Chipmaker Accuses MediaTek of Scheme to File ‘Frivolous’ Suits

Realtek Semiconductor Corp. filed an antitrust lawsuit against MediaTek Inc., likening the fellow smart television chipmaker to a “modern robber baron” and accusing it of conspiring with a patent-assertion entity to harass it with “frivolous” and costly-to-defend lawsuits.

MediaTek entered into a 2019 agreement with IPValue Management Inc.'s subsidiary Future Link Systems LLC, encouraging Future Link to wage patent war against the MediaTek rival, Realtek claimed in a complaint filed Tuesday in the US District Court for the Northern District of California. Realtek—which, like MediaTek, is based in Taiwan—also named Future Link and IPValue as defendants in the complaint, comparing them to “hired henchmen.”

The lawsuit isn’t the first time a tech company has sued a patent-licensing company alleging antitrust violations, though some prior attempts were unsuccessful.

Realtek’s suit differs from some of those prior actions, however, in that it targets not only a patent-assertion company but also a leading manufacturer.

“MediaTek conspired with Future Link, paying it a secret ‘bounty’ to file meritless patent claims to harass Realtek, manipulating the court system to increase Realtek’s costs and divert Realtek’s attention away from product development and innovation,” according to the complaint.

The dispute dates back to 2021, when Future Link sued Realtek, twice in the US District Court for the Western District of Texas and once at the US International Trade Commission, where patent owners can block imports of patent-infringing products.

As part of those proceedings, Realtek obtained a patent-licensing agreement between MediaTek and Future Link from 2019. The agreement was announced publicly in a joint press release that said the license covered a portfolio of around 200 patents that had originally been assigned to the Netherlands-based Koninklijke Philips N.V. and its semiconductor spin-off, NXP Semiconductors Inc.

But Realtek’s complaint alleged that the agreement also contained “a secret litigation ‘bounty’ provision previously hidden from the public and Realtek,” that made it and its integrated circuits a target.

Realtek uncovered the bounty scheme through discovery in the patent cases, and “Future Link quickly dismissed its claims” after it surfaced, the complaint said. It quoted an ITC administrative law judge who said, of the provision, that it is “difficult to imagine how it could possibly be lawful or enforceable” and, that, at a minimum, the provision “would seem to warrant an action by Realtek against” Future Link or MediaTek.

Realtek separately sought to have the provision made public in the Texas case, but Judge Alan D. Albright ruled that Future Link could maintain redactions to public-facing versions of court filings mentioning it.

Alleged Anti-Competitive Actions

Realtek also claimed that MediaTek’s actions violated antitrust law and weren’t limited to the “bounty” provision and related lawsuits filed by Future Link.

MediaTek told “at least one TV Chip customer not to incorporate Realtek TV Chips into its products due to Realtek’s involvement in patent litigation,” the complaint said.

The complaint also claims that MediaTek, which has US subsidiaries in San Jose, violated federal and California unfair competition laws, in addition to committing antitrust violations and tortious interference.

The suit seeks damages as well as an injunction barring Future Link and IPValue from filing additional patent suits against Realtek.

Realtek says IPValue sued it recently in Japan through a different subsidiary, Monterey Research LLC, according to the filing. The complaint called that suit “an apparent pre-emptive retaliatory move.”

MediaTek didn’t immediately respond to Bloomberg Law’s requests for comment.

IPValue issued a statement saying that while the company “has not had time to fully review Realtek’s complaint,” it expects “to vigorously contest many of Realtek’s allegations,” including that its ITC complaint was “defective.”

In its statement, IPValue noted that “numerous companies have entered patent license agreements with Future Link covering the same patents that were subject of the litigation between Future Link and Realtek.”

The statement said IPValue only litigates to enforce its patent rights as a last resort.

Realtek is represented by Paul Hastings LLP and White Hat Legal PC.

The case is Realtek Semiconductor Corp. v. MediaTek Inc., N.D. Cal., 5:23-cv-2774, complaint filed 6/6/23.