Sunnyvale, Calif. -- Rambus Inc. has announced that it has reached a licensing agreement with Micron Technology, Inc. In a conference call on December 10, 2013, Ron Black, Rambus CEO, called it the “last major outstanding litigation” and closes a 13-year period of litigation for the company. The agreement is a patent cross-license agreement under which Micron gains the right to use any Rambus patent for the manufacture of specified ICs, including memory.
In an interview with EETimes earlier this year, Rambus’s chief marketing officer Jerome Nadel revealed that he expected Rambus would be more collaborative and less confrontational during Black’s tenure as CEO. The agreement with Micron is the latest in a chain of completed litigation for Rambus this year, including agreements with STMicroelectronics (June), Freescale (September), LSI (February), and SK Hynix (June). Black says the Micron agreement is part of the company’s larger set of objectives for 2013, which includes a strategy for delivering outstanding technology and moving beyond litigation, but settling in fair and reasonable terms. “I believe we have delivered on this strategy,” Black said.
The new agreement extends the typical licensing term to seven years (as compared to five), and Black thinks this will allow for “patent peace,” saying that the previous focus on five-year deals may have been a bit flawed. He notes that in the semiconductor industry, five years can sound like a long time, but it goes by quickly. He says that he hopes the longer agreement terms assure customers that Rambus will not be in litigation when they go into production.
Black hopes that the end to the 13-year period of litigation will allow the company to focus on the design side of the business. He says he is confident that Rambus can grow this part of the business substantially.
Satish Rishi, Senior Vice President and Chief Financial Officer, explained the terms of the deal with Micron, which requires quarterly royalty payments to Rambus over the next seven years with a quarterly cap of $10 million and a 12-month cap of $40 million. The payments will be held one quarter in arrears based on revenue. So, in the first quarter 2014, Rishi expects about a $5 million payment for Q4 2013. At the end of the seven years, Micron will have the option to extend the agreement. Jae Kim, Senior Vice President and General Counsel, notes that Rambus’s focus on IP development will continue, and he expects they will have compelling patents to secure renewals as well as “collaboration on the technical side that would also increase technical engagements.”
As part of this agreement, the two companies have settled all outstanding patent and antitrust claims, and the agreement covers both Micron and Elpida products. Any licensing fees already paid by Elpida are not included in the current fee structure. During the conference call, Kim elaborated that the new agreement replaces what was in place for Elpida, and the current agreement encompasses a combined pool of Micron/Elpida products with a running royalty rate of 0.6%.
Now that the long days of litigation are behind them, Black, and subsequently Rambus, seem firmly focused on collaboration and R&D. Rishi estimates that the 13-year cost of litigation was in excess of $20 million.
— Janine Love , UBM Tech