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Nvidia and Microsoft Sued for Allegedly Undercutting AI Technology Patent Prices

By  |  September 5, 2024

In a new legal battle, tech giants Nvidia and Microsoft are facing a lawsuit in the U.S. for allegedly stealing technology from a small Texas-based company to fuel their AI innovations. According to Reuters, the lawsuit was filed by Xockets Inc. in federal court in Waco, Texas, on Thursday, accusing both Nvidia and Microsoft of “rampant” patent infringement related to its data processor technology.

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    Xockets claims that Nvidia and Microsoft conspired with RPX, a patent risk management firm, to suppress the value of its technology and drive down licensing costs, according to the court filing. “Nvidia and Microsoft are abusing their dominance and market power in AI in an attempt to pay little or nothing for the innovations of others that are used in their products,” Xockets board member Robert Cote said in a statement.

    Microsoft has been heavily invested in artificial intelligence, including its multi-billion-dollar partnership with OpenAI, the company behind the popular AI tool ChatGPT. Nvidia, a leader in providing hardware for AI applications, supplies equipment for data centers that support the development and operation of AI systems.

    Related: Nvidia Refutes Claims of Subpoena Over Antitrust Concerns

    Xockets, founded in 2012, claims that its data processing units (DPUs) play a crucial role in these AI systems by accelerating tasks and preventing server processors from being overwhelmed.

    The lawsuit alleges that Xockets tried to negotiate licenses for its technology with both Nvidia and Microsoft. However, the companies reportedly funneled these discussions through RPX, which Xockets argues was a tactic to fix and lower the value of its patented technology.

    The Texas company is now seeking triple damages and a court order to block the sale of products containing the allegedly infringing technology, according to Reuters.

    The case, filed under Xockets Inc v Nvidia, Microsoft, and RPX in the U.S. District Court for the Western District of Texas, adds to the growing number of disputes involving AI technology as companies race to develop and dominate the field.

    Source: Reuters