When NVIDIA Corporation (NASDAQ:NVDA) launched its first-ever patent infringement lawsuit against Samsung (NASDAQOTH:SSNLF) and Qualcomm (NASDAQ:QCOM) just more than a year ago, the graphics-chip specialist knew it was in for a long and winding road. Unfortunately for NVIDIA, it took a few steps back on that road a few days ago, when U.S. International Trade Commission (ITC) Judge Thomas Pender ruled that Samsung and Qualcomm did not violate U.S. law with respect to importing certain Samsung products into the country.
More specifically, NVIDIA says, Pender issued an "initial determination" that Samsung and Qualcomm didn't infringe on two NVIDIA patents. At the same time, Pender also determined that Samsung and Qualcomm did infringe on a third NVIDIA patent, but asserted that the third patent is invalid.
For perspective, when NVIDIA initially filed the suit, it requested not only financial damages, but also that the ITC block shipments of Samsung Galaxy Mobile phones, tablets, and Smart TVs containing the infringing technology -- an evolving list that most recently included the Galaxy S5, Galaxy Note 4, Galaxy Note Edge, and several other massively popular Samsung devices. If NVIDIA had been successful in its attempt to get Samsung's devices banned from import into the U.S., it would have provided sufficient financial motivation for Samsung and Qualcomm to settle this infringement case as quickly as possible.
But making this initial ruling even more surprising is that it came on the back of a favorable pretrial "Markman ruling" in April, when Judge Pender determined that "claim constructions" favorable to NVIDIA would be applied to six out of seven disputed claims. Put another way, because the verbiage of complicated technology patents must be understandable to a layman, they can often be interpreted in more than one way. The goal of a Markman Ruling, then, is to settle these ambiguities before the infringement issues are actually considered. And make no mistake -- NVIDIA enjoyed a distinct advantage where its own claim constructions were used.
Far from over
Naturally, NVIDIA disagrees with Pender's initial ruling. And NVIDIA executive VP David Shannon wasted little time stating the company's intention to ask the full U.S. International Trade Commission -- made up of six commissioners -- to both review the ruling, and to "confirm the previous judgment of the U.S. Patent Office -- that the third patent is valid." If they agree with the latter, in particular, the ITC would follow by issuing the aforementioned import ban on infringing Samsung products. Shannon added, "This initial determination is one more step in a long legal process."
This ITC case is separate from NVIDIA's open Federal case against Samsung and Qualcomm. On top of that, recall that Samsung quickly responded with two countersuits of its own shortly after NVIDIA launched its legal offensive last year: First, a patent infringement suit in Virginia -- which NVIDIA notes has a faster time to trial than most other U.S. jurisdictions -- and second, another suit with the International Trade Commission.
Though NVIDIA was unsurprised with Samsung's response -- it was a "predictable" move, Shannon stated at the time, and nothing more than "typical legal ping pong" -- together, Samsung's suits regrettably named more than a dozen small NVIDIA partners as co-defendants. Referencing the inclusion of partner Velocity Micro as a likely attempt to influence the location of the Virginia case, for example, Shannon lamented, "It can be a dangerous strategy for one of the largest companies on the planet to decide to sue one of the smallest companies in all of Virginia."
Nonetheless, NVIDIA's resolve to continue plowing forward with the ITC case remains intact, as success here would provide invaluable leverage to help it win the remaining cases. If one thing is clear right now, it's that NVIDIA's patent battle with Samsung and Qualcomm is far from over.
Steve Symington owns shares of Nvidia. The Motley Fool owns shares of and recommends Qualcomm. The Motley Fool recommends Nvidia. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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