Rambus found guilty of fraud in patent dispute
Desmarais, the Infineon lawyer, said the verdict would have ``a very large impact'' on the other pending cases.
Nathan Brookwood, an analyst with Insight 64 in Saratoga, said that earlier this week, during the discovery phase of the trial, it was revealed that Samsung, the world's top memory-chip maker, has a clause in its contract with Rambus that stipulates that if Rambus' patents are found to be unenforceable, Samsung will not have to pay any further royalties.
``If I were Samsung, I'd be on the phone to Geoff Tate saying, `Why do we have to pay you?' '' Brookwood said.
But it's unclear whether the court has definitively found that Rambus' patents are unenforceable. ``This could drag on for a while,'' Brookwood said.
BY THERESE POLETTI
San Jose Mercury News
Rambus suffered another major legal blow Wednesday, when a federal jury found the memory-chip designer guilty of fraud in a patent dispute and ordered the company to pay $3.5 million in punitive damages to German chip maker Infineon Technologies.
If sustained on appeal, the verdict could wipe out a huge source of revenue for Rambus: royalties on its patented memory-interface technologies, which are used in almost every computer memory chip.
In August, Los Altos-based Rambus filed a patent-infringement lawsuit against Infineon in U.S. District Court in Richmond, Va. The suit was Rambus' first attempt to defend some of its key patents.
Last week, U.S. District Judge Robert Payne threw out Rambus' patent-infringement claims against Infineon. And Wednesday, a jury ruled on Infineon's countersuit, which contended Rambus fraudulently participated in industry meetings to set standards for memory chips without disclosing it had filed patent applications on designs that it was promoting as standards.
``We showed how they were attending the meetings and they were changing their patents to make the wording match the standard,'' said John Desmarais, an attorney with the New York office of Kirkland & Ellis, the law firm representing Infineon.
Other companies, including Hyundai Electronics, are also challenging Rambus' patents, citing the chip designer's allegedly deceptive actions at the standards meetings, held by the Joint Electron Device Engineering Council (JEDEC).
Industry analysts said that if the chip makers had known that Rambus had filed for patents on these memory technologies, they probably wouldn't have chosen them as standards.
In a statement, Rambus said it abided by JEDEC's rules, despite the fact that ``these rules have been shown to be confusing, conflicting, poorly communicated and generally not complied with by other JEDEC members.''
``We are obviously disappointed in today's verdict and will immediately appeal,'' Rambus Chief Executive Geoff Tate said in the statement. A company spokeswoman said Virginia has a cap on punitive damages at $350,000, and Rambus has asked the judge to lower the damage award.
Rambus shares fell 6.6 percent Wednesday, dropping 90 cents to close at $12.80. The company's shares have lost about 70 percent of their value since March.
This case will likely have a big impact on Rambus' continued attempts to get royalty payments on memory-interface technologies used in the most common memory chips, SDRAM (static dynamic random access) and DDR (double data rate) memory chips.
Mark Edelstone, a Morgan Stanley Dean Witter analyst, had estimated Rambus could reap as much as $1 billion a year in royalties from memory-chip makers if the disputed designs are upheld.
These royalties are in addition to the royalties it receives from its main business, a high-speed memory-interface technology called RDRAM that is designed to work with Intel's high-end microprocessors. These patents are not in dispute.
Rambus already has licenses with eight other memory-chip makers for its SDRAM and DDR patents -- deals which are likely to be revisited and possibly voided as a result of the Infineon case.
Rambus has sued two other companies on allegations of patent infringement: Micron Technology of Boise, Idaha, and South Korea's Hyundai. Rambus has another suit against Infineon in Germany.
The Virginia case has been closely watched by the $29 billion memory-chip industry. Attorneys for Hyundai and Micron Technology were in the courtroom in Richmond, taking copious notes on the proceedings. A Hyundai spokesman in the U.S. declined to comment on the recent developments and said the company's attorneys were not available because they were en route back to San Jose from attending the trial.
Desmarais, the Infineon lawyer, said the verdict would have ``a very large impact'' on the other pending cases.
Nathan Brookwood, an analyst with Insight 64 in Saratoga, said that earlier this week, during the discovery phase of the trial, it was revealed that Samsung, the world's top memory-chip maker, has a clause in its contract with Rambus that stipulates that if Rambus' patents are found to be unenforceable, Samsung will not have to pay any further royalties.
``If I were Samsung, I'd be on the phone to Geoff Tate saying, `Why do we have to pay you?' '' Brookwood said.
But it's unclear whether the court has definitively found that Rambus' patents are unenforceable. ``This could drag on for a while,'' Brookwood said. |
