When NVIDIA (NVDA 2.54%) filed its first-ever patent infringement lawsuit in September, the company knew all too well it would be met with resistance.
After all, the defendants are none other than Samsung (NASDAQOTH: SSNLF) and mobile chip specialist Qualcomm (QCOM 6.08%), the former of which NVIDIA said its licensing team spoke with several times over the past couple of years to try and come to terms. NVIDIA insisted both are using its GPU-centric intellectual property without paying proper compensation -- which in this case could easily amount to billions of dollars -- only to be repeatedly told this was primarily their suppliers' problem.
Consequently, NVIDIA also asked the International Trade Commission to block shipments into the U.S. of Samsung mobile phones and tablets containing the infringing technology -- a list which encompasses tens of millions of devices including the Galaxy S5, Galaxy Note 3, Galaxy S4, Galaxy Tab S, Galaxy Note Pro, Galaxy Tab 2, Galaxy Note Edge, and Galaxy Note 4. In October, the ITC voted to approve an investigation into whether those products should be blocked.
Shortly after that, Samsung filed a countersuit against both NVIDIA and a small NVIDIA customer called Velocity Micro. While the countersuit was "fully expected," says NVIDIA Executive Vice President David Shannon, it was "unfortunate" Samsung had to drag Velocity Micro into it. This allowed the electronics giant to "keep its lawsuit in Virginia, which has a faster time to trial than most jurisdictions in the United States."
"It can be a dangerous strategy," Shannon noted in a blog post, "for one of the largest companies on the planet to decide to sue one of the smallest companies in all of Virginia."
Samsung just created (even) more collateral damage
On Tuesday, Shannon took to NVIDIA's official blog with an update on the case. In addition to its lawsuit in Virginia, he said, Samsung also "predictably" filed a separate countersuit with the International Trade Commission. The kicker? This lawsuit includes "a dozen other small [NVIDIA] partners ... who also have nothing to do with this fight," according to Shannon.
As it did with NVIDIA, the ITC voted to allow Samsung's case to proceed. But, according to Shannon, this is nothing more than "typical legal ping pong" as the two companies position their respective cases. The only difference seems to be that NVIDIA is unwilling to throw Samsung partners with no connection to the case under the bus in the process.
What's more Shannon reminded in his post that the countersuits obviously don't affect NVIDIA's resolve in asserting patent infringement by Samsung. NVIDIA's claim "only" involves seven of its more than 7,000 issued and pending patents, a treasure trove on which NVIDIA has invested more than $9 billion over the past 20 years to create. As such, NVIDIA intends to do all it can to earn a reasonable return on that investment.
For now, shareholders of both companies can only wait for the courts to do their work. NVIDIA, for its part, expects the first case to be decided will be its ITC complaint against Samsung. Should that decision arrive in NVIDIA's favor, it would strike a crushing blow to Samsung by preventing virtually all of its flagship devices from being shipped into the U.S. If that happens, I wouldn't be the least bit surprised if NVIDIA and Samsung quickly come to terms.