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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: capt rocky 1 who wrote (47537)	7/19/2000 2:57:25 PM
From: Don Green	Read Replies (1) \| Respond to of 93625

Industry to Attack Rambus Patents Memory makers reportedly upping the ante electronicnews.com By Steven Fyffe If industry reports are accurate, some major memory makers will soon be asking the Federal Trade Commission (FTC) to overrule the sweeping patent claims of Rambus Inc. A report earlier this month stated that a group of DRAM manufacturers were preparing to file an antitrust complaint against Rambus with the FTC. Avo Kanadjian, vice president of worldwide marketing at Rambus Some analysts said the impending move was a last ditch effort to avoid paying Mountain View, Calif.-based Rambus royalties for its patents on mainstream SDRAMs, double data rate (DDR) SDRAMS, and logic controllers with synchronous interfaces. Rambus has said that it always planned to force memory makers to pay for its patented synchronous DRAM technology, and has recently upped the legal pressure on companies to do so. Hitachi Ltd. tried to fight off one such patent infringement suit, but capitulated last month and signed a licensing agreement with Rambus instead. "If Hitachi thought they could have proven those patents were not valid, they probably would not have settled," said Steve Cullen, principal analyst at Cahners In-Stat Group, Scottsdale, Ariz. "To me that says they don't have a basis for challenging the patents. If they are planning an antitrust complaint, it seems to me they think they are going to have a hard time breaking those patents." An antitrust battle would take even longer than a courtroom confrontation, Cullen said. Hitachi agreed to the licensing deal after its customer Sega Enterprises Ltd. was dragged into the suit filed by Rambus, on the grounds that some of Sega's game consoles contained Hitachi's SH microprocessor. Rambus claimed the processor used its synchronous technology. "It's bigger than just DRAM," said Bob Merritt, director of emerging markets at Semico Research Corp., Phoenix. "This extends to microprocessors, SDRAMs, DDR and chipsets, and anybody making them." The battle has the potential to affect everyone in the product chain, including OEMs, Merritt added. "By bringing in the customer with Sega, they have demonstrated this thing has the potential to go all the way up the chain to the OEMs, and that's never been done before." The top three DRAM makers, Samsung Semiconductor Inc., Hyundai Electronics Industries Co. Ltd. and Micron Technology Inc., publicly have remained quiet on the possibility of antitrust action. But Merritt said a legal challenge of Rambus' patents was inevitable. "It's too big of a risk to be floating around undefined," he said. "When you're talking about 1.5 to 2 percent royalties in an industry that has been losing money, it can make a big, big difference." The royalties could add up to $600 million to $800 million a year if all the companies were found to be violating Rambus' patents and decided to pay up, according to Merritt. Avo Kanadjian, vice president of worldwide marketing at Rambus, said he had read reports of the possible antitrust complaint, but was not aware of any current proceedings. Rambus prefers negotiation to confrontation, Kanadjian said. "Since the last suit against Hitachi, a number of companies have studied our patents and come to us to negotiate." Rambus aims to control half the DRAM market by 2003, he said. "The companies we are dealing with all have their own IP (intellectual property), and it is very common for them (to) meet and cross-license their respective patent portfolios. We are very confident they respect the IP of others." Some of the legal defenses raised by Hitachi may be incorporated into the reported antitrust complaint against Rambus. One of the arguments was that Rambus had taken technology discussed in open sessions of the Joint Electron Devices Engineering Council (JEDEC) early in the 1990s. "If you are forming a standard, and you know you are pressing patent action on those standards, you are supposed to let the committee know," said Jim Handy, a memory analyst at GartnerGroup Inc.'s Dataquest division, San Jose. "Rambus did not broadcast what they were doing in JEDEC." Kanadjian said Rambus had not broken the rules. "JEDEC standards don't preclude companies from charging for the use of their IP," he said. The whole concept of a patent vs. a monopoly presented an interesting paradox, Cullen said. "What is a patent but a legal monopoly? The government recognizes the investment you have made in developing a technology and says, 'We are going to give you a monopoly on it until this patent expires.' Antitrust laws come into play when somebody's patent position gets too strong. And it's up to a judge to decide if that has happened."