SK hynix faces US probe over claims by ‘patent troll’

Screen capture showing the U.S. International Trade Commission's (USITC) decision to open an investigation on MonolithIC 3D's claim that alleges SK hynix and Kioxia have infringed upon certain NAND flash and dynamic random access memory chip patents / Captured from USITC website

The U.S. Trade Commission (USITC) is launching an investigation into MonolithIC 3D’s claim that SK hynix has infringed certain NAND flash and dynamic random access memory chip patents, raising concerns that the Korean chipmaker may face additional costs.

The USITC announced Thursday that it will investigate alleged violations of Section 337 of the Tariff Act based on MonolithIC 3D’s claims. The investigation covers SK hynix’s headquarters in Korea, SK hynix America and SK hynix Memory Solutions America, as well as seven units of Japanese NAND firm Kioxia.

MonolithIC 3D is a non-practicing entity (NPE), which does not manufacture products or use technologies by itself, but instead files lawsuits against large companies based on patents registered in the past. Since NPEs mostly use vague patents to demand large settlements or licensing fees, they are often times called “patent trolls.”

MonolithIC 3D filed the complaint on Feb. 17, alleging that SK hynix and Kioxia infringed its patents related to high-bandwidth memory (HBM) and NAND flash memory. It sought a ban on the importation, distribution and sale of the products in the United States.

The U.S. International Trade Commission's (USITC) notice of institution of investigation / Captured from USITC

The complaint is based on alleged infringement of eight U.S. patents, largely related to three-dimensional stacked memory architectures. The technologies involve vertically integrating circuits within a single chip, making them relevant to artificial intelligence (AI) server memory such as HBMs or advanced flash memory including 3D NAND.

The decision to investigate indicates that the case has met the USITC’s threshold for review, putting the respondents on a formal litigation track that could lead to potential import bans or licensing negotiations if infringement is found.

In letters to the USITC, SK hynix argued that HBM is a critical component of AI data center infrastructure emphasized by the U.S. administration, adding that any import ban could harm public interest by causing supply disruptions and sharp price increases. MonolithIC 3D, however, countered that concerns over supply shortages are overstated.

The USITC said it will set a target completion date for the investigation within 45 days after the institution of investigation.

Patent claims by NPEs are emerging as key risks for Korean chipmakers, as Washington is increasingly leaning in favor of patent holders.

SK hynix and rival chipmaker Samsung Electronics have both relied on the U.S. Patent Trial and Appeal Board to invalidate patents through petitions known as inter partes reviews (IPRs).

SK hynix's high-bandwidth memory 4 / Courtesy of SK hynix

In recent months, however, a growing number of IPR petitions have been rejected, with industry officials saying the denial rate has surged since U.S. Patent and Trademark Office director John Squires took office in late September.

They estimate the denial rate has risen from around 30 percent before his appointment to about 90 percent, in line with the Trump administration’s “America First” policy direction.

In response, the Korean government is exploring a government-level response to protect the country’s chipmakers.

“While Korea’s semiconductor industry is on an uptrend, one of the key challenges facing leading companies is patent infringement lawsuits being raised in U.S. courts,” Prime Minister Kim Min-seok said on March 20.

“We have to pay close attention on how to respond to this in a coordinated way.”