A Texas tech firm is seeking billions in damages and threatening to block Nvidia’s rollout of its Blackwell AI chips this year, alleging patent infringement.
Xockets claims that Nvidia’s AI acceleration technology wasn’t invented in-house but "stolen" by Mellanox, a competitor Nvidia acquired in 2020 for nearly $7 billion.
The firm estimates its data processing unit (DPU) technology has saved Nvidia’s customers roughly $45,000 per server on a million servers equipped with Nvidia’s BlueField, ConnectX, and NVLink Switch DPUs.
“You can do the math—a million servers at $40,000 to $45,000 is extraordinary,” said Robert Cote, a Xockets board member, during a Thursday presentation hosted by ACG Analytics. “We seek a portion of that benefit.”
Cote, refuting claims that Xockets is a patent troll, said the company has filed for an injunction to block Blackwell sales that rely on its alleged IP. This would allow time to negotiate a licensing deal or sell the company.
Stopping the Blackwell launch poses a serious risk for Nvidia, which dominates 90% of the AI accelerator chip market.
The company expects Blackwell shipments to bring in billions of dollars in the fiscal fourth quarter ending January.
Xockets' case against Nvidia
The case centers on Xockets' claim that it developed the technology behind Nvidia’s DPUs, which act as a third type of microchip, alongside CPUs and GPUs, optimized for networking servers at scale.
"This will be one of the three major pillars of computing," Nvidia CEO Jensen Huang has said.
While DPUs don’t appear in personal computers, they handle server-to-server communications at data centers, enabling massive AI compute clusters to work together efficiently. As large-scale AI models like OpenAI’s GPT require such scale, DPU-enabled hardware helps save energy and reduce costs.
Xockets claims it introduced the world’s first DPU, the StreamSwitch, in 2015. Months later, it alleges Mellanox unlawfully adopted the technology. Xockets argues that Nvidia’s pivot from gaming and crypto mining to AI computing only succeeded after acquiring Mellanox and its DPU capabilities.
"Without the speed and efficiency enabled by DPUs, we wouldn’t be unlocking the AI revolution today," Cote said, noting that data centers can now accomplish in weeks what used to take years.
Patent law precedent following Apple Watch ruling
Cote pointed to the U.S. International Trade Commission’s recent ruling that Apple’s smartwatch infringed on Masimo’s oxygen-level monitoring patent. "They showed an injunctive remedy can shut down even a company as powerful as Apple," he said.
A court hearing originally set for September 19 has been delayed by a few weeks. "We’ll know more about our injunction request by the end of September," Cote said, adding that Xockets aims for a jury trial next year to resolve the dispute.
Nvidia declined to comment on the allegations.
