Context: A few months ago, publicly-traded German high-performance computing (HPC) firm ParTec AG, whose CEO Bernhard Frohwitter has considerable expertise in patent monetization, sued Microsoft in the Eastern District of Texas over two patents allegedly infringed by Microsoft’s cloud infrastructure, particularly the one used to power its AI services (June 10, 2024 ip fray article).
What’s new: Today it became known that ParTec is asserting two European members of the same patent families as in the Microsoft case against AI chipset maker (and presently the world’s most valuable corporation) Nvidia. ParTec filed an infringement lawsuit in the Unified Patent Court’s (UPC) Munich Local Division (LD), seeking an injunction in all 18 European countries that are UPC contracting states. One of the patents is a Unitary Patent. The complaint notes that ParTec explained the technology at issue to Nvidia in 2019, believes that infringement began thereafter, and a recent letter to Nvidia’s CEO Jensen Huang, inviting the company to licensing negotiations, went unanswered. Apparently Nvidia declined to engage because ParTec is suing its largest customer, Microsoft.
Direct impact: The UPC aims to resolve such complaints within a year. In this case, one patent-in-suit can easily be adjudicated during that time frame. The other patent, however, could face a bit of delay as an opposition panel of the European Patent Office (EPO), after preliminarily rejecting a challenger’s theory of impermissibly added subject matter, changed mind. Should the part concerning that patent be stayed, ParTec’s EPO appeal could be accelerated. Other procedural options exist, also in light of the depth of ParTec’s portfolio. Nvidia is now facing the risk of its DGX product line being shut out of large parts of the European market in a year’s time.
Wider ramifications: Both ParTec and Nvidia were not previously party to a UPC case, though Nvidia has been invited to intervene on a customer’s behalf in some other case. In any event, this is the first, or at least the first major, AI-related patent case to be filed in the UPC. There is an indirect connection with a high-profile case pending in the European Court of Justice (ECJ) in which ParTec’s lead counsel in the UPC case against Nvidia, Dr. Roman Sedlmaier of IPCGS, is advocating the ability of courts in EU member states to impose remedies with respect to patent infringements in non-member states, which the President of the UPC’s Court of Appeal (CoA) referenced at a conference (May 31, 2024 ip fray article). For one of the patents-in-suit in this Nvidia case it is conceivable that the UPC could impose remedies beyond its 18 contracting states.
As ip fray mentioned a few months ago, ParTec is an actual operating company with substantial revenues. On its website, it lists various customers whom it helped to build high-performance computer systems, such as the Barcelona Supercomputing Center, Italy’s Cineca, the Israel Innovation Authority, and the Berlin-based Zuse Institute.
Technically, the first of the two plaintiffs in the case filed yesterday and announced today is BF exaQC AG, the exclusive licensee of the patents in question. The BF in the company name must be the initials of its founder, Bernhard Frohwitter. BF exaQC AG is also in the process of obtaining further supercomputer patents of its own. ParTec AG is the second plaintiff.
The two defendants from the Nvidia group are the group parent, NVIDIA Corporation, and the German subsidiary, NVIDIA GmbH.
The two patents-in-suit are technologically complementary and both relate to high-performance computing clusters combining central processing units (CPUs) and specialized processors such as, in this case, Nvidia’s graphics processing units (GPUs) that are effectively used as AI chips. These are the patents:
- EP2628080 (“A computer cluster arrangement for processing a computation task and method for operation thereof”); filed in 2011
- EP3743812 (“Application runtime determined dynamical allocation of heterogeneous compute resources”); filed in 2019 and having unitary effect (i.e., it is enforceable in all EU member states that are part of the Unitary Patent System, which are presently 18 and the EU commissioner-designate for the internal market wants to bring in the other nine as soon as possible (October 25, 2024 ip fray article)
ParTec and BF exaQC are confident that they will prevail over the EPO’s Opposition Division on appeal. Should the UPC decide to stay the proceedings with respect to EP’812 pending the decision by an EPO Board of Appeal, the UPC could request accelerated appellate proceedings under Rule 298 of its Rules of Procedure:
The Court may of its own motion or at the request of a party request that opposition proceedings or limitation proceedings (including any subsequent appeal proceedings) before the European Patent Office be accelerated in accordance with the proceedings of the European Patent Office. The Court may stay its proceedings in accordance with Rule 295(a) pending the outcome of such request and any subsequent accelerated proceedings.
