3Dfx sues rival Nvidia

Nvidia, a rising star in the graphics chip market, has been hit with yet another patent infringment lawsuit, this time from 3Dfx.

3Dfx filed the suit against Nvidia in the U.S. District Court in Northern California, claiming that Nvidia is using 3Dfx's patented "multitexturing" technology in its newest graphics chip, the Riva TNT.

In May, S3 filed a patent infringement suit against Nvidia, claiming that it had violated three video patents in developing its Riva family of graphics processors. Silicon Graphics had filed a similar suit against Nvidia only a month earlier.

The litigation has come at a particularly bad time for Nvidia, which earlier this year filed with the Securities and Exchange Commission for an initial public offering. Although the lawsuits are not likely to derail a proposed IPO, analysts said it could affect share price or the timing of the offering.

Nvidia disputes the lawsuit, even though the company hasn't seen it yet, said Lew Paceley, vice president of corporate marketing.

"We think the implementation of our technolgy is unique," Paceley said. "We think this is a nuisance suit."

Paceley said the timing of IPO won't be affected.

"We seem to be in the litigation phase," said Peter Glaskowsky, an analyst with MicroDesign Resources. "The industry has gone through the innovation, design, and product phases. Now it's coming down to 'who invented what and who got there first.'"

After the main microprocessor, graphics chips are the most critical piece of silicon in personal computers today. These chips handle the manipulation of images users see on their computer screens and are increasingly important as computer interfaces and 3D games become more sophisticated and demanding.

The pace of the fast-moving graphics chip industry has created an "impossible situation," said Dr. Jon Peddie, president of Jon Peddie Associates, a Tiburon, California-based consultancy.

People are bouncing around from company to company and taking ideas with them, he said. Design cycles are up to 18 months, but product cycles are down to six months, he said.

"It creates a dynamic flux where everything is moving at Web time. Who the hell has time to do a patent search? It's an unwinable war," Peddie said.

The 3Dfx suit centers on multitexturing technology, a process through which more than one texture is applied to an object. 3Dfx says it developed the technology for coin-operated arcade games in 1996.

Glaskowsky said the patent was just issued and had been pending for a while. "They believe that, based on their analysis, Nvidia's Riva TNT is infringing on their patent," he said.

"This looks like 3Dfx has a pretty solid patent," Peddie said, though he cautioned that he had not read the whole document.

The suit follows attempts by 3Dfx to reach a mutually acceptable solution with Nvidia, according to a 3Dfx statement.

"We see litigation as an unfortunate last resort," Greg Ballard, president and chief executive of 3Dfx, said in a statement. "We regret having to pursue this matter legally, but it is imperative that we protect our intellectual property on behalf of our employees, shareholders, and industry partners."