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To: 2MAR$ who wrote (52163)	5/18/2011 10:35:37 AM
From: Donald Wennerstrom	Read Replies (1) \| Respond to of 95391

Appeals Court Vacates Rambus's Patent Win Vs Hynix 4:02 AM ET 5/14/11 NEW YORK (Dow Jones)--An appeals court Friday delivered a pair of blows to Rambus Inc. (RMBS), determining that the company destroyed documents in patent-infringement cases against Hynix Semiconductor Inc. (000660.SE) and Micron Inc. (MU), and returning the cases to district court. The rulings by the U.S. Court of Appeals for the Federal Circuit sent Rambus shares to their lowest level in nearly two years. Much of the company's perceived value is based on its ability to leverage compensation for its patents. "We are very disappointed with the decisions in these cases," said Thomas Lavelle, senior vice president and general counsel at Rambus. "We are hopeful when the district courts reconsider these decisions, they will find, as we believe, there was no bad faith and no prejudice." He said during a conference call that Rambus hasn't yet decided whether it will challenge the rulings and noted it's premature to speculate how the decisions will impact other cases. The Sunnyvale, Calif., company licenses patented technology used to accelerate the performance of memory chips, including products known as dynamic random-access memory, or DRAM, chips that are a mainstay of personal computers. For more than a decade, Rambus has waged legal battles to collect royalty payments from companies that don't license its patents, including Micron, Hynix and Nanya Technology Corp. (2408.TW). The court cases Friday revolved around whether Rambus wrongly destroyed documents and violated its duty to hold on to the documents for litigation. Rambus argued that it destroyed the documents as part of its normal course of business under its document-retention policy and that, when it destroyed documents, the patent litigation wasn't reasonably foreseeable. Micron initially won a dismissal in its case, with the trial court saying Rambus' claims were unenforceable because of the document destruction. In the Hynix case, a judge originally rejected Hynix's arguments and found in favor of Rambus. The original judgment would have required Hynix to pay $397 million as well as additional royalties. Friday, an appeals court in the Hynix case vacated the earlier ruling and ordered the trial court to again look at whether Rambus wrongly destroyed documents in the Hynix case. In the Micron case, the court determined Rambus had wrongly destroyed documents and ordered the trial court to examine again whether that destruction justifies dismissing Rambus' patent claims against Micron. "The federal circuit took more a expansive view of the duty of companies to preserve documents that may be relevant in future litigation," said Alexander Poltorak, chairman and chief executive of General Patent Corp., an intellectual property and patent-enforcement firm. "It's a lesson for any IP-centric business. Patents are nothing but a license to sue." Matt Powers, a Weil Gotschal attorney representing Micron, said the appellate court didn't determine the district court was wrong in finding Rambus' patents unenforceable, only that it wants more detailed findings from the lower court on the questions of bad faith and prejudice. "There was no hint in the appellate court--in fact, it was really more to the contrary--that the district court's finding was inaccurate on those issues," he said. "We believe the district court, on hearing the evidence again, will make the same decision" in favor of Micron. Hynix said in a statement that it is "gratified" by the court's decision, adding that it expects to find itself at the more advantageous position in negotiating with Rambus on another similar case. Rambus shares tumbled after the rulings, closing down 18% to $15.83. The stock initially had jumped to $21.69 as news of the rulings spread, before falling as low as $14.60. In the wild swing, the stock set off six trading circuit-breakers on the Nasdaq stock market. Shares are halted if they make a 10% move in price over a five-minute period, guarding against rapid price swings. Micron shares, meanwhile, slid 2.4% to $10.40. Hynix and Micron initially filed suit against Rambus in August 2000, and Rambus countersued shortly thereafter. The companies have been involved in litigation ever since. The three companies also are embroiled in further litigation in California regarding other memory-patent infringement. A judge recently delayed the start of the trial, originally scheduled for the beginning of May, pending decisions in the appeals-court cases. Micron attorney Powers said the California judge in that trial hadn't yet determined the issue of document destruction, and that he expects the appeals court's decision to be binding on the judge. "Our view is that this decision from the federal circuit from the Delaware case will pull Micron out of the case on the ground that it's binding on him," he said. "Whether it's binding on him in the Hynix case is something for Hynix to speak to, not us." Along with the patent litigation is a separate case regarding price-fixing. The trial is set to begin June 7. Chief Financial Officer Satish Rishi said during a conference call that the company will update its litigation-expense guidance for the second quarter if there's a "significant change." Rambus last month said legal costs would be $14 million to $17 million for the June period. "It's hard to say anything about this other than this is bad news," Chief Executive Harold Hughes said. "We've had setbacks before and have overcome them. We continue to defend vigorously our patents and innovations and seek fair compensation for their use."