Updated with hearing date*
Nvidia has reportedly been under investigation by US regulators for violating antitrust laws, and now faces a federal lawsuit from startup Xockets over allegations both Nvidia and Microsoft formed an illegal cartel to avoid paying a fair price for Xockets’ patented Data Processing Unit technology.
*A federal judge set an expedited preliminary injunction hearing in the matter for Sept. 19 because Xockets is seeking to enjoin the release of Nvidia Blackwell GPUs.
Xockets, a private company based in Temple, Texas, was founded in 2012 by Parin Dalal and network infrastructure engineers and included investors such as Greg Lavender, the current CTO of Intel, and Jerry Yang, the co-founder of Yahoo. Dalal’s concept for DPUs is designed to help free up processors such as CPUs, GPUs and other hybrids from data-heavy workloads that slow down distributed computing processes used by cloud processors. DPUs are meant to handle data traveling between servers for networking, storage, and security and reduce and organize these data streams.
The Xockets lawsuit (6:24-cv-453), filed in US district court for the western district of Texas, alleges Nvidia and Microsoft violated antitrust laws governing illegal monopoly practices and willfully infringed on Xockets’ patents. Xockets is seeking an injunction on the release of new Nvidia Blackwell GPUs, unspecified damages and a jury trial; the case has been assigned to US District Court Judge Alan Albright.
The illegal cartel of the two giants was facilitated by an entity called RPX, the suit says in a 492-page complaint. Xockets argues RPX was formed to allow Nvidia, Microsoft and others to jointly boycott innovations such as those by Xockets to drive prices lower than if each company negotiated separately. Nvidia uses Xockets DPU intellectual property in its GPUs used in data center servers, while Microsoft relies on the IP for GPU-enabled AI platforms, Xocket said in the lawsuit. The DPU IP is critical to Microsoft and Nvidia market capitalization, Xockets added.
Xockets also claims Nvidia has infringed on Xockets patents since Nvidia’s 2020 acquisition of Mellanox. The lawsuit also says the companies have rebuffed negotiations with Xockets.
Xockets is seeking to enjoin what it calls illegal activities of both companies and to halt the release of Nvidia’s new Blackwell GPUs and Microsoft’s use of Blackwell for GenAI systems.
Xockets board member Robert Cote said in a statement that Nvidia and Microsoft are “abusing their dominance and market power in AI in an attempt to pay little or nothing for the innovations of others.” He said they are engaged in illegal activities “that are part of Big Tech’s predatory infringement playbook, a strategy designed to devalue the IP of other innovators.” They have refused to license the DPU technology from Xockets, he added. The infringement concept has been raised by startups in the past, referring to a philosophy of by a large company to infringe on a patent, then let lawyers fight over the matter in the future.
Nvidia systems feature three distinct DPUs based on Xockets’ patented architectures, Xockets said in a statement. They are used by Nvidia in Nvidia’s BluField, ConnectX and NVLink Switch.
Nvidia and Microsoft did not comment on the Xockets lawsuit, but Nvidia has commented on previous reports of US Justice investigations into alleged anticompetitive behavior by saying it has not been subpoenaed by Justice and “wins on merit, as reflected in our benchmark results and value to customers, and customers can choose whatever solution is best for them.”