EP’812 was deemed novel and inventive over the prior art presented by a party challenging it in the opposition proceeding. In that regard, it’s a strong and battle-tested patent. When the Opposition Division invited the parties to its hearing, the examiners found the added-matter argument unavailing: “Calling the second assignment [a] reassignment does not add subject matter.” But they changed mind, and that’s why ParTec appealed.
Nvidia’s refusal to negotiate
This is not a standard-essential patent case in which an implementer must show that it is a willing licensee. But Nvidia’s refusal to engage with ParTec and exa QC could backfire now. It doesn’t change anything about the technical merits, yet shows to the UPC that this may just be a typical case of a small innovator needing judicial help against an unrepentant infringer.
There is a policy dimension here: the small innovator is European, the alleged infringer is American. The gap between the U.S. and the EU in the technology sector is huge, and it keeps widening, but here there is a European supercomputer firm that actually believes it can be a major player in the global market for high-performance computing clusters.
Competition regulators around the globe are concerned about concentration of AI infrastructure and technologies in the hands of a few Big Tech companies. ip fray‘s sibling site ai fray has repeatedly reported and commented on papers put forward by antitrust authorities voicing such concerns, and believes that the AI technology stack is actually far more competitive and dynamic than some competition watchdogs suggest. In this regulatory climate, it may have been unwise for Nvidia to tell ParTec that it won’t negotiate because of the latter’s enforcement of intellectual property rights against Nvidia’s largest customer, Microsoft. Either of those companies has a market capitalization above $3 trillion (the only other company in that league is Apple).
In the U.S. Microsoft case, Judge Rodney Gilstrap recently entered a scheduling order envisioning an April 2026 jury trial:
DOCKET CONTROL ORDER re 21 JOINT MOTION For Entry of Docket Control Order (Agreed) filed by ParTec AG, BF exaQC AG., Pretrial Conference set for 3/2/2026 at 09:00 AM before District Judge Rodney Gilstrap., Jury Selection set for 4/6/2026 at 09:00AM before District Judge Rodney Gilstrap., Markman Hearing set for 10/28/2025 at 09:00 AM before District Judge Rodney Gilstrap (Motion(s) 21 terminated). Signed by District Judge Rodney Gilstrap on 10/8/2024. (NKL) (Entered: 10/09/2024)
Microsoft’s invalidity contentions are due in a matter of days.
Multi-firm legal team
ParTec and exa QC are jointly represented in the UPC case against Nvidia by professionals from four firms:
- IPCGS (lead): attorney-at-law Dr. Roman Sedlmaier as mentioned above and patent attorney Jan Gigerich
- Krieger Mes & Graf v. der Groeben: attorney-at-law Axel Verhauwen (a leading Dusseldorf-based patent litigator)
- df-mp: David Molnia (a dual-qualified German/European as well as U.S. patent attorney, known from various other high-profile cases, particularly for Nokia (to whom he used to be adverse, but they hired him because of the excellent work he did against them) and InterDigital)
- Frohwitter Intellectual Property Counselors: patent attorney Mathias Himmelsbach
Different defendants in different jurisdictions
Interestingly, ParTec and BF exaQC decided to sue Microsoft in the U.S. (where their lead counsel is Susman Godfrey’s Justin Nelson, known for various notable successes including a spectacular $800M settlement with Fox News last year) and Nvidia in the UPC. There is no reason they couldn’t sue both in the other jurisdiction as well, but it may be better to reserve that option for later if needed to bring about settlements. If they prevail on claim construction over one of them, the other will read the writing on the wall.