Texas Startup Xockets Takes on Nvidia and Microsoft in Patent Infringement Lawsuit

Overview

A Texas-based startup, Xockets, is making headlines by suing Nvidia and Microsoft, alleging patent infringement related to its innovative data processing unit (DPU) technology. The lawsuit claims that these tech giants are part of an illegal buying cartel that aims to manipulate prices of AI technology.

The Allegations

Xockets, which is backed by notable figures like the cofounder of Yahoo and the CTO of Intel, claims that Nvidia has infringed on its patents following its acquisition of Mellanox in 2020. Xockets argues that Mellanox initially violated its patents after Xockets showcased its DPU technology at a conference in 2015. The startup specifically points to three of Nvidia’s DPUs — BlueField, ConnectX, and NVLink Switch — alleging they are based on its patented technology.

Microsoft’s Involvement

Furthermore, Xockets accuses Microsoft of benefiting from Nvidia’s infringement as a customer, having privileged access to infringing GPU-enabled server systems designed for AI applications. Xockets claims that Nvidia's approach to infringement is a strategy of “efficient infringement,” which implies that the company infringes on patents while relying on legal defenses to address the consequences later.

The Cartel Claims

In addition to the patent issues, Xockets alleges that Nvidia and Microsoft are part of a buying cartel through an organization called RPX. This cartel, according to Xockets, was created to allow major tech companies to collectively suppress innovation and keep prices low, effectively monopolizing the market for GPU-enabled generative AI technologies.

Legal Actions and Future Prospects

Xockets is seeking damages and an order to prevent Nvidia and Microsoft from continuing their alleged violations of patent and antitrust laws. Despite facing two of the largest companies in the tech industry, Xockets believes it has the resources to pursue this legal battle. Investor and board member Robert Cote, an IP lawyer, expressed confidence in Xockets' position against these corporate giants.

Notable Individuals

Parin Dalal, a board member of Xockets, is currently a principal engineer at Google. However, Google does not have an official role in this litigation. Both Nvidia and Google have declined to comment on the lawsuit, while Microsoft and RPX have yet to respond to inquiries.