Companies named in the ITC case include: Samsung, Apple, Asus, Kingston, Lenovo, PNY, RIM, Sony, Sony-Ericsson, and Transcend.

The Kodak actions allege that both Samsung and LG camera phones infringe Kodak digital camera patents. The patents in question cover technology related to image capture, compression, and data storage and a method for previewing motion images, Kodak said.

Kodak on Monday filed suit against Samsung and LG in the United States District Court for the Western District of New York, as well as in the U.S. International Trade Commission.

Kodak's District Court complaints request compensation for damages resulting from the companies' infringement, and both the District Court and ITC actions seek injunctions prohibiting Samsung and LG from further importation and sale of products cited in the complaints. Kodak did not disclose the amount of damages it is pursuing.

Kodak has licensed its imaging patents to several leading technology companies including: MEI/Panasonic, Motorola, Nokia, Olympus, Sanyo, Sharp, Sony, Sony Ericsson, and others.

A lawsuit filed Tuesday alleges Nvidia lost more than $3 billion in market value because it concealed defects in its graphics chips.

The complaint filed by New York-based Shalov Stone Bonner & Rocco alleges that Nvidia committed "securities fraud" due to "a series of misrepresentations and omissions that actively concealed and failed to disclose the unusually high failure rates of Nvidia's mobile video adapters."

The suit ties the alleged misrepresentations to Nvidia's loss of market capitalization since July when the company "belatedly" revealed the information about problems and "promptly" lost $3 billion in market capitalization. The class action covers the period between November 8, 2007, and July 2, 2008--when Nvidia allegedly failed to disclose problems.

On July 2, Nvidia announced that it would take a one-time charge of $150 million to $200 million to "cover anticipated warranty, repair, return, replacement and other costs and expenses, arising from a weak die/packaging material set in certain versions of its previous generation GPU and MCP products used in notebook systems." (GPU stands for graphics processing unit, and MCP for multichip package.)

Hewlett-Packard stated in July that it "initiated a customer program to address this issue in November 2007, and have notified registered customers who have notebook PC models that are included in this HP program."

Dell at that time also issued a statement and offered a workaround that involved updating the computer's BIOS (basic input/output system). Other PC makers have also offered BIOS workarounds that try to mitigate potential problems.

Dell characterized the problem as "weak die/packaging material set, which may fail with GPU temperature fluctuations. If your GPU fails, you may see intermittent symptoms," Dell said at that time.

Both companies listed more than a dozen laptop models potentially affected by the glitch.

The most oft-cited graphics chip models potentially affected by the problem are Nvidia's GeForce 8 series.

Symptoms include black screens, duplicate images, wireless networking complications, and the random appearance of lines, characters, and other on-screen interference, according to the complaint.

The lawsuit tries to draw a comparison with the infamous Intel chip flaw of 1994 that forced Intel to take a $475 million write down. That flaw, however, turned out to be extremely rare. The lawsuit contends that this kind of "disaster scenario" has "materialized" for Nvidia.

Filed in United States District Court for the Northern District of California, the lawsuit names as defendants Nvidia and the company's CEO and CFO during the Class Period.

Nvidia is in the throes of a minor meltdown. Its share price is collapsing as it grapples with widespread product defects, a resurgent Advanced Micro Devices, and a weak market.

It all started when Nvidia released a statement on July 2 saying it would take a $150 million to $200 million charge to cover the costs for repair and replacement of defective graphics silicon in notebook PCs. Though Nvidia didn't name any names, Hewlett-Packard, Apple, and Lenovo, among others, use Nvidia graphics chips in their notebooks.

Then on Thursday, July 3, shares plunged $5.54, or just over 30 percent, and closed at $12.49. And share prices have continued to fall--though how much of the post-30-percent drop can be attributed to the weak stock market is not clear.

"There are two piece of news. One is the technical problem, the other part is that (Nvidia) isn't happy with where their business is going," said Dean McCarron, principal at Cave Creek, Ariz.-based Mercury Research.

Keener-than-usual competition is adding to product-defect woes. "Pricing has been more aggressive," McCarron said, referring to more competitive products from AMD's ATI graphics unit. "They did make some price adjustments on their GPU (graphics processing unit) products based on AMD being more competitive," McCarron said.

PC makers such as HP and Toshiba are also using more AMD-ATI graphics chips in notebook PCs, though the impact of this trend may be felt later rather than sooner. "I wouldn't necessarily look at it as being a tremendous share shift. We won't know until the end of the quarter. My suspicion is that (this quarter) a market share shift could be a small component," he said.

Beyond Nvidia's internal problems and the inter-company rivalry with AMD, McCarron sees a bigger issue looming that may affect not only Nvidia in a big way but AMD and Intel, too. "I am seeing some early signs that the market is weaker than forecast. China in particular seems to be much softer," McCarron said. This is a concern because China is now driving a lot of the growth, he said.

Stateside, an ill-timed Rambus lawsuit against Nvidia falls into the kick-them-when-they're-down category. Rambus, which makes a living--though not that successfully in recent years--suing other companies for patent infringement, has now set its sights on Nvidia. The Los Altos, Calif.-based company filed a lawsuit Thursday claiming Nvidia products with memory controllers for synchronous dynamic random access memory (SDR) and double data rate memory (DDR, DDR2, DDR3, GDDR, and GDDR3) infringe 17 Rambus patents.

But product defects will be the big issue that dogs Nvidia over the summer and weighs on its stock price. Here is an excerpt from Nvidia's 8-K filing with the Securities and Exchange Commission on July 2. "While we have not been able to determine a root cause for these failures, testing suggests a weak material set of die/package combination, system thermal management designs."

McCarron said in some cases "you're getting enough mechanical stress that you're actually breaking the bond between the chip and the motherboard" which can cause a system with an Nvidia chip to fail.

Transmeta, the erstwhile x86 chip competitor, is coming under attack from shareholders.

Transmeta's Crusoe processor once powered NEC, Sony subnotebooks.

(Credit: Transmeta)

The fact that the company posted revenue of only $44,000 in the third quarter, "which included $43,000 of services revenue and $1,000 of license revenue for royalty payments" may or may not have anything to do with Friday's proposed buyout by Riley Investment Management, which owns over 6 percent of Transmeta shares.

The investment firm does have serious questions about the business model based on the LongRun2 technology--described by Transmeta as a suite of technologies for advanced power management and "leakage control" in processors, among other technologies.

Riley complains that there is no "credible evidence" that shareholders will benefit from the LongRun2-related operating expenses. In an EETimes.com article, Riley also rails against an "illegal and unconscionable bonus of over $10 million" paid to Transmeta's general counsel, "simply for doing his job and settling an intellectual property lawsuit against Intel 10 months after it was filed" and claims that grants to top executives were given "at great cost to the shareholders with no commensurate value creation."

A little history: Transmeta, founded in 1995, ultimately failed in its bid to build better low-power x86 processors than Intel after consistently posting large annual losses. Not able to compete as a chip supplier, Transmeta in 2005 transformed itself into a supplier of x86 intellectual property.

After this transition, Transmeta filed a lawsuit against Intel alleging that the latter infringed upon 10 of Transmeta's patents, including computer architecture and power efficiency technologies. In October, Transmeta settled with Intel for $250 million. But this is a one-time payment and doesn't change the fact that Transmeta has exhibited unreliable earnings, particularly compared with a company like ARM Holdings--with 10 billion ARM design-based chips shipped to date and revenue of $384 million in the third quarter.

Transmeta's meager Q3 revenue juxtaposed with the handsome payouts to executives is, indeed, a cause for concern.