Will lawsuits curb Rambus' royalty drive? Rambus
Sep. 01, 2000 (Electronic Buyers News - CMP via COMTEX) -- Rambus Inc. last week
said it is still seeking to license its synchronous-interface technology to DRAM
makers, despite lawsuits filed by Micron Technology Inc. and Hyundai Electronics
Industries Co. Ltd. to void the patents.
The industry was split as to the effect the brewing legal battle will have on
other DRAM makers, leading one executive at Samsung Semiconductor Inc., San
Jose, to advocate "sitting on the sidelines" as the drama unfolds.
The long-simmering issue gained a new head of steam when Micron filed an
antitrust suit against Rambus in U.S. District Court in Delaware, charging the
company with trying to contravene open industry standards governing SDRAM and
double-data-rate SDRAM. Separately, Hyundai filed suit in federal court in San
Jose seeking to invalidate the Rambus patents on the grounds of prior art and
invention, citing an IBM Corp. synchronous-memory timing patent granted July 4,
1989-a decade before Rambus received its patents.
Rambus denied the allegations in both suits and will defend itself vigorously,
said a company spokeswoman.
The actions followed an infringement complaint filed last month by Rambus,
Mountain View, Calif., against Infineon Technologies AG for its refusal to
license Rambus' synchronous-interface technology. As part of its defense,
Infineon will also seek to have the Rambus patents overturned.
Observers were divided over Rambus' chances of signing new licensees in the
current legal climate. Dean McCarron, an analyst at Mercury Research,
Scottsdale, Ariz., doubted that the cases will sway smaller vendors. "Second-
and third-tier suppliers may not have that much SDRAM volume at stake and may be
willing to take out a license to avoid costly legal fees if they're sued by
Rambus," McCarron said. "They also fear if Rambus patents stand up, and they
haven't taken out any license, the royalties plus damages demanded of them could
be much higher."
Farhad Tabrizi, vice president of strategic marketing and product planning at
the DRAM Business Unit of Hyundai, advised other DRAM makers "to wait before
signing any Rambus synchronous licenses. They'd be wise just to monitor the
progress of the lawsuits before making any commitments," he said.
Indeed, the raft of suits washing up against Rambus may encourage smaller
companies to hold out against the licensing effort, knowing it may take years
before legal questions are finally resolved, said Bob Merritt, an analyst at
Semico Research Corp. in Redwood City, Calif.
Aside from the legal posturing such events may provoke, most analysts and
executives contacted last week agreed that the looming battle over Rambus'
patents will have no immediate effect on the DRAM industry. "The determining
factor in the DRAM market now is economic, not legal," McCarron said.
The case that Micron is building stems from claims that Rambus has given DRAM
manufacturers "take-it-or-leave-it nonnegotiable terms" to license its
synchronous memory patents. The suit alleges Rambus is seeking excessive
royalties on double-data-rate (DDR) SDRAMs in an anticompetitive move to block
the rival memory chip to its own Direct Rambus DRAM.
Rambus "admitted that it intends to charge more for licenses to SDRAM products
that it views as a threat to its own RDRAM technology," Micron said in its
filing. The suit charged that Rambus is targeting Micron because the company has
been a prime advocate of DDR, while continuing to develop Direct RDRAM prototype
chips as well. A Micron spokesman said, despite its synchronous DRAM suit
against Rambus, the chip maker will stick to its schedule to validate its Direct
Rambus prototypes.
Still, Micron claimed Rambus' rigid synchronous-licensing demands are an attempt
"to coerce exorbitant royalties from all semiconductor memory manufacturers for
sales of SDRAMs and DDR SDRAMs, and to file lawsuits against those manufacturers
who don't agree to Rambus' non-negotiable license terms."
The Micron suit reiterated two previous antitrust cases that it claimed showed
Rambus was trying to restrain competition in its synchronous-patent licenses.
It cited an antitrust consent decree Dell Computer Corp. signed with the FTC for
seeking royalties on patents the PC maker failed to disclose in open
industry-standards deliberations. Micron also cited a case in the early 1990s
involving Wang Laboratories' attempts to enforce its patents on data allegedly
gleaned from industry-standards meetings. The Wang suit was settled out of
court.
In those cases and in the current Rambus dispute, Micron said industry
procedures required the companies to disclose patents pending on technology
under discussion. Otherwise, the implicated companies can obtain inside
information on open standards, which they can then subvert by fashioning their
own patents to pre-empt competition, Micron charged.
The antitrust charges against Rambus center around the memory-design company's
participation in the JEDEC (Joint Electron Devices Engineering Council) open
standards from 1991 through 1996. Although Rambus had filed its synchronous
patent applications during that time, the company never disclosed them in the
JEDEC deliberations as required.
Then, a month after Dell's antitrust consent decree in May 1996 made some of the
computer maker's patents unenforceable, Rambus quit the deliberations, but still
failed to disclose its pending patents. Avo Kanadjian, Rambus' vice president of
worldwide marketing, had previously said the Dell case was not applicable to the
Rambus patents.
Hyundai filed suit a day after Micron, but took a different tack, claiming
Rambus synchronous patents are invalid due to prior art and invention of
synchronous-timing technology for memory chips. A Hyundai spokesman said the
company isn't raising the antitrust issue, the focus of Micron's suit.
Hyundai cites SDRAM inventions-such as patent number 4845664 awarded to
Frederich Aichlmann of IBM July 4, 1989-that preceded the Rambus patent. Hyundai
also disputed Rambus' claim that it applied for its SDRAM patents in 1990. The
suit charged that the original Rambus filing did not mention SDRAMs, which were
only added to the patent application in 1995 and DDR in 1997.
Hyundai alleged that Rambus added the synchronous memory details to its
application only after the company gained this knowledge from participating in
the JEDEC open-standards discussions on SDRAM and DDR. JEDEC promulgated a
series of single-data-rate SDRAM standards starting in 1993 and DDR standards
starting in 1997.
Three Japanese chip makers have already licensed the Rambus synchronous
technology-Hitachi Ltd., Toshiba Corp., and Oki Electric Industry Co. Ltd.
Hitachi pays royalties on its SDRAMs until the end of the year, when its DRAM
marketing and design operations are combined with NEC Corp. in a new joint
venture. Hitachi continues to pay royalties for the synchronous-logic interface
on its SH processor chips and will pay SDRAM royalties should it resume selling
the memory chips itself.
---
Rambus' legal saga
January 2000: Rambus sues Hitachi for patent infringement
June: Toshiba signs synchronous-interface licensing deal
June: Hitachi settles Rambus suit, signs licensing agreement
July: Oki Electric takes synchronous license
August: Micron files antitrust civil suit against Rambus
August: Hyundai files civil suit to invalidate Rambus patents
Source: EBN reports
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