MediaTek Faces Lawsuit From Chip Rival Realtek Over Patent 'Bounty' Scheme

Realtek stated that the lawsuit aims to protect fair competition in the industry and prevent further harm to the public. 

Realtek argues that MediaTek has used patent lawsuits.

Realtek Semiconductor Corp has filed a lawsuit against MediaTek Inc, a rival Taiwanese chipmaker, in a Northern California federal court. As reported by Reuters, Realtek alleges that MediaTek engaged in a scheme with IPValue Management Inc to disrupt Realtek's business by paying a "secret litigation bounty" to file baseless lawsuits in the United States. The lawsuit claims that MediaTek conspired with IPValue to drive Realtek out of the market and monopolise the industry for chips used in smart televisions and set-top boxes. According to Realtek, MediaTek currently holds nearly 60 per cent of the global market share for television chips.

Realtek stated that the lawsuit aims to protect fair competition in the industry and prevent further harm to the public. 

Realtek alleges that MediaTek entered into a patent licensing agreement with IPValue's subsidiary, Future Link Systems LLC, in 2019, which included the undisclosed "bounty" agreement. The existence of this agreement came to light during patent litigation involving Future Link in a West Texas federal court and the US International Trade Commission (ITC). Realtek claims that the details of the agreement were kept hidden under confidentiality obligations and protective orders.

The ITC expressed concerns about the agreement, stating that it may be "untoward and actionable," while the West Texas court deemed it "improper" and discouraged such practices as a matter of public policy. Realtek further noted that Future Link settled multiple patent cases against tech companies, including MediaTek's competitor Amlogic, after facing criticism from the ITC.

Realtek argues that MediaTek has used these patent lawsuits, which seek to remove Realtek's allegedly infringing chips from the market, to suggest to customers that Realtek may be an unreliable supplier in the television chip industry.

In its lawsuit, Realtek is seeking an end to the alleged conspiracy and unspecified monetary damages from both MediaTek and IPValue.

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