Manhasset, N.Y. -- Hardened by years of legal battles, memory designer Rambus Inc. appears finally to be getting its day in court--and warning of more such days if DRAM makers now infringing its patents do not come to terms.
In what Rambus called a validation victory last week, a federal-court jury in San Jose, Calif., put a $306.9 million cap on a long-running dispute with Hynix Semiconductor Inc. The jury found Hynix had infringed patents covering dynamic random-access memory, or DRAM, the main type of computer memory.
The damage award against Hynix, in U.S. District Court for Northern California, covered Hynix's sales of SDRAM, DDR SDRAM and DDR2 memories in the United States between June 2000 and the end of 2005. Rambus had argued during the month-long trial that Hynix owes it between $108.5 million and $868 million in damages.
The case began in August 2000 when Hynix sued Rambus, seeking a declaratory judgment that 11 patents were invalid and not infringed. Rambus countersued, and eventually expanded the case to include Hynix's SDRAM, DDR and DDR2 memory products, and 59 patent claims from 14 Rambus patents. Ten of the claims were allowed to go before the trial jury.
For Rambus, the verdict appears to offer leverage in its ongoing battles with a number of chip makers. Rambus contends that chip suppliers have willfully violated its patents and conspired to drive the company out of the memory market.
Founded in 1990, Rambus built up an extensive intellectual-property portfolio over the years governing many chip-level and system-level DRAM chips. Revenue comes from royalties generated by granting licenses for its patents, covering SDRAM, DDR SDRAM and DDR2 memories--a business model the company calls a win-win for licensees.
"We hope people say it is worth innovating [by] using our patents," said John Danforth, senior vice president and general counsel at Rambus, in an interview with EE Times following the trial.
"We continue to hold out an olive branch to resolve the matter short of a full-scale trial," he said, adding that chip makers could avoid further litigation by signing license agreements with Rambus.
Indeed, over the years Rambus has signed license agreements with industry heavyweights like IBM, Fujitsu, Renesas Technology, Hewlett-Packard and NEC. But with some other suppliers, it has come to terms only after a bitter legal fight.
In a May 2004 antitrust suit in California Superior Court, Rambus accused Hynix, Infineon Technologies and Micron Technology of an "unlawful effort to eliminate competition and stifle innovation."
Calling for a truce, Infineon agreed in March 2005 to pay $5.85 million quarterly to use Rambus patents.
But by June Rambus had added Samsung, the leading memory supplier, to the antitrust suit. And the battle with Micron has escalated. On Feb. 21, Micron sued, accusing Rambus of false testimony, destroying evidence and other actions to "mislead courts and Micron and to extract unjust patent licensing fees or damages."
Memory suppliers also face legal issues well beyond Rambus. A separate federal probe into price fixing of DRAMs between 1999 and 2002 resulted in a Micron executive's being charged with obstruction of justice in December 2003, forcing his resignation. Stiff fines have been levied against Elpida, Hynix, Infineon and Samsung for admitting their parts in the price-fixing scheme. Samsung was fined $300 million, the largest single fine. In addition, four Infineon executives and three from Samsung drew jail terms.
The antitrust case against Hynix, Micron and Samsung is proceeding, with a San Francisco court in February ordering evidence turned over to Rambus for future use.
The Hynix patent case is also far from over. Rambus has asked the court to permanently bar Hynix from making, using or importing Hynix memories that infringe Rambus patents. The injunction will likely be addressed after the trial's third phase, in which Hynix is expected to argue that Rambus' patents are invalid.
Hynix is likely to appeal the lower-court jury's decision and try to reduce the size of the damage verdict, said John Ward, an intellectual-property lawyer with the firm Greenberg Traurig (East Palo Alto, Calif.).
Ward believes all bets are off in the remaining court cases. "There's a lot of noise around Rambus' patents," he said. "Other districts have come up with verdicts that are opposite--the Virginia court found Rambus patents are unenforceable. There is a greater chance of other defendants falling in line and settling their case, but there's enough uncertainty. Everyone is going to have weigh all factors."
Telephone calls last week to Hynix's lawyers were not returned.