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Technology Stocks : 3DFX -- Ignore unavailable to you. Want to Upgrade?

To: Sun Tzu who wrote (7825)	10/1/1998 6:57:00 PM
From: Patrick Grinsell	Read Replies (2) \| Respond to of 16960

Nvidia comments on lawsuit... “In light of recent admissions by 3Dfx, we can only speculate that they are turning to legal remedies in an attempt to stay profitable, rather than addressing their core market issues of channel saturation for older products and uncertain demand for their latest product,” said Jen-Hsun Huang, President and CEO of Nvidia. “While we have not yet been served with the complaint, Nvidia has examined the patent and believes there is no infringement by the Riva TNT. Nvidia intends to defend itself against this nuisance litigation.” Jen-Hsun was logically annoyed when asked about this latest suit. In his unflagging buoyancy he said, “It's absolutely clear now who everyone believes is number one in the graphics industry.” He was referring to the string of suits, first from SGI, then S3, and now 3Dfx. “It's going to take a year to go to court,” he added. “We're going to take this the distance.” When asked why he felt the company was the target of the latest suit, Huang replied, “They need to figure out a way, any way, to slow us down. Next year we're going to announce so many products it will amaze you ¾ and they'll all be WHQL approved ¾ I challenge you to get that [Banshee] certified.” We asked Huang if he knew of any infringements of 3Dfx's technology, and he replied, “I don't know how they did it [their texture compositing], or how could they know how we do it. We both have millions of transistors. It's just harassment to slow us down in the market place.” And so the beat goes on, and on, and on. Four people enter a room, two lawyers and their clients. Three people leave winners and one a loser. Guess who's who in the list? For you slower folks, two of the winners are the lawyers. This is an issue of our ties ¾ IP and where it came from. In Silicon Valley people move from company to company almost every month. They don't check their brains at the door, they're hired for their brains and experience. (BTW ¾ Jen-Hsun Huang points out, “We don't have any former 3Dfx employees.”) We live in an industry with design cycles approaching 18 months while product lives are dropping from nine months to six. How can any company under such pressure check all the possible appropriate patents, read through them, understand them and then look through their own design to see if they may have inadvertently infringed on something they thought was prior art? I look at it like SW or chip testing ¾ it's impossible to test for everything no matter how diligent or ethical you are. In this crazy industry where everyone seems to have deals and complaints against everyone else, it's just a question of time until eventually everybody sues everybody else. But what's the real point of it? Why do lawsuits now rate a press release? What does a company like 3Dfx hope to get from a company like Nvidia? Royalties? How much could they get? Enough to pay their legal bills? No, “IP” pursuits are not about royalties anymore (companies like TI, AT&T, Analog Devices, and others who actually make money on royalties never issue press releases. No the rules of IP engagement have changed ¾ it's the lotto now. It's about settlement - big settlements. And it's about spiking the stock price. Put out a PR piece that you're suing someone over IP and there's a pretty good chance your share price will go up. And if you can get an injunction to have a competitor prohibited from making the offending part (as SGI has tried to do to Nvidia) then you have a double gain. But be clear here. Although this may sound scolding it really isn't, it's a lecture on how business is done today. Learn the rules or die. The issues about the WHQL cerification is probably true. Uncle Billy doesn't like 3dfx at all. I think the driver issues are what caused the delay with Banshee's release. Disappointing considering they've had working reference boards since May and still can't get the TV-out working right. Pat