Xockets, a Texas-based startup, has filed a lawsuit against Nvidia and Microsoft for allegedly violating the patent for a key data processing unit (DPU) technology. The startup stated that the patent infringement is a result of Nvidia’s acquisition of Mellanox in 2020.

Xockets claims that Mellanox started to infringe on the patent after a public display of the technology in 2015. The startup also claims that Nvidia’s DPUs, including BlueField, ConnectX, and NVLink Switch, are derived from its patented technology. In addition, the firm faulted Microsoft, saying the tech giant benefited from the alleged infringement through the use of Nvidia’s GPU-based server platforms for AI workloads.

Lawsuit implicates RPX corporation in alleged buying cartel

Xockets’ complaint does not only revolve around patent infringement but also includes antitrust violation claims. It alleges that Nvidia and Microsoft are part of the buying syndicate that is orchestrated by RPX Corporation and whose purpose is to form groups to purchase patents. Xockets has claimed that this cartel approach helps Nvidia and Microsoft to suppress innovation and set a below-cost price.

“The buyers’ cartel at issue in this case is part of a pattern of illegal cartel behavior engaged in by NVIDIA and Microsoft, as evidenced by the ongoing investigations of these entities by the United States Department of Justice, the United States Federal Trade Commission, and the European Union.” Socket stated.

The lawsuit alleges that Nvidia and Microsoft, through their subsidiary RPX, have engaged in a conspiracy to monopolize the market for GPU-accelerated AI technologies. According to Xockets, this behavior reduces competition in the market and hinders innovation as it is.

The complaint also alleges that Nvidia uses the so-called ‘efficient infringement’ approach, where the company deliberately infringes patents, hoping that it will win the case or reach a settlement at some point. Xockets also claims that Parin Dalal, the founder of the company, complained to Nvidia’s DPU business VP regarding the infringement in February 2022. However, the matter has not been addressed.

Lawsuit seeks damages and injunction against tech giants

According to Robert Cote, Xockets’ investor and board member, Xockets has been prepared to engage Nvidia and Microsoft in a legal battle for a long time. Cote said that Xockets has the base and the will to compete with the other major players in this industry.

The case filed by Xockets provides information on the activities of RPX in the alleged cartel conspiracy. The startup also argues that RPX’s coordination of the actions of the leading technology companies aggravates the harm caused by the alleged anti-competitive conduct.

The startup is suing for damages for patent infringement and an injunction to prevent the alleged anti-competitive conduct. This lawsuit comes as British regulators have given the green light to Microsoft’s acquisition of talents from Inflection AI.