III. Royalty Payments 
B. The royalty rate generally is set at whatever the
     market will bear. 
  1. The following factors have been considered by
       licensors in setting the royalty base. 
    a. The strength of the patent, 
    b. Availability of competing technology, 
    c. The cost to develop the invention, 
    d. The savings or profit to be realized, 
    e. The cost of the suit, 
    f. Nature of license (exclusivity, etc.), 
    g. Negotiation costs, 
    h. Cost of assembling concomitant technical
       information for licensee, 
    I. Cost of serving the agreement (start up
       assistance, etc.), and 
    j. Investment required by licensee. 
  2. From the commercial viewpoint, there are three
       principle considerations: 
    a. Royalty patterns in the industry, 
    b. Experience with the product of related product,
    c. Calculation of a reasonable share of anticipated
       profits.
C. Royalty Base 
  3. When a court becomes involved in setting royalty rates,
       it generally uses a range of 2-10% of gross sales. 
    a. Courts attempt to arrive at a reasonable royalty by
       calculating what a reasonable and prudent licensee
       will pay a reasonable and prudent licensor. 
    b. An existing license will be given great weight, however. 
    c. When profits are considered, they are used as a
       factor to determine what a willing licensee will pay.
       A rule of thumb is 1/4 to 1/3 of the anticipated profits 
       from the use of an invention as appropriate royalty.

B.1.a) The strength of the Rambus patents is sufficiently
       highly debatable that it is now in court.  Also note that
       the trade press has repeatedly suggested that Rambus
       should not be in a position to collect on these patents.
B.1.b) There are many available competing techniques available.
       For instance, the CAS latency can be done with a wire.
B.1.c) Rambus' cost to develop SDRAM and DDR together add up to
       zero.  The cost to develop RDRAM, at the time that JEDEC
       decided on SDRAM, was nominal.
B.1.d) Savings or profit is only dependent on the fact of the
       existence of the JEDEC standards.
B.1.e) Rambus has been saying that this suit isn't going to be
       terribly costly.
B.1.f) License isn't exclusive, and so would be cheaper.
B.1.g) Compared to any percentage, negotiation costs are
       negligible.
B.1.h) same
B.1.i) same
B.1.j) Licensee has already invested a lot of money, therefore
       making the patent value less.  (The most valuable patent
       would be one that didn't require money to put into
       production.)
B.2.a) Royalty patterns in the industry are minuscule.  Look at
       Mosaid, for instance, who have many more patents than
       Rambus.
B.2.b) What the heck does this mean?

But there are also the following bullish comments:
C.3)   2-10% would be very good for RMBS.
C.3.a) Huh?
C.3.b) Existing licensees are paying 1-3% or whatever.
C.3.c) It is very hard to figure out what "anticipated profits"
       are for the DRAM industry.  Certainly they're low right
       now.