Robert Cote is a lead investor and board member of Xockets. The small Texas-based company is the David to the Goliath of Nvidia and Microsoft (as he puts it) in a new antitrust and patent infringement dispute now before a federal district judge in western Texas.
Cotes talks fast in long sentences with biblical fervor that evokes strains of fundamental fairness, of how Big Tech companies are hurting the little, good guys in the growth of AI in ways that are fundamentally anti-American--as the founding fathers meant it.
“This is the real deal,” he said in an interview with Fierce Electronics. “I’ve never seen rampant infringement like this…This playbook of Big Tech that holds the reins of power today that boycotts patent trolls has moved into the role of boycotting the good guys. We need to make sure we recognize they’ve overstepped their bounds.”
If it isn’t clear, Cotes believes he and Xockets are the good guys, much like other small players who invent seminal technology that major companies adopt and use without paying fair market value for licensing rights. In the case before Judge Alan Albright (6:24-cv-453), Xockets alleges Nvidia and Microsoft formed an illegal cartel with an entity called RPX to avoid paying a fair price for the Xockets patented Data Processing Unit technology.
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DPUs, invented by Xockets founder Parin Dalal prior to 2012, were designed to free up compute cycles in other processors like CPUs and GPUs to keep them from slowing down in distributed computing used by cloud processors. The DPUs are meant to handle data traveling between servers for networking, storage and security to reduce and organize such data streams.
Xockets wants to enjoin Nvidia, Microsoft and RPX from their alleged antitrust practices as well as sales of Blackwell GPUs and other such processors. In addition, Xockets is seeking damages and a jury trial.
Cote said in an earlier 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 added they are engaged in illegal activities “that are part of Big Tech’s predatory infringement playbook, a strategy design to devalue the IP of other innovators.”
When Xockets tried to meet with the companies to seek licenses for its DPU technology, they companies refused to meet, Cote told Fierce.
While Cote insists the antitrust allegations are the most significant part of the case, there is also a lengthy tabulation in the 492-page complaint filed Sept. 5 over what Xockets believes it is owed for damages that reach to a minimum of $4 billion. Depending on the number of actual servers running Nvidia tech with Xockets IP, the number could reach much higher.
“We aren’t just seeking damages,” he insisted. “We want injunctive relief to stop the boycott [of Xocket IP]. There is injury big time. We are seeking strict enforcement of our patent rights. Big companies can deny you and boycott you. Most Davids cannot get an injunction. They know most Davids can’t take on a Goliath. But we’re strictly enforcing our rights and reward for our hard work.”
Cote recalled it was Eric Schmidt, former CEO of Google, who first characterized the behavior of the Goliaths who “steal IP to have their lawyers clean up the mess later.” It is a practice also known in legal circles as “efficient infringement” when a company deliberately chooses to infringe a patent, knowing it will be cheaper than to license the patent.
Against such a widely-understood practice, Cote added, “David can’t take on Goliath unless David has a big bat. We’re stopping any infringement, seeking an injunction to stop further boycott of our processor, while enjoining Blackwell is step 2.”
Cote is an engineer and an attorney who has used his engineering chops to bring multiple legal actions in IP disputes in the past. He said he first became fascinated with patent law as a 12-year-old, after learning about the legal battles Alexander Graham Bell faced with telephone patents and
rights. He refuses to disclose what percentage of Xockets he owns, but said he has invested millions as a lead investor and that Xockets is probably worth “billions.”
While the threats against Blackwell sales might be secondary, Cote said Xockets recognizes that Nvidia is under a previously-stated timeline of rolling out Blackwell GPUs in the fourth quarter and that the clock is ticking. “This [action] is existential to Nvidia’s expectations for investors,” Cote said. “All their business plans and all the planning by their customers depends on those H100s and new Blackwells coming to the market. Those investments are capex investments, multi-year…Nvidia can’t pay nothing.”
One key allegation, Cote said, that ties Nvidia to Xocket’s claims is that Nvidia has used Xockets’ patented technology for Nvidia’s BlueField, ConnectX and NVLink Switch DPUs. “The holy trinity of computing…is the CPU, the GPU and the DPU,” Nvidia CEO Jensen Huang is quoted as saying early in the lawsuit. “These three processors are fundamental to computing.”
The suit adds: “Nvidia did not invent the technology in its BlueField, ConnectX and NVLink Switch DPUs. This technology was taken from Xockets. And it was done so knowingly. Instead of paying fair value for the technology, Microsoft and Nvidia took it without permission. And when Nvidia and Microsoft were put on notice that Xockets would not allow its technology to be used illegally without a license, they formed an illegal buyers’ cartel with RPX to drive the price of Xockets’ patent on its DPU inventions below the market price and/or drive Xockets out of business. This lawsuit will stop the illegal conduct.”
Cote further asserted in the interview that Huang has “admitted” that Xockets IP is “the key to AI.”
In a discourse on the unfairness of Nvidia and Microsoft and other Big Tech firms, Cote said small innovators like Xockets “won’t create if there’s tyranny. This [suit] is meant to bring light to darkness. We’re trying to create balance…The companies like Xockets need funding. Otherwise, the innovation economy falls away.”
Nvidia and Microsoft have not responded to the lawsuit except to seek an extension on the date for a preliminary injunction hearing. Agreeing, Judge Albright on Thursday moved the date later, to Oct. 15.
RPX, which describes itself as a patent risk management company, blasted the suit in a brief statement on Tuesday as “inaccurate and distorted.” The statement added that RPX “will vigorously defend itself against this injudicious lawsuit which is both flawed and utterly baseless.”