Patent War Spreads to Chip Industry

      July 14, 2011 11:19

      An intensifying patent war centering on smartphones appears to be spreading to the semiconductor industry, with the world's most notorious "patent troll," Intellectual Ventures of the U.S., suing Hynix Semiconductor and Japan's Elpida.

      A patent troll is a company that has no business other than buying up patents from insolvent firms and collecting royalties.

      Hynix denied infringing Intellectual Ventures' patents and vowed to take company-wide legal measures. IV filed the suit at a federal court in Seattle on Tuesday claiming Hynix and Elpida infringed on patented technology in manufacturing DRAM and flash memory chips.

      According to Reuters, IV is suing altogether 12 companies, including HP, Dell and Acer, which buy chips from Hynix and Elpida to make PCs, and vendors Wal-Mart and Best Buy. The firm was established in 2000 by Nathan Myhrvold, the former chief technology officer at Microsoft. Headquartered in Bellevue, Washington, IV has acquired 35,000 patents in the fields of IT and biotechnology that have apparently generated around US$2 billion in royalty payments so far.

      In December last year, IV sued nine firms including Hynix and Elpida in a federal court in Delaware, and the case is still pending after the two refused to pay royalties. IV has also sought royalty payments from Samsung Electronics and they settled in November last year for an undisclosed amount in royalties.

      In the latest lawsuit, IV claims talks with Hynix since 2009 over royalties for DRAM and flash memory products failed because Hynix rejected an agreement. It says the problem is the same with Elpida.

      In 2000 the U.S. technology licensing firm Rambus sued Hynix for W400 billion (US$1=W1,062) in royalties, but the U.S. Court of Appeals for the Federal Circuit in Washington threw out the case in May this year. Samsung Electronics agreed to pay Rambus W700 billion in royalties after a similar lawsuit.

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