Myhrvold Sues Hynix, Elpida as Chipmakers Balk at Royalty Demand

A patent business controlled by former Microsoft Corp. Chief Technology Officer Nathan Myhrvold sued Hynix Semiconductor Inc. (000660) and Elpida Memory Inc., along with 10 of their customers, after the companies refused to pay royalties on computer-chip technology.

The complaint by Intellectual Ventures LLC targets products made by Ichon, South Korea-based Hynix, the world’s second- largest maker of computer-memory chips, and Tokyo-based Elpida, the third-largest. Wal-Mart Stores Inc. (WMT), Dell Inc. (DELL) and Best Buy Co., which make or sell products that have Hynix or Elpida chips, were also targeted in the lawsuit.

Closely held Intellectual Ventures, founded by Myhrvold after he left Microsoft in 2000, has bought more than 30,000 patents and collected almost $2 billion in licensing fees, according to the complaint. Hynix and Elpida have “failed and refused to license Intellectual Ventures’ patents on reasonable terms and continues to use those inventions without permission,” the Bellevue, Washington-based company said in the complaint filed yesterday in federal court in Seattle.

The other companies named in the case are: Acer Inc. (2353), A- Data Technology Co., Asustek Computer Inc., Hewlett-Packard Co. (HPQ), Kingston Technology Co., Logitech International SA (LOGN) and Pantech Co.

In addition to buying patents, Intellectual Ventures also pays scientists to come up with ideas that can be patented in industries including nuclear power, medical devices, agriculture and computers. Investors in Intellectual Ventures include Microsoft, Apple Inc., JPMorgan Chase & Co., and the Mayo Clinic, according to a court filing in a Xilinx Inc. lawsuit against Intellectual Ventures that challenged some of patents.

Myhrvold is a columnist for Bloomberg View, which is owned by Bloomberg LP, the parent company of Bloomberg News.

The case is Intellectual Ventures I LLC v. Hynix Semiconductor Inc., 11cv1145, U.S. District Court for the Western District of Washington (Seattle).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net.

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net

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