UPDATE for 7/31/08 – I spoke with one of the lawyers for the defendants on this class-action suit and he verified for me all the information that I detailed below.  The judge denied class-status to the entirety of GPU buyers and limited it to those who purchased GPUs directly from ATI or NVIDIA online; i.e. only those that purchased on ATI.com.  He was adamant in telling me that the Dept of Justice has NOT closed the investigation on either company completely however. 

Anyone that knows me personally knows that I have a certain distaste for much the legal system in our country.  Frivolous lawsuits, class-action cases, etc are, some of the time at least, a drag on our society.  But enough about my personal views on the state of the nation; some interesting news popped into my mailbox today concerning one such lawsuit involving a market I know all too well.

In December of 2006, the Department of Justice created a grand jury investigation based on complaints of price fixing from NVIDIA and ATI on the GPUs.  Then in November of 2007 a class-action lawsuit was filed in the state of California alleging that NVIDIA and ATI/AMD worked together, staged hidden meetings and communicated in secret to keep prices high for consumers on GPUs and graphics cards.  Just this month an email, supposedly from NVIDIA PR lead Dan Vivoli in 2002, communicating with then ATI COO Dave Orton seems to solidify the case:

Vivoli wrote, in part, “I really think we should work harder together on the marketing front. As you and I have talked about, even though we are competitors, we have the common goal of making our category a well positioned, respected playing field. $5 and $8 stocks are a result of no respect.” “That’s not good for the defense,” said Alsup after reading the e-mail aloud in the courtroom. “A jury would like to see this,” he said.

That is indeed, no good for the defense.  I won’t get into the many issues that I think make this suit bad from the beginning, such as the market dominating Intel integrated graphics solutions not taken into consideration, but just today some news arrived to me that indicate the plaintiffs and their lawyers have been severely limited in the scope of the charges.

Essentially, the grand jury investigating the two companies was unable to find any evidence of price fixing on GPUs.  A letter with these findings was sent to Judge William Alsup who then decided that due to the information the grand jury provided, the class-action lawsuit that was being filed against both NVIDIA and AMD was only going to take into account the graphics cards that were sold directly from both companies to the consumers.  And since NVIDIA has never sold card directly to consumers, that means that Judge Alsup has essential left this as a class-action suit for buyers of ATI hardware from the ATI.com website.

NVIDIA and ATI Price Fixing Lawsuit gets Legal Backhand - Graphics Cards  1
Could NVIDIA be off the hook?  Is AMD far behind?

All the sudden the excitement many in the media have had for this legal feud looks over played; NVIDIA is basically left out of any civil action against them (even though they are still named in the documents) and AMD/ATI sold a very small percentage of their product through their website.  Obviously the leaked email from Vivoli to Orton either turned out to be faked or blown out of proportions.

I am currently awaiting calls from several people involved in this legal battle, mostly lawyers representing the plaintiffs, to verify and update the information presented here.