Legally, they're perfectly entitled to do this. Personally I'd love to see some anti-patent activism from developers, leading to activism from gamers deciding to boycott nVidia for such immoral behavior. I guess that shows where I stand on the patent debate
I completely agree with you.
There is the old quote that a good way to get rid of bad laws is to have them vigorously enforced.
Totally derailing, as it was just in the news that Yahoo was threatened with a $250K/day fine if they didn't comply with secret US wiretap rules and they gave in because they didn't want to explain to stockholders, a vigorous enforcement would have been best. When the global financial conference call and legally mandated financial reports come out, answering "What is the line for $91M in NSA Fines? Ask the NSA or the President since we have a gag order," would have been amazing publicity. If they forced the government to actually enforce that side of the law it could have started some investigations 4 years earlier.
Probably the best way to encourage industry to force governmental change is to have the industries hit with legal penalties. When they start feeling financial pressure they'll bribe lobby the correct officials enough to make the changes.