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As claims against Nvidia begin, what settlement means

Claims can now be filed against Nvidia for defective graphics processors. This follows more than two years of payouts by Nvidia to PC makers, who have been separately repairing laptops with defective Nvidia graphics chips.

Brooke Crothers Former CNET contributor
Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.
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Brooke Crothers
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The clock is now ticking for consumers to file claims against Nvidia for defective graphics processors. As a result of a class action settlement, consumers were allowed to begin filing their claims related to the cost of repairing laptops that contained the defective chips on Thursday and have until March 14 to file a claim. But this settlement shouldn't be confused with a series of large payouts by Nvidia to PC makers dating back to July 2008.

Models affected include older MacBook Pros.
Models affected include older MacBook Pros. Apple

Nvidia's problems began back in 2007, as CNET has reported, when defective Nvidia graphics processing units (GPUs) began showing up in laptops from Apple, Hewlett-Packard, and Dell--among others.

Nvidia responded for the first time officially in July 2008. At that time, Nvidia took a charge of $196 million. The company took additional charges over the next two years, which, in total, were close to half a billion dollars.

No small part of this money has been allocated for PC makers (also referred to as original equipment manufacturers, or OEMs) that, over the last few years, have been making repairs to laptops from Apple, Hewlett-Packard, and Dell. Most laptops affected are older models shipped in 2008.

So, then, what is the class action about? This is settling consumer claims, which Nvidia describes as a "group of customers who wanted remedy [because they] didn't get a repair from their OEM, or they didn't know to get a repair from their OEM, or they felt that their repair wasn't satisfactory," according to a statement from an Nvidia spokesman. (A list of the affected models is here.)

Symptoms are described as (PDF) "distorted or scrambled video on the notebook computer screen...No video on the notebook computer screen even when the notebook computer is on...Random characters, lines or garbled images on the notebook computer screen," among other issues.

In response to the settlement dated August 12, 2010, Nvidia issued this statement. "We can confirm that Nvidia has settled litigation concerning a weak die/packaging material set in certain versions of our previous generation MCP (media and communication processor) and GPU products used in notebook configurations."

The statement continues. "Notice of this settlement has been sent to potentially affected eligible customers. Claims are being processed through a third-party administrator who is working directly with our customers. Consumers who believe they are affected and wish to file a claim should read the notice and follow the instructions that it sets out. As previously announced, our second-quarter financial results reflected costs associated with this settlement."

However, starting on page 24 of the settlement, Nvidia also stated that it "has denied, and continues to deny, all allegations of wrongdoing or liability" related to the claims. And it goes on to say that it is settling "solely because it will eliminate the burden, expense, management distraction and uncertainties of further litigation and the concomitant distraction of resources and efforts from their business."