Rambus Is Found Guilty of Fraud In Infineon Case,
Plans to Appeal
By DAN GOODIN
Staff Reporter of THE WALL STREET JOURNAL
May 10, 2001
In another blow to Rambus Inc., a federal jury in Richmond, Va., handed down a $3.5 million judgment against the chip-technology company after returning a verdict that it committed fraud in not disclosing patent applications to an organization hashing out standards for semiconductors.
The jury awarded the money to plaintiff Infineon Technologies AG of Germany, which has been locked in a bitter patent lawsuit with Rambus.
Last week, U.S. District Judge Robert Payne in Richmond, who is overseeing the case, tossed out Rambus's claims that its patents for high-speed computer memory were being infringed by Infineon. Rambus, of Los Altos, Calif., said it will appeal that finding as well as Wednesday's verdict. The company also asked the court to reduce the award to $350,000.
The fraud verdict, if upheld, could presage trouble that Rambus might encounter in coming battles with Micron Technology Inc. and Hyundai Electronics Industries Co. Both have sued to invalidate patents Rambus is asserting against them.
Some analysts predict that other companies might decide to renege on their commitments if they have reason to believe the Rambus patents aren't enforceable. Licensees to Rambus pay royalties of as much as 3.5% of sales on a Rambus technology known as DDR and 0.75% for another technology called SDRAM.
Rambus participated in standards-writing meetings convened by Jedec, a semiconductor association in Arlington, Va., from 1991 to 1996, an official of the body said in an interview. Infineon alleged in its suit that Rambus failed to disclose it had filed applications for more than 30 patents that, if awarded, might cover some of the technology being formalized by Jedec. Jedec rules required such disclosure so members know ahead of time whether a proposed standard will require royalty payments.
What's more, Infineon alleged, Rambus used its knowledge of Jedec's plans to rewrite patent applications so they would cover the technology being contemplated as a standard. The vast majority of companies making DRAM chips now comply with the standard, said Ken McGhee, a staff director at Jedec who oversaw the standard-writing process.
Mr. McGhee says he has remained neutral in the dispute over fraud. Still, he said: "The disclosure that should have been made from 1992 to 1996 while [Rambus was] a member never took place."
John Desmarais, an attorney at Kirkland & Ellis in New York representing Infineon, said the verdict could eventually extend to other companies. "We believe [Rambus] should not be able to enforce their patents on any company compliant with that standard," Mr. Desmarais said.
Rambus strongly contested the verdict, stating that it followed all of Jedec's disclosure rules. It argued that the ruling threatens all companies that participated in standards bodies.
"I attended the whole trial and continue to believe that Infineon's Jedec charges are completely baseless," said Geoff Tate, Rambus chief executive, in a news release. "Today's verdict, if allowed to stand, poses a serious threat to all technology companies that try to protect their inventions through our intellectual property rights." |
