Hitachi Settles Patent Dispute With Rambus
(06/22/00, 6:00 p.m. ET) By Mark Hachman, TechWeb News
Rambus convinced Hitachi to agree to a broad patent-licensing agreement, an indication that Rambus's patent claims may indeed cut a broad swath through the semiconductor industry.
As it did last week with Toshiba, Japan's Hitachi (stock: HIT) agreed to pay Rambus (stock: RMBS), Santa Clara, Calif., royalties on products including synchronous and double-data-rate (DDR) DRAM.
Rambus asserts that its 80 existing patents, including numerous other patent claims, entitle it to royalties on virtually all memory products and controllers using a synchronous memory interface, as well as its own Direct Rambus technology.
"I believe that the early settlement of these lawsuits ensures further growth of Hitachi's semiconductor business," said Tadashi Ishibashi, president and CEO of the semiconductor and IC business unit of Hitachi. "In addition, Hitachi wishes to reestablish the good business relationship that had existed between the companies since 1992, when the original Hitachi-Rambus license was executed."
The additional settlement produced even more shock, if possible, than last week's agreement.
"I'm even more shocked," said Sherry Garber, an analyst at Semico Research, Phoenix. "It's certainly good news for Rambus stock, as a lot of announcements have been...but I really hope that the DRAM industry doesn't capitulate to an [intellectual property] house."
As in the Rambus-Toshiba settlement, Hitachi agreed to pay higher royalties for production of DDR memory than for its own licensed Direct Rambus memory.
The agreement contained one caveat: a settlement fee in addition to the quarterly royalty payments also agreed to by Toshiba.
The settlement ends a suit filed by Rambus in January against Hitachi and Sega Enterprises, charging the companies with infringing Rambus' patents protecting synchronous memory technology and high-performance bus interfaces.
In its complaint, Rambus sought to have Hitachi SDRAMs and certain microprocessors barred from import into the United States, and filed a similar complaint in a German court. The suit in Germany has also been settled. In both cases, Hitachi attempted to bring other DRAM companies into the cases as co-defendants, but all apparently refused.
According to Semico, Hitachi was also a minority player in the DRAM industry, with a 2.3 percent share in the DRAM market worth about $470 million in revenue. For 2000, Garber said she believes the DRAM market will grow 50 percent and estimated that Hitachi's DRAM sales could grow 30 percent.
Hitachi, like other Japanese DRAM vendors, is deemphasizing DRAM, Garber said. Hitachi will pay additional fees for the memory controller logic.
In January, Rambus also asked for a similar injunction against Sega's Dreamcast game console, saying the device used the offending Hitachi chips. No settlement has been reached.
Last week, at a press conference announcing Rambus' entrance into the consumer market, Rambus CEO Geoff Tate spoke frankly about the company's plans.
"Our patents are pretty fundamental," he said. "I think it's likely to say that most companies will violate these patents."
Micron Technology (stock: MU), the world's largest DRAM maker, reported earnings today. At press time, a company spokeswoman declined to comment upon the Hitachi-Rambus settlement, and also declined to comment if Rambus and Micron are in settlement talks.
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