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NVIDIA forced to enter licence deal with Rambus

by Pete Mason on 13 August 2010, 15:26

Tags: NVIDIA (NASDAQ:NVDA), Rambus (NASDAQ:RMBS)

Quick Link: HEXUS.net/qazkf

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Cast your mind back a few weeks and you may remember that NVIDIA became a little unstuck over a patent dispute with Rambus.  After many, many months and what we assume are embarrassingly-large legal fees, the International Trade Commission (ITC) ruled against the GeForce manufacturer, potentially halting imports of any products infringing the intellectual property. 

However, NVIDIA has today announced that the two companies have struck a licensing agreement, meaning that the company's GPUs can continue to be made and sold.

Of course, this isn't too surprising.  Even though company representatives publicly stated that they planned to appeal the decision, a ruling confirmed by the ITC is quite damning.  Furthermore, the Commission could have upheld its ban on imports even while an appeal was ongoing, which wouldn't do any favours for NVIDIA's profitability.  Reaching some sort of deal with Rambus, even in the interim, was the only feasible way to proceed.

Under the terms of the deal, NVIDIA will pay a 2 per cent royalty rate for all non-SDR  memory controllers.  This includes controllers used with the DDR3, GDDR3 and GDDR5 memory that is found on most of the company's video cards.  There's also a 1 per cent royalty rate on all SDR controllers.

A few per cent may not seem like a huge amount, but NVIDIA is playing catchup in a very competitive video-card market.  We have to assume that profit margins are already squeezed and, given the company's announcement yesterday of a $141m loss this quarter, we have to assume that every per cent of its profits count.



HEXUS Forums :: 7 Comments

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Surprised they reported the royalty details - presumably it's the same agreement that AMD reached with RAMBUS some time ago.
The PR talked about standard licensing terms, so I'd assume it would be similar to the AMD deal.

Having said though, there's not a lot you can tell from the amounts they gave. How much are the royalties on the RAM controllers even worth? It really is a bit vague, and would probably take some iSuppli-style teardown to even get close to figuring it out.

Long story short, though, it amounts to a big chunk of cash that I'm guessing NVIDIA don't have spare.
I wonder if they will have to backdate royalties on products already sold - could be a fair amount.
I hate Rambus. Those bastards make money by suing everyone for patent infringement.
ddg4005
I hate Rambus. Those bastards make money by suing everyone for patent infringement.

Well, they don't have to use Rambus' designs. If they can come up with their own smart way of doing things then they won't have to use someone else's patented designs. If the design is too broad then the patent won't be enforceable. But I think the court cases are proving that's not the case.