Rambus loses key patent case

Rambus’s days as a patent troll appear to be numbered after it lost an important $3.95 billion jury trial over its allegations that Micron and Hynix Semiconductor conspired to prevent its memory chips from becoming an industry standard.

A state court jury in San Francisco today by a 9-3 vote rejected Rambus’s claims that Micron, Ichon, and Hynix are liable for colluding to manipulate prices of dynamic random access memory, or DRAM, chips in violation of California antitrust law.

The jury, which had been thinking about it since September, also decided that the two companies were not liable for plotting to interfere with Rambus’s business relationship with Intel and driving the world’s largest chipmaker away from RDRAM.

Harold Hughes, president and chief executive officer of Rambus, said in an e-mailed statement that the outfit would appeal.

If Rambus had won it would have made a cool $3.95 billion in royalties. Antitrust charges would have automatically tripled this to $11.9 billion.

Shares in Rambus fell from $14 to $4. Investors said that with the court loss it becomes a lot harder for Rambus to make the huge profits that analysts had predicted.

Hynix Chief Executive Officer O.C. Kwon said he was relieved that the jury rejected Rambus’s claim that Hynix was to blame for the failure of Rambus’s proprietary RDRAM technology to become the standard for computer main memory.

Steve Appleton, Micron’s chairman and CEO was quoted by Business Week  as saying that the jury backed his company’s assertion that Micron acted in accordance with the law and went with its values of innovation and fair competition.

Other analysts have dubbed the verdict “extreme” and a complete shock to investors.

Daniel Berenbaum, an analyst with MKM Partner said that everyone had been talking about what would happen if there was a $500 million or $1 billion award, no one seemed to think they would actually lose.

The trial began in June, Rambus claimed that Micron and Hynix acted as a cartel to derail Intel’s 1996 decision to collaborate on RDRAM as a solution to a computer- memory bottleneck.

It claimed that the two outfits abused agreements made in the 1990s to manufacture RDRAM by inflating its price and suppressing availability. This caused Chipzilla to turn away from adopting and promoting Rambus memory as an industry standard.

But Hynix and Micron said that the Rambus-Intel relationship was stuffed up by Rambus being tossers. .

One Intel manager told the court that Rambus insisted that it have the right to block shipments of Intel processors that relied on the chip designer’s technology if certain conditions requiring Intel to promote RDRAM weren’t met.

For that reason, Intel could not be bothered supporting it.

Meanwhile Samsung must be kicking itself. It was named as a defendant in Rambus’s original complaint and ended up paying more than $900 million to end all legal claims with Rambus and reach a new licensing deal over computer-memory technology. Infineon was likewise removed from the antitrust case by paying $150 million to make the case go away.