Texas Startup Accuses Nvidia and Microsoft of Patent Infringement in AI Race

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A small Texas-based technology company, Xockets, has filed a lawsuit against tech giants Nvidia and Microsoft, alleging that they stole its data processor technology to further their development of artificial intelligence (AI) products.

The lawsuit, filed in a federal court in Waco, Texas, accuses Nvidia and Microsoft of “rampant” patent infringement. Xockets claims that the companies conspired with each other and with patent risk management company RPX to manipulate and reduce the value of its technology.

Robert Cote, a board member of Xockets, stated that Nvidia and Microsoft are abusing their dominant market position in the AI industry by attempting to exploit the innovations of others without fair compensation.

Nvidia declined to comment on the allegations, while Microsoft and RPX did not immediately respond to requests for comment.

Microsoft has made significant investments in OpenAI, the creator of ChatGPT, which has become a prominent figure in the generative AI landscape. Nvidia’s hardware is widely used in data centers that support the development and operation of AI systems.

Xockets, founded in 2012, asserts that its inventions for “data processing units,” or DPUs, are crucial components in some of Nvidia and Microsoft’s systems. The company’s technology enables computer systems to offload and accelerate certain tasks that would otherwise strain server processors.

The lawsuit alleges that Xockets attempted to license its technology to Nvidia and Microsoft, but the companies formed a pact to redirect any licensing negotiations through RPX.

Xockets is seeking unspecified triple damages and a court order that would prohibit the sale of products that allegedly infringe on its patented technology. The lawsuit marks a significant escalation in the ongoing legal battles surrounding intellectual property rights in the rapidly evolving AI industry.