Realtek Accuses MediaTek of Conspiring Against It with Patent Hoarder

This week, Realtek sued rival MediaTek in Northern California federal court, accusing it of conspiring against it with a patent holder in a bid to drive Realtek out of business. Reuters reports that Realtek asserts that MediaTek intends to monopolize the markets of smart TVs and set-top-boxes and asks the court to protect itself from the ongoing injury and the market from unfair competition practices.

It is not a secret that various patent assertion entities (PAE), a juridical term for patent hoarders, acquire patents and then sue different designers for royalties. In 2019, MediaTek entered into a patent license agreement with Future Link and its owner IPValue to license some of the patents issued initially to NXP Semiconductor and Philips. While this would be a reasonably typical license agreement, it contained a secret provision, which included MediaTek's demanding Future Link act against its rivals, including Realtek. 

Future Link sued Realtek for alleged patent infringement on April 13, 2021, accusing the chip designer of infringing two of its patents related to TV SoCs. By the end of 2021, Future Link reportedly expanded the list of its allegations against Realtek with two more patents and then dropped some of the claims. The important thing here is that Future Link alleges that all of Realtek's products that use Arm's AXI interface for multi-core SoCs infringe its patents, which in turn means that virtually all of Realtek's TV chips use its IP illegally and have to be barred from the market, which will eliminate a rival for Mediatek, which already controls 60% of the TV SoC market, according to Reuters citing the lawsuit.

At the time, Realtek was not aware that the action brought by Future Link was inspired by its rival MediaTek, the company says. 

"In April 2022, there was a shocking revelation regarding that seemingly innocuous agreement," Realtek states. "Discovery revealed that before the litigation against Realtek began, the license agreement among MediaTek, IPValue, and Future Link included a secret litigation 'bounty' provision previously hidden from the public and Realtek. […]. Specific details of this scheme remain hidden from the public even today because Future Link has managed to keep the arrangement buried under confidentiality obligations and protective orders."

On April 12, 2022, an Administrative Law Judge at the ITC said that the license agreement between Future Link and MediaTek contained a demand for action against Realtek.

"At a minimum, it would seem to warrant an action by Realtek against either Future Link or its counterparty for unfair competition," the ALJ wrote. 

Realtek says its move aims to counter a modern-day monopolist and its allies to protect itself, uphold competition in the semiconductor industry, and hold the offenders — MediaTek, Future Link, and IPValue — accountable. Any damages recovered by Realtek from this action will be donated to charity.

"Because Realtek seeks to protect the public interest with this action, Realtek will donate the amount of damages that it recovers to charity," the company said.

MediaTek, Future Link, and IPValue did not comment on the story.

Sources: Reuters, Reuters (PDF)