Realtek Semiconductor sued rival Taiwanese chip maker MediaTek in a US federal court on Tuesday, claiming MediaTek paid a company that sues over patents a “secret litigation bounty” to file meritless lawsuits in the US to disrupt its business.

The lawsuit accuses MediaTek of conspiring with IPValue Management in an effort to drive Realtek out of the market and monopolise the industry for chips used in smart televisions and set-top boxes.

MediaTek owns nearly 60% of the global market share for television chips, the lawsuit said.

Realtek said in a statement that it filed the lawsuit to “protect free and fair competition in the industry” and “prevent further harm to the public”. MediaTek declined comment, citing the ongoing litigation. IPValue did not immediately respond to a request for comment on the lawsuit.

Realtek said MediaTek signed a patent licensing agreement with IPValue subsidiary Future Link Systems in 2019 that included the secret “bounty” agreement.

The agreement was revealed last year in patent litigation involving Future Link in West Texas federal court and at the US International Trade Commission (ITC), according to the lawsuit. Realtek said Future Link has kept details of the agreement “buried under confidentiality obligations and protective orders”.

‘Alarming’

The ITC called the agreement “alarming” and said it “may well be untoward and actionable”, while the West Texas court said it was “improper” and “should be discouraged as a matter of public policy”.

Future Link settled several other patent cases against tech companies including MediaTek competitor Amlogic soon after the ITC criticised it, Realtek said.

Realtek said MediaTek has used the patent lawsuits, which seek to take its allegedly infringing chips off the market, to suggest to customers that Realtek may be an “unreliable supplier” for the television chip industry.