Crossed swords: Nvidia countersues Intel over chipsets for Nehalem

In a court filing in Delaware district court today, revealed by the filer itself, Nvidia is counterclaiming that Intel had no right to tell the general public -- by way of the court -- that Nvidia was not licensed to produce chipsets for motherboards based on Intel's Nehalem processor architecture.

"Nvidia admits that it believes that Intel has violated its contractual obligations and has improperly made statements to the effect that Intel does not believe, or 'disputes,' that Nvidia is licensed to market [Media and Communications Processor] chipsets," reads the text of Nvidia's countersuit filed this morning (redacted PDF available here).

In Intel's initial claim against Nvidia filed last month, now no longer under seal (redacted PDF available here), Intel cited a June 2008 article in Maximum PC magazine entitled "Intel and Nvidia's Secret War Revealed." That article, written by Gordon Mah Ung, focused on what was then a pending problem with SLI architecture -- what enables an OEM or system builder to install two Nvidia graphics cards in the same system. Ung stated that SLI was originally designed around Intel chipsets, casting doubt on the notion put forth by Nvidia that somehow SLI was incompatible with Intel chipsets, for reasons Nvidia explained as having to do with validation.

In that article, Nvidia spokesperson Brian Burke made a statement indicating that Nvidia was licensed to produce SLI graphics cards for Nehalem-supportive chipsets like X48 and X48 Express, but that it was simply choosing not to do so. "We do have full licensing in our licensing agreement," Burke told Ung. "We don't have a product for Nehalem. Right now."

At the heart of Intel's original dispute is the belief that the cross-license agreement (CLA) only extends to Intel architectures that contain "northbridge" and "southbridge" chips or functions. While a southbridge maintains the input/output functions of a motherboard, the northbridge acts as the memory controller hub. For Nehalem -- for the first time in Intel's history -- that memory controller has been moved on-board the CPU, in an architectural design shift that is ironically at the heart of Intel's separate cross-license dispute with AMD, which integrated that functionality into its CPUs first.

The non-redacted portion of Intel's February suit leaves it clear that it believes, due to the architectural shift, "the disputed MCPs are not licensed under the CLA."

The month after Maximum PC printed its article, Intel claims, its attorneys sent a formal letter to Nvidia asking it "to cease making false and misleading statements concerning its purported rights under the [cross-license agreement] to make Disputed Nvidia MCPs." It also drafted a joint press statement and had Nvidia look it over, but Intel says Nvidia never responded.

In its response today, Nvidia says it saw that draft joint press statement, but denies that it failed to respond to the letter. But from there, Nvidia advanced a theory that Intel is using legal maneuvers to compensate for its failure in the market to produce integrated graphics processors that compete with Nvidia's.

"For years, Intel has dominated the lucrative field of [CPUs], with Intel's graphics offerings being an afterthought," reads the countersuit. "Nvidia, in contrast, correctly predicted that graphics processing would become increasingly important to computer technology and pioneered sophisticated graphics products, including new innovative [GPUs]."

Intel found itself playing catch-up, states Nvidia's case, and for that reason in 2004 entered into the cross-licensing agreements that make SLI possible. It was the only way Nvidia could build its own chipsets -- such as nForce 790i -- that would work with Intel CPUs, Nvidia contends. "And, once again, it looked as though Nvidia had made the right decision," state the company's attorneys.

"Unable to compete on the merits, Intel is now using this lawsuit to tilt the playing field decidedly in its favor," the countersuit goes on. "After months of attempting to steer customers away from Nvidia by claiming there was a licensing 'dispute,' Intel has now publicly and unequivocally asserted that Nvidia is not licensed to sell any chipset -- no matter how designed -- for its next generation of 'Nehalem' CPUs. Intel's disavowal of its license and pre-emptive filing of this lawsuit will, by design, serve to alarm customers and immediately and negatively impact Nvidia's sales, even as to chipsets sold for architectures other than 'Nehalem.'"

This while Intel continues to make use of Nvidia's IP, it goes on, even if apparently all for naught.

More explicit claims of Intel's alleged breach of the cross-licensing agreement were redacted from the public version of the countersuit. This filing comes in the midst of the important Game Developers' Conference in San Francisco, where both Intel and Nvidia are prominently featured. Intel has not issued a public response as of early Thursday evening.

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